How to Reduce Your Risks After The Termination
By: ROBERT C. BOISVERT, JR.
March 2007
(This article originally appeared in the November 1999 Fredrikson & Byron Employment & Labor Law Focus Newsletter and was revised in March 2007)
Most employers already know there are steps they can take before they terminate an employee that will reduce their risk of being sued. What some forget is that what they do after the termination can also affect their risk of a lawsuit. What an employer does and says after the termination could give the employee a legal claim where previously they had none.
Increasingly, terminated employees are asking their former employers for a written explanation of the reason for their termination and a copy of their personnel records. Such requests are an early indication that trouble may be brewing. An employee who makes these requests has probably talked to a lawyer and is at least considering suing his or her former employer. Employers faced with one of these requests should promptly consult their own attorney
Beware of Requests for the Reason for Termination
Minnesota law gives terminated employees the right to demand a written explanation of the truthful reason for their termination. The former employee must make the request in writing within 15 working days of the termination. The employer must respond to a proper request within 10 working days of receipt.
This request poses several risks for the employer. On one hand, the employer that does not respond may be liable for damages, a fine of up to $750, and the former employee's attorney's fees if he or she prevails in a lawsuit under the statute. On the other hand, the employer's response could have unforeseen consequences. For example, if the former employee later sues for wrongful termination, an employer that listed only one reason for terminating may have a hard time bringing up other incidents or performance problems that contributed to the decision to terminate.
Requests for Personnel Records: The Difference Between Files and Records
Minnesota law also gives former employees the right to receive a copy of their personnel record. The former employee must make the request in writing and may request a copy once each year after separation from employment for as long as the employer maintains the employee's personnel record. The employer must provide a free copy of the record within seven working days of receiving the request, or within 14 working days if the record is kept outside the state.
An employer that fails to provide a requested personnel record may be liable for damages, a fine of up to $5,000, and the former employee's attorney's fees if he or she prevails in a lawsuit under the statute. Also, the employer may be barred from using the omitted personnel record as evidence at a trial or hearing involving the former employee.
Many employers mistakenly think that all they have to do to comply with a personnel record request is send the former employee a copy of his or her personnel file. The law requires that the employer provide a copy of the "personnel record," which is different from a "personnel file and may include documents that were not kept in the employee's personnel file.
The law defines "personnel record" as:
any application for employment; wage or salary history; notices of commendation, warning, discipline, or termination; authorization for deduction or withholding of pay; fringe benefit information; leave records; and employment history with the employer, including salary and compensation history, job titles, dates of promotions, transfers, and other changes, attendance records, performance evaluations, and retirement record.
The law contains only 10 exceptions to the definition of a "personnel record." If a document relating to a former employee does not fit within one of these 10 exceptions, the employer may be required to provide the document to the former employee. The employer should review the exceptions with its attorney before responding to a current or former employee's request for their personnel record.
Silence is Golden - Usually
Another source of post-employment trouble, and frequently litigation, is employee references. The surge in defamation lawsuits has led many employers to stop or sharply curtail giving references. The emergence of fraudulent and negligent reference claims has complicated this strategy, however. Increasingly, new employers who rely on references and end up hiring bad employees are suing the former employers that gave misleading or incomplete references. While these cases usually involve unique circumstances, such as not disclosing that a fired daycare worker was accused of abusing children under his or her care, they are becoming more common.
As a general rule, employers should adopt a policy for responding to requests for information about current and former employees. The policy should prohibit employees from disclosing information about current or former employees and require that all inquiries be directed to a specific person within the company. In addition, as a general rule the employer should not provide information about current or former employees unless the subject of the information request first signs a form authorizing the employer to provide the information and releasing the employer from liability for providing it.
Employers should watch for other red flags as well. For example, if the employer receives a charge of discrimination from an anti-discrimination agency or a demand letter from a former employee or his or her attorney, the employer should immediately contact its attorney.
Risk management does not end with the termination of employment. An employer that remains vigilant after the termination can minimize its legal risks.