Termination for Cause: 6 Scenarios & Handling Tips
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Firing an employee is never a pleasant experience, but it's crucial to understand the proper procedures to safeguard your company. This involves familiarizing yourself with "grounds for termination" or "terminations for cause," ensuring you have clear policies and documentation in place. Additionally, maintaining accurate employee information throughout the process is essential for compliance and protecting your organization from potential legal challenges. Understanding these aspects can help you navigate termination situations with professionalism and fairness.
In most states, employment law dictates that employees work "at will" and can be fired for any reason that doesn't violate state or federal law. But being employed at will doesn't mean you can do whatever you want.
There are many reasons to fire someone, including business considerations such as layoffs or downsizing or performance issues (poor performance). You can also fire someone for reasons that violate the law or company policy, such as embezzlement, insubordination, or discrimination.
Whatever the reason, after the termination, your employee can file for unemployment benefits. Since you are responsible for the decision to fire, in most cases you will need a reason for the termination.
For example, if you have an employee who is part of a union, they probably have a contract that prevents you from legally firing them without proving cause. This means that your team member's conduct must be so severe or harmful to your business that you can no longer employ them.
Additionally, if you fire someone for cause and the state unemployment commission accepts the evidence, you will not be required to pay unemployment benefits.
However, if you fire someone and the unemployment commission decides it was not for cause (wrongful termination), you will be responsible for paying benefits.
As you can see, there are a lot of things to consider in the termination process. To help you with that, we've written this article where we walk you through everything you need to know about termination for cause. So without further ado, let's get right into it!
What is termination for cause?
Termination for cause refers to firing an employee for valid, legally classified reasons. For termination for cause to be justified, the reason for termination must be serious and legitimate.
For example, if an employee's behavior in the workplace causes so much concern that, in some cases, the employment relationship must be terminated immediately (without notice), termination for cause is legitimate.
This type of behavior is called "gross misconduct" and is defined differently depending on the state you operate in.
However, the U.S. Department of Labor defines gross misconduct as "an intentional or controllable act or omission that demonstrates a conscious disregard for the employer's interests."
Employees can exhibit this intolerable behavior through actions in the workplace, interactions with coworkers or supervisors, or even the way they treat customers.
6 Reasons for Termination Without Cause and Examples
When you terminate an employee, in most states you can prove termination for cause under the following circumstances:
Drugs and Alcohol
One issue that raises significant concerns in the employment context is drug and alcohol abuse. Cases such as showing up to work under the influence or failing a company-required drug and alcohol test can be serious enough to warrant termination. Employees who are under the influence of drugs not only endanger themselves, but also their coworkers and overall productivity in the workplace. The liability risks posed by substance abuse can extend to lawsuits or damage to the company's reputation. As a result, employees who violate drug and alcohol policies are often terminated without notice.
Criminal Behavior
Criminal acts related to work duties are a serious breach of trust. Examples include physically attacking co-workers or driving under the influence of drugs while performing work duties. Such behaviors not only endanger the safety of people in the workplace, but can also lead to criminal charges and legal complications for the employer. The subsequent police investigations and legal proceedings can disrupt the work environment and require termination of employment.
Theft
Embezzlement of assets, be they trade secrets, funds or other types of company property, is a serious offense. Likewise, stealing from co-workers is considered highly unethical. Such acts create distrust in the workplace and employers often view them as a point of no return in terms of employee relations. The economic consequences of theft can also be significant, especially when valuable trade secrets are involved.
Safety Violations
Employees are expected to follow the safety rules and policies established by the company. Intentional violations of these safety protocols can result in harmful or even catastrophic consequences, including workplace injuries or property damage. Employees guilty of such actions are often quickly terminated to prevent further incidents and protect the well-being of other employees.
Excessive Absenteeism
An essential part of any employment contract is the expectation of regular attendance. Repeated absences without a valid reason can be detrimental to business operations. Persistent noncompliance can lead to work disruptions and increase the burden on colleagues who must take on the absent employee's duties. Employers usually have clear policies outlining the consequences of excessive unexcused absences, and violations of these policies often result in termination.
Policy Violations
Every company has a unique set of policies, usually compiled in a code of conduct or ethics manual. Intentional violations of these policies will not be tolerated, especially when such actions result in consequences that harm the company or its employees. Whether it's harassment, discrimination, or misuse of company resources, violating established policies can result in immediate termination.
Note: Different states have different definitions of "gross misconduct," so double-check what your state means by it.
This isn't an exhaustive list of reasons you can fire someone for cause, but it will give you an idea of what is considered "just cause" in most states.
And as a general rule, as long as you can prove that you had to terminate the employment contract because the team member's behavior was damaging to your company, you most likely have a good case.
Just make sure you document the termination process well, including evidence of the misconduct. Write a termination letter listing the behavior and reason for termination, and keep a copy for your records. This will serve as valuable evidence in case you need to prove it later.
Termination for Cause and Collective Bargaining Agreements
There are several types of employment contracts that prevent lawful termination without cause.
One of the most common is a collective bargaining agreement (CBA), which is a contract that a union and an employer negotiate about wages, working hours and working conditions. This contract usually includes a clause that says you can only fire them for a specific reason.
If there is a reason for termination, document the evidence and the reason for termination. This will protect you from any wrongful termination lawsuits that may result from firing the union member.
Termination for Cause and Severance Agreements
Severance agreements are another type of contract to consider when terminating an employee.
Severance agreements are contracts between an employer and employees that set out the terms of an employee's departure.
Typically, these agreements are used by companies to legally protect themselves if an employee files a wrongful termination lawsuit.
The language in the agreement will determine whether an employer must provide reasonable notice or severance pay when terminating an employee.
If an employee violates the employment contract, the employer may provide reasonable notice or severance pay in lieu of termination, but they are not required to do so. A severance agreement is separate from an employment contract, so there is no clause in the employment contract that can prevent you from terminating for cause.
Effects of Terminating for Cause on Unemployment Benefits
If you fire an employee, they are always eligible to apply for unemployment benefits and receive the benefits. They can also receive benefits if you eliminate the position or deem them unsuitable.
However, if the government determines that the termination was for cause, their application will be denied. As a result, your insurance premium will not increase.
The state unemployment commission will notify you when an employee files a claim. They will request details about the employee from you in a termination report to determine eligibility for benefits.
If you have a reason for termination and believe the employee should not receive the benefits, request a hearing. This is where your documented evidence comes in—if you have a strong case with evidence of gross misconduct, you will likely win.
Again, be sure to check with your state's unemployment office to learn more about what specifically qualifies as gross misconduct in your area. And if you have any questions, it's best to contact an employment lawyer.
Handling termination for cause requires careful documentation and adherence to legal standards. Use tools like IceHrm to ensure a smooth and compliant termination process. Learn more about how IceHrm can help you manage employee records and streamline HR tasks.
