From time to time nonprofits need to cut ties with an executive level employee. Although the hope is always that employees will keep the best interests of the organization in mind at all times, including at the point when they should resign, the reality is that sometimes an employee needs to be fired.
Employment law considerations are paramount in any decision-making process that leads to a termination. A first point to consider is whether the individual is at-will or has a contract with the organization. In California, an at-will employee can be fired without the employer providing a rationale, at least in theory. Terminating the employment of an at-will employee still needs to be done with consideration for laws protecting employees from discrimination and unfairness.
If the executive is working under an employment contract, the organization may need to follow additional protocols. A contract may specify that an executive may only be terminated for cause, and may list the circumstances that would qualify as “cause.” Assuming the contract was well drafted, it should provide the board with sufficient tools for terminating an executive who has done things that are unlawful, contrary to the mission of the organization, or harmful to its reputation.
Whether a termination will be for cause or can be done without cause, an organization should take care to develop a comprehensive, fair, and honest analysis of its rationale. The process should be conducted with the assumption that litigation may follow, even if the possibility of litigation seems remote.
Terminating a high-profile executive may create risks for a nonprofit beyond the employer-employee relationship. The organization must be prepared to address concerns among other staff members and volunteers who may be affected by the termination. It also needs a plan to address the termination with members of the organization’s broader constituency, including donors, partners, and beneficiaries, with whom the executive had regular contact.
The Church Law Center of California counsels religious and secular nonprofits on matters relating to governance, risk management, and compliance. If your organization has questions about how to manage a difficult employment situation, reach out to us today. Call us at (949) 689-0437 or use our contact page.