In today's Freedom Friday blog and email newsletter, I want to discuss an issue related to last week's topic. In last week's Freedom Friday blog and email newsletter, I answered the question, “Help! How Can I Hire My First Employee?” In this week's Freedom Friday blog and email newsletter, I want to answer a related question, “Help! How Can I Fire My Small Business Employee?” Many small business owners start out just doing everything themselves, and then eventually the small business grows to a point where the small business owner needs to hire an employee. But what happens when that employee doesn't work out, or is no longer a fit for the job? How can you as a small business owner terminate that employee and protect your small business?
Once again, before I explore this topic, I want to give a strong word of caution. If you hire someone, and they are a 1099 contractor, they are an independent contractor, and NOT an employee. There is no such thing as a “1099 employee.” As a small business owner, you either hire someone as an independent contractor, and give them a 1099 for tax purposes, or you hire them as an employee, and give them a W-2 for tax purposes.
In today's Freedom Friday blog and email newsletter, I want to share with you three (3) pitfalls to avoid in terminating an employee:
1. Misunderstanding Laws and Regulations
The first pitfall to avoid in terminating an employee is misunderstanding, or not understanding, all the laws and regulations involved in terminating an employee. Most people believe that if their employees are hired “at will,” then an employee can be fired for any reason at any time (or for no reason at all). While this is generally true, there are exceptions that apply where the idea of “at will” does not protect your small business. For instance, if you fire someone after they have lodged a complaint against you or your small business with the U.S. Equal Employment Opportunity Commission (EEOC), your small business can be sued for retaliation.
2. Lack of Documentation of Performance Concerns
The second pitfall to avoid in terminating an employee is not documenting performance concerns. It is always best to document an employee's performance, either good or bad. It is also a good idea to have regular performance reviews. I would encourage you as a small business owner to have a new employee's first performance review ninety (90) days after their hire date, and then their second performance review at the six (6) months' mark. Documentation of an employee's failure to perform job duties, misconduct on the job, warnings for the same, etc., can help protect your small business against a lawsuit for retaliation or against a claim for unemployment benefits. You should document your employee's performance so that you can show the termination was based on poor job performance rather than based on retaliation, discrimination, or being laid off for economic reasons.
3. Failing to Plan for the Termination
The third pitfall to avoid in terminating an employee is failing to plan for the termination. There is an old saying which is very true; if you fail to plan you plan to fail. Once you have decided to terminate an employee, you need to have a plan in place once that employee is terminated. You may need to plan to disable the former employee's security badges or access cards; shut down their email; ask them to return office keys or business-owned devices; and consider any information the employee might have had access to and eliminate security issues. You also need to decide if you will offer your former employee a severance package and what that might entail.
If you are interested in starting a small business anywhere in Oklahoma, or you are interested in taking your small business to the next level, please contact me at [email protected] to schedule a FREE strategy session.
For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/