What Is the Termination Labor Law?

Basic Doctrine

• Employment-at-will is the principle that applies to job terminations. Employment-at-will means both employers and employees can initiate a separation from employment without the need to provide a valid reason or follow particular procedures. Just as employees can walk away from a job without having to provide notice and without justification, employers can discharge employees for a wide variety of reasons, or even for no reason at all.
  
  

Legal Restrictions

• Federal laws prohibit job terminations for any situation stemming from discrimination or whistleblowing. Discrimination laws bar employers from unequal treatment, including discharge, of employees based on their gender, race, religion, age, disability and other traits or characteristics. Whistleblower protections cover employees who have reported their employers for illegal activity, as an example, or who have filed a complaint with the Occupational Safety and Health Administration about conditions on the job.
  
  

Case Law

• While no statutes provide additional restrictions on employment-at-will, several common-law exceptions exist. Statements about separation of employment in a company handbook or employee manual might constitute an implied contract, which could limit an employer's right to terminate employees to circumstances listed in the statements rather than at will. Employees also have the right to decline orders or requests to break the law and not put their job security at risk. Finally, a minority of state courts have recognized a covenant of good faith and fair dealing by which any termination is wrongful if it is malicious or arbitrary rather than for cause.
  
  

Benefits Continuation

• When terminating an employee, an employer usually must allow him to continue receiving coverage through a group health plan if one exists. This requirement covers businesses that have regularly employed more than 20 employees during the past year. The continuation of health benefits, known as COBRA, lasts 18 months after voluntary or involuntary separation from employment. The only exception is in the case of a termination for gross misconduct, such as illegal actions or blatant disregard of the employer's basic interest. Premiums often go up for former employees in the COBRA program because employers choose to stop paying a portion of the premiums for terminated employees.
  
  

Final Paycheck

• When terminating an employee, according to federal labor laws, employers do not have an obligation to pay final wages by any time before the next scheduled payday. For employees who do not receive their final wages by that day, the U.S. Department of Labor suggests contacting its Wage and Hour Division or the state labor department's enforcement division. Some states might in fact require faster payment of final wages for terminated employees.