This resource is continually monitored and revised for any necessary changes due to legal, market, or practice developments. Any significant developments affecting this resource will be described below.
Departing Employee Toolkit
Resources to minimize risk during and following a voluntary or involuntary employee termination.
Losing employees is an unavoidable consequence of engaging in business. In addition to being disruptive and expensive, employee departures can bring legal risks. Avoiding liability requires an understanding of the legal landscape. Employers and their counsel must appreciate their legal exposure when employees go their separate ways, including:
Litigation from aggrieved former employees. Terminated employees, in particular, often seek redress from their former employers by filing suit. Even unfounded claims are expensive, time consuming and demoralizing, making proactive litigation avoidance a worthwhile investment for employers. Common areas of exposure that can be minimized by awareness of legal obligations and proper documentation of termination decisions include claims alleging:
wage and hour violations;
leave law violations;
labor law violations; and
breach of contract.
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. In particular, employers must adhere to obligations under:
nonqualified deferred compensation plans; and
equity incentive arrangements.
The Departing Employee Toolkit provides information on best practices for employee termination, discipline in advance of termination, employee benefits and risk mitigation.
Separation and Release of Claims Agreement ( www.practicallaw.com/0-503-8253) (also see select state-specific versions below)