How to Legally Terminate an Employee

January 15, 2020
Posted in: Legal

Table of Contents


Firing an employee is stressful for all parties involved—not just for the employee who’s losing a job. No matter how well and often you communicate performance or conduct problems to an employee, there are times when this will all have been for naught (except for documentation purposes) and the termination process must be initiated. To avoid the hassle and expense of a wrongful termination lawsuit, this article will provide guidelines for staying within employment laws when termination becomes necessary.




Reasons to Fire Someone


There are many reasons that companies fire employees. But for most employers, it isn’t necessary to give a reason. Unless employees are protected by a bargaining agreement or employment contract, they’re likely at-will employees. Employment at-will means that employees can be fired at any time, for any reason, and without advance notice. 

Nevertheless, most employers don’t fire employees without cause. Most terminations are considered terminations for cause, which means the employee is being fired for a particular reason.  Below are some of the reasons that an employer may choose to terminate employment:


  • Behavior – Behavioral issues are a common reason for termination of employment. If you gave an employee time to correct bad behavior (and documented this) but the problem persisted or worsened, it’s time to let the employee go. If you allow the behavior to continue after the employee has been warned, it sets a bad example and damages morale. 
  • Performance – If an employee can’t meet the company’s performance standards after being given a chance to improve, termination is the logical next step. If concessions and guidance haven’t worked, this may be a sign that the employee isn’t suited for the position. If a suitable position isn’t available in the company, termination is likely necessary.
  • Bad attitude – Terminating for a bad attitude can be difficult to document and land you in legal hot water. In the case of an at-will employee, you’re not required to give a reason. On the other hand, if you’re terminating a non-at-will employee, you’ll need to document specific examples of the attitude problem before termination takes place.
  • Insubordination – If an employee refuses to perform the duties set forth in the job description, or refuses to follow your (or the manager’s) reasonable directive, termination for insubordination is warranted. If the employee is disrespectful to a direct manager, this is also grounds for dismissal. Document all instances of insubordination.
  • Sexual harassment – If you don’t take complaints of sexual harassment seriously, you could find yourself liable for creating a hostile work environment if the offended employee files a lawsuit.  If there is evidence that an employee has been harassing co-workers, make sure it is well-documented before termination. 
  • Attendance – If you’ve made the employee aware of the consequences of repeated tardiness or absenteeism, and he/she continues to violate the company attendance policy, firing may be necessary. Keep records of the attendance infractions.
  • Bullying – Bullying is a form of harassment in which an employee exhibits unwelcome, hostile behavior toward co-workers. Document all complaints and warn the bullying employee of the consequences should the behavior continue. If the employee doesn’t heed the warnings, this is cause for termination. 
  • Safety violations – If an employee blatantly violates the company’s safety rules and thereby places co-workers in danger, dismissal may be warranted. Before terminating an employee for safety violations, consult an attorney to ensure that your actions are legal. 
  • Damaging company property – If an employee damages company property, whether intentional or not, this may be cause for termination.  However, there may be other remedies for handling the matter such as restitution.
  • Drug or alcohol possession – Being intoxicated or taking drugs in the workplace can not only interfere with an employee’s job performance but can endanger co-workers if the employee handles heavy machinery or hazardous chemicals. Also, depending on the drug and the amount in the employee’s possession, it may be a felony.  
  • Using company property for personal business – Some companies don’t mind if an employee makes the occasional personal photocopy or sends the occasional personal email from the company computer. However, constant use of the company’s equipment for personal business isn’t acceptable at most companies. If your employee continually uses the company’s resources for personal reasons, carefully document this. Some employers monitor things like internet usage as documentation.
  • Theft – This is similar to using company property for personal business since the company’s resources can be depleted in both instances. This offense can include everything from stealing a box of pencils, a ream of paper, equipment, and money. Depending on the value of the stolen items, contacting law enforcement may be required as part of the disciplinary process.


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Things You Should Never Do 


For most employers, firing an employee isn’t the preferred course of action but sometimes it’s necessary. By using a supportive approach, however, you can make the experience more agreeable for all involved. The way that the termination is handled will matter to the departing employee and to remaining co-workers. 

While fair and respectful treatment of the employee is important, it’s also important to ensure that the company’s interests are protected.  Here are some things you should never do when you’ve come to the conclusion that an employee has to be let go.


Don’t Fire an Employee Electronically 

In our ever-increasingly litigious and social-media-dominated society, how you fire an employee is important. You should never fire an employee via an electronic method. This means no emails, voicemails, texts, or even phone calls. Although a mailed letter isn’t an electronic method, it’s still inappropriate.

