What counts as cause for termination?

It’s never an enjoyable experience to fire an employee, but it’s important to know how to do it right to protect your business. That includes learning about “cause for termination,” or “termination for cause.”

In most states, employment law dictates that employees work “at-will” and can be fired for any reason that does not violate state or federal law. But at-will employment doesn’t mean you can do whatever you want. 

There are many reasons you might fire someone, including business considerations like layoffs or downsizing, or performance issues. In these cases, your employee can apply for unemployment. You also would likely not have to worry about a wrongful termination lawsuit. 

However, you may have an employee who is part of a union. If so, they would likely have a contract preventing you from legally firing them without proving cause for termination. This means your team member’s behavior is so detrimental to your business that you can no longer keep them employed. 

Furthermore, if you fire someone for cause and the state unemployment commission accepts the evidence, you won’t be on the hook for their unemployment benefits. 

So what counts as termination for cause? It depends on where you live, but the rules tend to be pretty universal. 

What is termination for cause? 

If you fire an employee for cause, it’s because their workplace behavior causes such a concern that the employment relationship needs to be terminated, in some cases, immediately. This type of behavior is known as “gross misconduct” and is defined differently depending on what state you operate in. 

However, the federal Department of Labor defines gross misconduct as “an intentional or controllable act or failure to take action, which shows a deliberate disregard of the employer’s interests.”

Employees can portray this intolerable behavior through actions in the workplace, interactions with colleagues or managers, or even how they treat customers. 

What counts as termination for cause? 

While different states have different definitions of “gross misconduct,” there are many similarities from state to state. When terminating an employee, you can prove termination for cause in most states under circumstances including: 

  • Drugs and alcohol: Showing up to work intoxicated or failing a required drug and alcohol test
  • Criminal behavior: Engaging in criminal behavior relating to the job, including assaulting a colleague, driving under the influence of drugs and alcohol, etc. 
  • Theft: Stealing trade secrets, funds, or other company property, or stealing from colleagues
  • Safety violations: Intentionally violating safety rules 
  • Excessive absences: Repeatedly failing to show up for work without an excuse 
  • Policy violations: Intentionally violating the business’s code of conduct or ethics 

This is not an exhaustive list of reasons you can fire someone for cause. As long as you can prove that you needed to terminate the employment agreement because the team member’s behavior was detrimental to your business, you’ll most likely have a good case. 

Make sure you document the termination process well, including evidence of the misconduct. Write a letter of termination listing the behavior and reason for firing, and save a copy for your records.

Termination for cause and union contracts 

There are several types of employee contracts that prevent you from legally terminating them without cause for termination. 

You may encounter a collective bargaining agreement (CBA), which is a contract that a union and employer negotiate regarding wages, hours, and terms and conditions of employment. These contracts typically include a clause that says you can only fire them for cause.

If there is a cause for termination in play, document the evidence and reason for termination. This will protect you from any wrongful termination lawsuits that could arise from firing the union member. 

How termination for cause impacts unemployment benefits

If you lay off an employee, they are always eligible to file an unemployment claim and receive the benefits. They can also receive benefits if you got rid of the position or deemed them unfit for the job. 

However, if the government determines they were fired for cause, their claim will be rejected. As a result, your insurance rate will not increase. 

The state unemployment commission will notify you when an employee files a claim. They will request details from you about the employee to determine benefit eligibility in a separation report. 

If you have cause for termination and believe the employee should not receive the benefits, request a hearing. This is where your documented evidence comes in—if you have a strong case backed with evidence of gross misconduct, you’ll likely win. 

Again, be sure to check with your state’s unemployment benefits office to learn more about what is specifically considered gross misconduct in your area. And if you have any questions, it’s best to contact an employment lawyer. 

Have more questions about terminations?

Homebase can also help. With HR Pro you’ll get access to certified HR experts who can answer any questions about specific employee situations, review your existing termination policies, and even help you create new ones. 


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