Terminating employees is one of the least desirable parts of running a business or organization. The discussion is rarely comfortable for a manager – and the impact to the employee is significant. Never mind the impact to the entire team’s morale and the “new normal” of completing work with one (or more) less people.

The Federal Trade Commission’s (FTC) recent announcement on its non-compete ban provides some insight on how both managers and employees might approach next steps after an actual termination in the future. That being said, the FTC’s rule does not take effect for four months and is already being challenged across jurisdictions. I recommend that employers and employees consider the following tips that can be implemented now (while the FTC rule is pending).

1. Think about the day after the termination takes effect. I sometimes assist employers that are motivated to quickly remove an employee because of an emergent issue. I always recommend that no matter how time-sensitive the issue is, employers and employees think about how the relationship will continue after the date of separation. When does the last paycheck need to be paid? How will equipment be returned? Are there existing agreements that will survive the termination (more below)? Developing an action plan on both sides is critical.
2. Review existing agreements and discuss/negotiate before departure. Non-compete agreements are still legal in many states (and while the FTC’s rule is still pending). Further, the FTC’s ban seemingly does not impact non-solicitation and non-disclosure agreements. Employers should remind employees of their existing contractual obligations – while employees should identify how they will be able to move on after separation, given the existing terms. Any clarification on the front end can avoid significant legal expense/stress down the road.
3. Consider a severance agreement. Severance agreements provide monetary compensation to an employee in exchange for a release of claims against an employer. I typically advise that employers at least review this option to limit their liability and assist the employee with next steps (which can go far in terms of business goodwill/how close-knit many industries are). On the employee side, I generally advise that a well-negotiated severance agreements can help bridge the gap if a relationship was not favorable or litigation is not preferred. The reality is that no severance agreement is perfect for either side. However, the document can provide finality and a valuable roadmap for the future of a relationship.

Feel free to reach out to me to discuss a termination issue that you might be confronting.