When you decide to fire an employee, the best way to inform him/her is via a face-to-face meeting.  It shows that, although the employment arrangement didn’t work out, you still value and respect the employee as a person. It also speaks volumes for your level of professionalism.

If you fire the employee using any method other than a face-to-face meeting, you’ll create a workplace in which morale will suffer. Your remaining employees will fear they’ll receive the same poor treatment should you decide to terminate their employment. 

An electronic dismissal could also result in your company being bashed on social media and employer review sites like Glassdoor and Indeed. This could hinder your ability to secure top-notch talent.


Don’t Fire Without Warning

Unless the employee has committed a horrific act, immediate firing is never a good idea. If the reason for termination is performance-based, the employee should have received regular feedback and been given a chance to shape up before the decision to let him/her go was made. Being caught off guard will undoubtedly make the employee angry and possibly vindictive.  

If you feel the employee is able to improve, along with performance feedback provide assistance in the form of encouragement and support. Clearly list the measurable improvement requirements for the employee in a performance improvement plan (PIP).  This gives him/her a record of what’s expected and protects you, the employer, in the event a lawsuit over the termination is filed.

If you don’t feel confident that the employee’s performance can improve, the PIP will be futile. It will be a waste of company time and a source of frustration for the employee if, at progress meetings, there is no improvement to report.  If the employee’s performance was grossly inadequate such that termination was the only recourse, you will at least have documentation of the warning.


Don’t Go it Alone

To protect your company in the event of a wrongful termination lawsuit, include a second employee in the termination meeting. This second employee will not only act as a witness, but he/she can participate in the process by supporting you if you, or the hiring manager, get stuck and aren’t sure how to proceed.  

The most logical person to attend the meeting is a member of the Human Resources (HR) team. This employee is more experienced in terminations than you or the manager so they can ensure that all bases are covered and that the meeting moves along with minimal hitches.

The HR staff member can also ensure that the departing employee is handled with fairness and professionalism throughout the termination process. This will ultimately limit your liability.


Don’t Belabor the Point

If you regularly documented the employee’s poor performance and provided feedback and guidance, it isn’t necessary to stress the point in the termination meeting. It will only make the employee feel worse.

Some employees will still ask why they’re being let go. Before the meeting, prepare an answer that honestly and succinctly addresses your decision to terminate. Your answer shouldn’t place blame or strip the employee of his/her dignity. You could remind the employee that the performance issues were discussed previously and that, unfortunately, performance is still at a level that doesn’t meet the company’s standards for that position.

Wish the employee well in future employment and express confidence that they’ll find a position that’s a better fit for them. It’ll make the employee feel better if you name a couple of their talents/skills so that they leave your company feeling hopeful. Don’t, however, drag the conversation out.


Don’t Give the Impression That Your Decision Could Change

Even when you’ve provided feedback and reports showing poor performance, some employees won’t accept that the termination is deserved. Because of this, they’ll try to plead their case and get you to change your mind. Don’t allow employees to believe that your decision can be swayed.

If you’ve given the matter careful consideration and arrived at the decision to terminate, this needs to be clearly articulated to the employee. This is another situation where the second employee (i.e. HR team member) can support you in remaining steadfast and focused.

Do communicate with the employee in a kind and respectful manner but be straightforward and unyielding. Don’t give the employee any indication that there’s a chance for the termination decision to be reversed. At the outset, let the employee know the purpose of the meeting and that your decision is final. This will save the employee from wasting time on a last-ditch effort to remain with the company.


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Don’t Let the Employee Leave with Company Property

At the termination meeting, ask the employee to turn in keys, badge, access cards, and any company-owned equipment like a cell phone, laptop, or tablet. If any items are at the employee’s home, make arrangements for them to be returned promptly. If the items aren’t returned by the designated time, follow up with the employee immediately.


Don’t Allow the Employee to Go Back to the Work Area

It’s not uncommon for terminated employees to become visibly upset and sometimes cry. For the sake of morale and the employee’s privacy, don’t allow him/her to return to the work area after the termination meeting. Arrange for the employee to come in after work or on a weekend to retrieve personal belongings. It may even be better if belongings are boxed and delivered to the employee’s home. If the employee insists on retrieving personal belongings immediately, have him/her escorted to the work area and then to the parking lot. 

Also, by not letting the employee return to the work area alone after the termination meeting, you can remove company documents such as customer files from the area. You want to ensure that the employee doesn’t remove any company documents or supplies that the next employee will need.


