Mountain Views News          Saturday, August 18, 2012

14

BUSINESS NEWS & TRENDS

 Mountain Views News Saturday August 18, 2012 


Legal Insights by Noah Green1

1 Noah Green lives in Sierra Madre and works as an attorney handling business litigation at the Ryan Law Firm in 
Pasadena, CA. He can be reached by e-mail at ngreen@ryanattorneys.com, or by telephone at (626) 568-8808.


TERMINATION PITFALLS

Terminating employees is one of the most unpleasant aspects of a business 
owner or manager’s job duties, but sometimes it is absolutely necessary 
in order to continue the business of the employer. But if terminating an 
employee is necessary, then it should be performed in the most ethical, 
and professional manner possible. Following the proper protocol in 
conducting the termination softens the blow to the terminated employee 
( who is very often surprised that they are being terminated); protects 
the business from potential litigation arising from the termination; and 
reassures the owner or manager that they did the right thing. Whether the 
terminated employee was a good worker or a bad worker is irrelevant. The 
decision to terminate an employee, once made, sets in motion a number of duties to the employer to 
handle the termination in a professional manner preserving the dignity of the terminated employee 
and protecting the employer’s interests as the employer does not want to see an angry former employee 
down the road in court. 

Employers faced with the unpleasant task of having to lay off an employee must use great care when 
doing so to avoid breaking the law. Similarly, when workers learn the unpleasant truth that they have 
been or are about to be terminated, they should be aware of their rights. 

Below is a short primer on the usual issues, both legal and professional, that arise under California 
law surrounding the termination of an employee. This article collects some of the information and 
observations we have gathered over the years and which we use to assist our clients as they navigate 
their way through this difficult area. 

Should You Terminate? 

 There are a wide variety of reasons why employers would terminate an employee. As long as 
those reasons are not impermissible in accordance with California and Federal law, then the question 
of whether or not to terminate an employee is dependent on the facts and circumstances of each case 
and the business judgment of the employer. 

Once it has been decided that it is in the company’s best interest to terminate an employee, certain 
practical business issues must be confronted along with the legal issues discussed later in this article. 
In the short term, the employer must decide how to distribute the terminated employee(s) existing 
projects and re-assign their job duties to other workers. 

In the long term, the company will need to continue producing goods or services once the employee 
is gone, but, at least in the short term, will have fewer human resources available to produce those 
goods and/or services. A heavier burden will fall on the remaining workforce and they will be 
expected to increase their productivity. The company must anticipate how these additional stresses 
on the workforce, the company’s finances, and public image will be addressed prior to implementing 
the termination. Like all business decisions, terminations must be thought through and properly 
planned out before being set in motion. 

A “Termination Risk Analysis” can help you make the “go/no go” decision to terminate an employee. 

Termination Risk Analysis

The decision to terminate an employee can raise many legal issues. The following checklist is designed 
to help you determine whether the termination is likely to lead to litigation. While there is no way 
to guarantee an employee won’t sue, using this risk analysis can alert you to potential legal problems. 
These problems could then be discussed with legal counsel before terminating the employee if you 
feel uncertain.

Step 1: Consider Your Company Policies and Documents 

 Review your Employee Handbook for policies which may limit your right to terminate, such as: 

 • Employment at-will policies 

 • Progressive discipline policies 

 • Internal dispute resolution or arbitration policies 

 • Termination policies requiring “just cause” 

 Is there a written employment contract? If so, what limits does it place on your the right to terminate 
the employee? 

 If you have an established system/policy of progressive discipline (i.e., written warnings prior to 
termination), was the system followed in this case? 

 • If so, was the process of progressive discipline well documented? Documentation of 
the progressive discipline is important evidence should a legal claim arise. 

 • If not, can you show a valid reason for your failure to follow your own policy? For 
example, an employer might terminate a violent employee without warnings in order to protect other 
employees from harm. 

 If you have an internal dispute resolution system, was the employee given a fair chance to resolve 
problems under that internal system? 

 Do you have an established policy of giving a certain period of notice before terminating an 
employee? This policy may be in writing (i.e., Employee Handbook) or may simply be an unwritten 
policy that you have established by having given employees notice in the past. 

Step 2: Consider Oral or Implied Contracts of Employment Will this termination breach an oral 
contract of employment? 

 An oral contract may have been created if the employee was told her job was secure, or that she 
would always have a job if she did a good job, or some other similar guarantee of employment. 

