At a glance: employment termination in the U.S.

Excerpted from a Morgan Lewis & Bockius LLP blog by David McManus, Michelle Silverman and Thomas Hurka

Grounds for termination
May an employer dismiss an employee for any reason or must there be ‘cause’? How is cause defined under the applicable statute or regulation?
Unless the employer contractually agrees otherwise (either in an individual employment or a collectively bargained agreement), most employment in the United States is ‘at will’, meaning that it is not for any specific period of time, and the employer and employee each have the legal right to terminate the employment relationship at any time, with or without advance notice or procedures and with or without any particular cause or reason. However, employers cannot terminate even at-will employees for a reason that is unlawful under federal, state or local law. The state of Montana does not recognize at-will employment after a six-month, or otherwise agreed to, probationary period. In that state, after the probationary period has elapsed, an employer may only terminate an employee for ‘good cause’, which is defined as ‘reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of operations, or other legitimate business reason’.

Notice
Must notice of termination be given prior to dismissal? May an employer provide pay in lieu of notice?
Advance notice of dismissal or pay in lieu of such notice is not required by any federal, state or local law, unless the termination of employment is owing to a mass lay-off or plant closing as those terms are specifically defined under the Worker Adjustment and Retraining Notification Act (the WARN Act) or any counterpart state law applicable to the employer. However, an employer may contractually agree to provide employees with advance notice of dismissal or pay in lieu of advance notice.

In which circumstances may an employer dismiss an employee without notice or payment in lieu of notice?
Unless the employer has contractually agreed to provide its employees with advance notice of dismissal or pay in lieu of advance notice (either in an individual employment or a collectively bargained agreement), or the termination of employment is owing to a mass lay-off or a plant closing under the WARN Act or any applicable state law counterpart, advance notice or pay in lieu of such notice is not required.

Severance pay
Is there any legislation establishing the right to severance pay upon termination of employment? How is severance pay calculated?
No federal, state or local law establishes a right to severance pay upon termination of employment. Whether to provide severance pay and, if so, in what form or amount, are determinations made by the employer, or these may be required in an individual employment or a collectively bargained agreement.

Procedure
Are there any procedural requirements for dismissing an employee?
No, unless the employer has contractually agreed to such procedures in an individual employment or a collectively bargained agreement. Many states require, however, that terminated employees be provided information relating to their medical insurance benefits and eligibility for unemployment compensation insurance benefits.

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