Don’t Allow the Employee Access to Information Systems 

Right before the termination meeting, cut off the employee’s access to all electronic systems like email, intranet, company wiki, and customer contact networks. Arrange this with IT staff to make sure the employee isn’t able to access these systems.

Although terminated employees may use the systems to send goodbye messages to co-workers, clients, etc., some disgruntled employees may take the opportunity to express their displeasure over the termination by destroying files and computer systems.


Don’t Let the Employee Leave Without Encouragement

Firing someone is never easy, but it’s often necessary. The purpose of the termination meeting is not to deride the employee, but to help him/her quickly move on to more suitable employment. Although the employee doesn’t want to lose a paycheck, in the long run, his/her best interest isn’t served by remaining in a position that’s not a skill set match. 

If you feel that losing the current job will cause the employee immediate financial hardship (especially in the case of a single parent), let him/her know if you allow terminated employees to collect unemployment.  In addition to mentioning a couple of the employee’s talents/skills, suggest the type of job that might better match his/her skills. 

You don’t need to turn the meeting into a career counseling session but do send the employee out the door with encouraging words. They’ll likely feel sad anyway but your words may help them regroup after the emotional phase has passed. 


Don’t Conduct the Termination Meeting Without a Checklist 

The employee termination checklist can help you organize the information you want to present at the termination meeting. It will ensure that you cover all of the necessary points should you get stressed or emotional (it can happen).

The employee termination checklist guides you through the process of not only informing the employee about the termination but what he/she can expect from your company as a result. It also serves as proof of what was discussed during the meeting so that the company’s interests are protected.




Can a Fired Employee Collect Unemployment?


To collect unemployment benefits, an employee must be out of work due to no fault of their own. Employees who are let go for economic reasons (i.e. plant closing or general lack of work) are eligible for unemployment benefits. Employees who are fired aren’t always eligible. It depends on the reasons for being fired.  

State law mandates whether a fired employee can collect unemployment. Generally, an employee who is fired for egregious conduct is ineligible for benefits, either entirely or for a certain period of time (the “disqualification period”). However, the definition of egregious conduct varies from state to state.

In many states, to be considered ineligible for unemployment benefits, an employee’s conduct has to be considerably poor. If an employee is fired because their skill set isn’t a good match for the job and the employee fails to perform up to company standards, he/she will likely be able to collect unemployment. An employee who intentionally behaves in a manner that goes against the employer’s standards will likely be ineligible for unemployment benefits.

Here are some of the reasons an employee might be ineligible to collect unemployment benefits:


  • Failing a drug or alcohol test – In many states, an employee terminated due to failing a drug or alcohol test is not eligible for unemployment benefits. Refusing to test would also disqualify the employee for benefits.
  • Theft – An employee who is fired due to theft of company or co-worker property is likely ineligible for unemployment.   
  • Committing a crime – If an employee is fired for committing a crime while on the job (i.e. attacking a coworker, driving under the influence while conducting company business, or destroying company property), the employee will most likely be disqualified from receiving benefits.   
  • Safety rule violation – An employee who unintentionally makes a careless mistake may be eligible for benefits but an employee who willfully disregards the company’s safety rules will likely be disqualified from collecting benefits.    


Avoid a Wrongful Termination Lawsuit


There’s not much you can do about an employee’s emotional reaction to being fired. You can, however, take steps to ensure that the employee doesn’t file a lawsuit for wrongful termination. By being proactive and communicating your expectations – orally and in writing at the start of the employment relationship, you can effectively prevent lawsuits and claims of employment bias. 

Other steps you can take to reduce wrongful termination lawsuits:


Management/Leadership Training

When new managers and supervisors join the company, ensure they receive adequate training in fair employment practices and company policies. This training should include federal and state employment laws, how to handle performance-related issues, and company procedures for handling terminations. The importance of enforcing and documenting workplace policies, disciplinary action and performance evaluations should also be included in the training. Refresher training for managers and one-on-one coaching and support should also be offered. Interactive training that focuses on learning through experience and observation is an effective method of training.  


Employee Training

During new-employee orientation, a comprehensive review of the employee handbook and company policies should take place. Most wrongful termination lawsuits can be prevented if company policies and expectations for job performance and workplace conduct are clearly communicated at the start of employment.  For instance, if company policy states that termination is warranted after four absences in a two-month period and this is communicated to an employee and reinforced by the supervisor/manager, the employee can’t reasonably argue that the termination was wrongful if the policy was violated.


