Litigation from aggrieved former employees. Terminated employees often seek redress from their former employers by filing suit. Even unfounded claims are expensive, time consuming, and demoralizing so it is worthwhile for employers to invest in proactively avoiding litigation. Employers should minimize risk of litigation by being aware of their legal obligations and properly documenting termination decisions. Common areas of exposure include claims of:

Loss of sensitive corporate information. Whether the employment relationship ends voluntarily or involuntarily, a departing employee may attempt to use valuable trade secrets or other confidential information for personal gain or for the benefit of a third party.

Unfair competition. Departing employees may also seek to engage in competitive activities in violation of restrictive covenant obligations.

End of employment compensation, benefits, and tax obligations. Employers may fail to appreciate employees' legal entitlements and the consequences of noncompliance with Internal Revenue Code Section 409A. Employers must adhere to obligations under:

Discipline and Discharge Under the National Labor Relations Act

Investigative Interviews Under the National Labor Relations Act

Separation and Release of Claims Agreement (Long-Form) (also see select state-specific versions in Settling State Law Employment Disputes Toolkit)

Employer's Release of Claims to Employee

Section 409A Six-Month Delay, Short-Term Deferral, and Separation Pay Plan Analysis