An oral contract can be created by anyone in the company with authority over the employee. This 
means that the company may be held to a supervisor’s promise to an employee of secure employment, 
even if the supervisor did not have the company’s authorization to make such a promise. 

 Will this termination breach an implied contract of employment? An implied contract of employment 
may have been created by a combination of these factors: 

 Long-term employment (although there is no specific number of years considered “long term,” many 
attorneys use five years as a guideline) 

Promotions 

Commendations 

Lack of criticism of the employee’s performance 

Other indicators of job security 

Step 3: Consider State/Federal Laws Protecting Employees 

Americans with Disabilities Act 

Is the employee physically or mentally disabled? If so, were attempts made to reasonably accommodate 
the employee’s disability? Were reasonable accommodation measures well documented? 

Title VII / California’s Fair Employment and Housing Act 

Is the employee being treated in the same manner as other employees in similar situations? 

Is the employee being terminated for an improper reason such as race, gender, religion, sexual 
preference, or national origin?

 Have other employees been given more chances before being terminated for the same or similar 
reasons as this employee? If so, are there legitimate, non-discriminatory reasons for treating this 
employee differently than other employees? 

Pregnancy Is the employee pregnant? 

 If so, Eemployees are entitled to four months off for pregnancy-related disabilities. 

Workers’ Compensation

Has the employee filed a workers’ compensation claim? Terminating an employee who has filed a 
claim, or intends to file a claim, or has testified in a worker’s compensation hearing could be considered 
workers’ compensation discrimination. 

Retaliation

 Has the employee reported any illegal activity of the company to a state or federal government 
agency? Even if the company is not in fact acting illegally, the termination could be seen as retaliation 
for “whistle-blowing.” 

 Once the employer determines that they can proceed with the termination, the question becomes 
how to do so properly. Below are a few suggestions for how to make sure the terminated employee is 
receiving everything they are entitled to under the law while still protecting the company’s legitimate 
interests.

 Has the employee participated in any official investigation of the employer (i.e., wage or safety 
violation) or testified against the employer in an unemployment insurance or other hearing? 

 Is the termination in retaliation for the employee’s exercise of protected personal rights, such as 
freedom of speech or political activity? 

Step 4: Review the employee’s personnel file

 • Is there sufficient documentation in the file to substantiate your reasons for 
termination? Examples include written warnings, performance reviews and attendance records. 

 • Is there anything in the file that might be evidence of an illegal termination? For 
example, a supervisor may have written a warning notice to the employee that her pregnancy was 
causing her to be absent too often. Legal counsel should be consulted if there are concerns. 

 Review personnel files for other employees who have similar problems. This comparison can 
point out potential discrimination issues. For example, could a female employee being terminated 
for attendance problems show that a male employee had the same number of absences but was not 
terminated? 

Step 5: Consider the Employee’s Eligibility for Unemployment Insurance 

A terminated employee may be eligible for unemployment insurance unless the termination is for 
refusal to perform suitable work or for misconduct. Mere inability to perform the duties of the job is 
not considered misconduct. 

 The cost to your unemployment insurance reserve account may be far greater than the cost of 
providing the employee with necessary training or performance counseling. 

Step 6: Consider Legal Ramifications of Not Terminating the Employee

Failing to terminate an employee who has been violent or threatened violence could result in harm to 
other employees and lead to employer liability. 

Termination of an employee who has sexually harassed other employees may be necessary to fulfill an 
employer’s legal obligations under sexual harassment laws.


FEED YOUR WEBSITE WITH 

SOCIAL MEDIA

Facebook and Twitter both have plug-ins that allow you to display your most recent posts on your 
web site. It’s an easy and affordable way to update your web site with announcements and current 
information. Every time you make a post, say on Facebook, it will also show up on your web site.

Here’s how you can add a feed to your web site:

• Create space on your web site for the feed (usually in a right or left column). You can put it 
on several pages of your site depending on where you drive the traffic.


• To plug-in a Twitter feed, go to http://twitter.com/about/resources/widgets. Select “Profile 
Widget.” Type in your Twitter handle, customize the size and look. Select “finish and grab code,” 
and it will generate html code you plug into your web site (or give to your web master).


• To plug in a Facebook feed, use the “Like Box located at http://developers.facebook.com/
docs/plugins. Make sure to type in the name of your Facebook page for the Page URL. Customize the 
settings, then select “get code” and plug it into your web site (or give to your web master). 


