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Safeguarding Your Company When Employees Exit

Safeguarding Your Company When Employees Exit

As happens occasionally, a client recently contacted his attorney to find out what to do when an employee served notice that he was leaving the firm. While the company and the employee were on good terms, the attorney recommended a number of actions that most businesses should consider taking when an employee leaves voluntarily. Whether you are a new or established business, you may want to consider taking the following actions in just such a circumstance:

- Obtain a letter of resignation. Written evidence that it was the employee who voluntarily terminated their employment can nip employment-related litigation, and unemployment claims, in the bud. It may also be helpful, for the same reasons, to obtain an explanation as to why the employee is leaving.

- Conduct an exit interview. This sounds more formal than it need be. This is simply a time to have the employee sign documents, return company property and acknowledge any continuing obligations to the company.

- Obtain a written acknowledgement from the employee of any restrictive covenants (non-compete, non-solicitation, non-disclosure and confidentiality) or other contractual obligations.

- Call your payroll company and notify them that the employee is leaving. You do not want to continue to pay the employee on direct deposit after they have left.

- If you are providing benefits, and if your payroll company or benefits provider does not handle such notices, you need to issue benefits related notices.

- Get all company property back from the employee (hard and soft copies) with written verification that he has returned everything.

- Address any portfolio issues with the employee regarding work performed. Is the employee entitled to divulge work product or state that he completed or worked on a particular project when soliciting work for a new employer?

- Get the keys back and change passwords. It sounds simple, but is often not done.

Some employers offer severance in a layoff situation in exchange for a release of the employer from any employment-related claims. Increasingly, employers are considering this on all termination events and, therefore, it is an option even in a non-layoff situation to reduce the company's legal exposure.  A simple release can be appropriate, if properly drafted.  Several provisions are necessary to incorporate release under some federal laws.  Therefore, proper drafting and that "magic" legal laguage are necessary to accomplish the goal of a valid, final and binding release.

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