Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission ("EEOC") under the Trump Administration.
Terminating an employee is one of the most challenging aspects of operating a business. Because it is often unavoidable, it is imperative to understand how to handle the process effectively and reduce your legal risks.
Compliance With State and Federal Employment Laws
New York and New Jersey are both "at-will" employment states. This means that private sector employers can terminate an employee at any time, absent an employment contract that dictates otherwise. Different laws apply to union members, public workers, and civil servants.
While private employers can fire an employee for no reason, they can't do so for an illegal reason, such as:
Discrimination: Federal employment laws like the Civil Rights Act of 1964, Americans with Disabilities Act (ADA), and Age Discrimination in Employment Act (ADEA) prohibit termination based on protected characteristics. These characteristics include race, gender, age, disability, religion, or national origin. State laws like New Jersey Law Against Discrimination (NJLAD) and the New York State Human Rights Law (NYSHRL) provide broader protections. They include characteristics such as sexual orientation, perceived sexual orientation, and gender identity. Supreme Court Title VII implications for reverse discrimination cases continue to shape employment law practices.
Retaliation: It is unlawful for an employer to fire someone in retaliation for engaging in legally protected activities. This includes reporting unsafe workplace practices or filing discrimination complaints.
Whistleblower Protections: Federal and state employment laws also prohibit employers from terminating employees for participating in whistleblowing activities. Examples include reporting fraudulent or illegal conduct or becoming involved in a government investigation.
Public Policy Violations: States like New York and New Jersey also allow employees to bring wrongful termination claims if an employer fires an employee for a reason that goes against well-established public policy. Examples include firing an employee for filing a worker's compensation claim. Another example is terminating an employee for taking legally protected medical leave. Civil litigation processes become important when wrongful termination claims proceed to court.
Changes to the EEOC's Priorities Under the Trump Administration
In terminating employees, employers should be mindful of the EEOC priority shift under the Trump administration. Indeed, the EEOC's stance on workplace discrimination is a significant departure from prior support for affirmative action and DEI initiatives. The focus has shifted to a strict interpretation of anti-discrimination laws that rejects group-based remedies. It also curtails disparate impact claims and targets DEI programs as potentially unlawful, while maintaining the enforcement of core anti-discrimination statutes like Title VII for individual claims.
In other words, the "new" EEOC essentially rejects "reverse" discrimination claims. Instead, it holds that Title VII protections apply equally to all workers claiming that:
"The EEOC does not require a higher showing of proof for so-called 'reverse' discrimination claims. The EEOC's position is that there is no such thing as "reverse" discrimination; there is only discrimination. The EEOC applies the same standard of proof to all race discrimination claims, regardless of the victim's race."1
Best Practices for Employee Terminations
While employee terminations are a necessary part of every business, there are steps employers can take to reduce their liability risks. The first is to create, implement, and communicate formal disciplinary and termination policies. Such policies are often included in employee handbooks and outline (at minimum): performance and conduct expectations; steps in progressive discipline; and grounds for suspension or termination. Having clear guidelines in place sets expectations and reduces the risk of legal conflicts.
Relatedly, it is recommended to conduct internal audits of DEI policies and practices. This helps ensure compliance with federal anti-discrimination laws.
Documentation and Policy Enforcement
Focus on facts. Clearly explain the reason for the termination and provide written documentation. This is the best way to avoid a potential lawsuit, particularly when an employee is terminated due to misconduct or poor performance.
Enforce policies consistently. Treat employees the same and consistently enforce clear policies and procedures. No employee should be surprised by their dismissal. This can be accomplished by documented and well-communicated performance reviews and progressive discipline.
Legal Requirements and Obligations
Consider notification requirements. Many states, including New York and New Jersey, have laws in place that may be triggered by mass layoffs. The New York State Worker Adjustment and Retraining Notification (WARN) Act requires covered businesses to give employees at least 90 days of notice. This applies to plant closings, mass layoffs, or other covered reductions in work hours. If a business does not provide notice, it may be required to pay back wages and benefits to workers.
Review ongoing obligations. Determine if the employee has any continuing obligations, such as a non-competition or confidentiality agreement. Be sure to provide a copy of the agreement to the employee during the exit interview.
Conducting the Termination Meeting
Involve HR. Arrange for least one other member of management or human resources to attend the meeting as a witness. An HR member can also explain outstanding issues regarding final paychecks, severance payments, COBRA health insurance continuation, unemployment benefit eligibility, etc. How to conduct an effective internal business investigation can help HR departments handle employee issues before they escalate to termination.
Be respectful. Treat the employee with dignity and respect. If the employee becomes emotional or confrontational, try to defuse the situation. For employees located in a physical workplace, it is often best to conduct the exit interview in a private location. Schedule it at either the start or end of the workday. This will help alleviate the employee's potential embarrassment when later retrieving personal belongings from his or her office.
Offer a separation package. Companies that offer separation packages mitigate their risks. Separation packages also show that the company sympathizes with the employee's loss of employment and shows respect for the person's dignity.
Post-Termination Procedures
Have an exit strategy. Once the meeting ends, direct the employee to collect his or her personal belongings and immediately leave the premises. Depending on the circumstances, you may wish to walk the employee back to his or her office and supervise the process.
Secure company property. Prepare a list of all company property that should be returned upon termination. This includes keys, credit cards, software, laptop computers, cell phones, etc. Arrange for all of these items to be returned, including any items the employee may have at home.
Address remaining employees. Because staff reductions can hurt morale and increase anxiety, it is also important to consider how you will address the termination with your remaining staff members.
Consult With an Experienced Employment Attorney
Mishandling employee terminations can lower morale, damage a company's reputation, and lead to significant legal consequences. Consulting with experienced legal counsel before terminating an employee is essential. This is particularly important when protected characteristics, accommodation requests, or recent complaints may be involved.
The attorneys of Scarinci Hollenbeck's Labor & Employment Practice are skilled at defending against wrongful termination claims by demonstrating lawful and justifiable reasons for employment decisions. Our employment lawyers can also help you develop and implement effective practices to minimize the risk of such claims.
Footnote
1. U.S. Equal Emp. Opportunity Comm'n, What You Should Know about DEI-Related Discrimination at Work, EEOC, (2025) https://www.eeoc.gov/wysk/what-you-should-know-about-dei-related-discrimination-work [last visited July 15, 2025]
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