About MJ: MJ and her brother David own HUTdogs, a creative services business that specializes in Social 
Media Education for business owners. Join their conversation on Facebook and get good tips and tricks 
about social media, www.facebook.com/hutdogs 

Sign up for their upcoming classes and presentations at: www.hutdogs.com/workshops/schedule 


OMG! OH MY GOSH DID YOU 
KNOW…………….. By Patricia Richardson, M.B.A


I bring to my business a long history working with computerized accounting 
software. Many of my clients do too. We have spent years closing year-ends; 
that is why I often get asked the question, “Do we need to close the books”? 
Well, yes we need to close the books but what they are really asking is, “Do 
we have to do something special to our database?” - think Peachtree software. 
QuickBooks is set up in such a fashion that users can password protect prior 
years. There is nothing worse than returning to a client’s office after income taxes have been filed to 
find that someone has deleted or changed data from a prior year. In order to ensure that that does not 
happen, I usually password-protect the prior year’s data. 

This brings us to the question of Condensing Data, which is different than password-protecting 
data because it actual changes the structure of the data. This feature, formerly known as Clean Up 
Data, now features improved inventory condense, more options to remove non-posting transactions, 
and accountant-only (in QuickBooks Accountant and QuickBooks Enterprise Accountant versions) 
condense options such as single summary entry, clean break (remove all transactions before a specific 
date so that you can start over as of a specific date – a huge time saver), and period copy (These 
accountant-only functions will be covered in another article). You can now condense your company 
file to get rid of unnecessary detail. You can:

• Remove transaction detail before a certain date. This option decreases the file size and 
improves performance if you have a large company file. 
• Remove all transactions. You can select this option to start over without losing your lists, 
preferences, and service subscriptions. 
• Remove all transactions to create a period copy that only includes transactions within a 
specified date range (QuickBooks Accountant only). This option creates a file you can send to third 
parties who don’t need to see transactions before or after the selected period. 


I had never realized the time saving and space saving benefits of being able to condense a file. Prior to 
this new feature, I have always thought that being able to go back and look at individual transactions 
if necessary was a great idea. Today however, I have a database that goes back to the 1980’s and while 
it is nice to see what happened in the past, this new feature will create an archive copy of the original 
file before condensing the database. This way, you will be able to access the details of transactions in 
the file(s) in the future. To do this, select File > Utilities > Condense Data and follow the prompts. 

The user will receive a prompt to run a Clean up Attachment Links utility for any attachments that 
were linked to the condensed transactions. The user will receive confirmation of any links that were 
cleaned up.

How does this improve your efficiency? This feature is great because it allows the user to have control 
over just how much of the data file to extract upon condensing. Users, preferences, reports, templates, 
lists, etc. are retained from the original data file. Unreconciled bank and credit card transactions 
can be kept while having one summary entry for all prior transactions (two of the options of the 
Condense feature) so that these accounts remain ready to reconcile. I cannot wait to give this a try 
today. I am going to condense everything in my current database for the 1980’s and 1990’s. Moving 
forward, I’ll complete work using the condensed file, with the assurance that I can access all details 
from prior periods quickly and easily.

Patricia Richardson the owner of Monrovia Computerized Business Service and is a local accountant, 
educator and trainer working to help business owners realize their business mission and vision 
by empowering them with tools and training in areas that may not be their core competency. For 
additional information, patti@qbworkshop.com or www.QBworkShop.com

GET THEM TO THE POLLS ON TIME

September 6, 2012

The League of Women Voters stands on voter education and voter participation as cornerstones 
of democracy. Current action on those two fronts – youths’ civics education and 
battles against voter suppression – will be the topics of a midday forum on Thursday, Sept. 6 
at the Women’s City Club, 160 N. Oakland Ave., Pasadena. 

At 11 a.m. Michael Croddy, a national leader in civics and law-related education, will describe 
the status and trends of youth civics education and engagement. Croddy is vice-
president of the Constitutional Rights 

Foundation, sponsors of Mock Trial and other highly respected programs. 

At 12:30, the topic will be voter suppression -- updates on the battles across the country to 
preserve voters’ rights and the status of a lawsuit in California regarding voting rights of 
former felons. The speaker will be Michelle White, an attorney who also is president-elect of 
the local League and former president of the local American Civil Liberties Union. 

Part of Lunch with the League at the Women’s City Club, the forum itself is free and open 
to the public. 

Registration is at 10:30 a.m. Lunch is $20, including tax, tip and parking. Lunch reservations 
and information are available by calling 626-798-0965. Walk-ins for the free program are 
welcome.