An at-will employee may be terminated by an employer at any time with or without cause and with or without advance notice, as long as the reason for the termination is not prohibited by law. For example, federal laws prohibit discrimination in employment based on certain protected classifications, including race, color, sex (including pregnancy), religion, national origin, age (40 or over) and disability. Therefore, an employer is prohibited from terminating an employee if the basis of that termination is his or her membership in any of these protected classifications.
If an individual believes he has been discriminated against with respect to an employment decision, he must file a complaint with the Equal Employment Opportunity Commission (EEOC) or the state counterpart thereof before he can file a lawsuit alleging that an employer violated those laws.
While there is no absolute way to prevent a terminated employee from filing an EEOC charge, there are steps you can take to minimize the chances that such a complaint will be filed. Moreover, there are steps an employer can take to put itself in a better position to respond to the EEOC, if and when a charge is filed.
With respect to attempting to resolve a dispute with an employee regarding termination of employment--including any potential discrimination claims--employers sometimes offer severance packages. These packages provide some form of consideration (typically, payment of a particular amount) in exchange for a release by the employee, requiring the employee to agree to release and waive any and all claims arising out of the employment relationship between the employee and the employer. Note, however, that even if the employee signs the release and accepts the consideration, the United States Supreme Court has held that this does not absolutely preclude the employee from filing a charge with the EEOC, although it does prevent him from recovering any monetary damages. However, the EEOC is not bound by the release, and thus, under these circumstances, the EEOC can take action upon the charge, assuming it believed that a discriminatory act had occurred.
If an employer offers a severance package to an employee who is over age 40, and the employee is asked to sign a release, specific requirements must be met in order to comply with the Older Worker's Benefit Protection Act (OWBPA), which amended the Age Discrimination in Employment Act of 1967 (ADEA), in order for the employee's waiver of rights to be valid. Among other requirements, the release must include a 21-day review period as well as a seven-day revocation period; the language of the release must be understandable to the average protected employee; and the employee must be advised in writing that she has the right to consult an attorney prior to signing the release. (Please note that this article is not intended to address all the requirements under the OWBPA. Employers should speak to their local counsel for guidance when these specific issues arise.)
Whether or not a severance agreement is offered and/or signed, there are other ways you can put yourself in a better position to defend an EEOC charge, which we mentioned earlier in this article: Communicating with employees when performance and/or work-related issues arise; documenting all important communication and relevant workplace events as they occur; having witnesses present when communication is oral; and having employees sign all written communication about the issues. Additionally, an employer should enforce its policies and procedures uniformly and consistently.
None of these suggestions guarantee that an employee will not file an EEOC charge or guarantee a successful defense or favorable outcome if an EEOC charge is filed. But if done correctly, they do provide important protection to the employer.
This article was excerpted from The Small Business Encyclopedia, except for the discrimination section, which was written by Larry Rosenfeld and appeared on Entrepreneur.com as the article "Protecting Yourself When Terminating Employees."