Required Acknowledgment of Company Policies 

Every employee, regardless of position, should sign acknowledgment forms to confirm that they received and understand the company policies or employee handbook. If changes are made to company policies, employees should have to, again, sign acknowledgments to indicate that they received the changes and clearly understand them.

Employees should always receive a copy of the signed acknowledgment form and the original should be placed in the employee’s HR file. 


Termination Process

There should be a process in place for handling terminations. In most companies, a supervisor notifies HR about an issue or behavior that may warrant disciplinary action or termination. HR then reviews the employee’s file and the information provided by the supervisor. The supervisor is generally asked for additional information and the circumstances of possible termination.  The HR staff member may override the supervisor’s decision to terminate the employee. HR is responsible for mitigating the company’s risk of liability for wrongful termination lawsuits so may feel there isn’t sufficient cause or documentation to warrant disciplinary action or termination.


Management Review

If a particular member of the management team is repeatedly involved in wrongful termination lawsuits against your company, this needs to be addressed. Management review is necessary to determine if the manager is upholding your company philosophy and properly enforcing company policies. Additional training or guidance may effectively address the matter but if there is evidence of bias or other inappropriate behavior, termination of the manager may be the best way to protect your company from future lawsuits.


Ask Employee to Sign a Release 

If you’re still concerned about facing a wrongful termination lawsuit, you can ask the employee to sign a release, or contract, in which the right to sue is waived by the employee.  Some employers customarily ask employees to sign a release as a condition of receiving a severance package. Other employers may only ask those employees who appear to have a legitimate basis for filing a lawsuit or who they feel are highly likely to sue.

The information that must be included in the release varies by state so it’s best to consult an attorney for guidance in creating the document in a way that best meets your needs. As you’re preparing to create the document, consider the following:


  • Give the employee something in exchange for signing the release – You’re asking the employee to forego the right to sue you so you’ll be expected to give something in return. If you generally offer severance packages to employees who aren’t asked to sign a release, you’ll have to offer an extra benefit to those employees who do sign. The release should clearly state what will be provided (often a specific amount of money).
  • The release should clearly specify the rights the employee is waiving – Make sure the release is specific enough to prevent the employee from later claiming that what the release covered wasn’t understood.  You could state that the employee is waiving any right to sue you for any reason stemming from the employment relationship.
  • Give the employee ample time to decide whether to signIt’s not unreasonable for an employee to need a couple of weeks to decide whether to waive the right to sue your company. The employee may need time to consult an attorney to ensure that his/her interests are protected.
  • Avoid any semblance of coercion – The employee’s decision to sign a release has to be voluntary or the release can’t be legally enforced. Don’t use threatening language or tone to get an employee to sign. This action will be counterproductive.
  • Special rules apply to 40+ employeesFor employees who are 40 years of age or older, the federal Older Workers Benefits Protection Act (OWBPA) dictates what must be included in a release. For example, these employees must be given a longer period of time to review the release before signing. You must also allow them to change their minds for a limited time after signing and advise them, in writing, to consult an attorney.




Illegal Reasons for Termination


Because most employees in the U.S. work at-will, they can be fired at any time and for any reason, unless that reason is illegal. State and federal employment laws prohibit employers from firing employees for discriminatory or retaliatory reasons. These prohibitions apply for both at-will employees and those who have an employment contract with the company.

Below are the most common illegal reasons for firing employees: 



According to federal law, it’s illegal for most employers to fire an employee based on race, gender, national origin, disability, religion, age, pregnancy status, and sexual orientation. Federal law also prohibits most employers from firing an employee because of a medical condition related to pregnancy or childbirth.

Most states also have anti-discrimination laws that prohibit firing for all of the reasons listed under federal law. Many state laws include additional prohibitions such as discrimination on the basis of marital status, and they cover a wider range of employers than federal law. 



It’s illegal for employers to fire employees for standing up for their rights under federal and state anti-discrimination laws. If the original discrimination claim doesn’t hold up, an employee can still file a retaliation claim. For example, if you fire an employee for claiming that they were passed over for a promotion based on sexual orientation, you could lose a retaliation lawsuit even if a judge or jury decided that your promotion decision wasn’t discriminatory.


Refusal to Take a Lie Detector Test

Per the federal Employee Polygraph Protection Act, most employers are prohibited from firing employees for refusing to agree to a lie detector test. Many state laws also prohibit termination for refusing to take a lie detector test. 


Alien Status

The federal Immigration Reform and Control Act (IRCA) prohibits most employers from terminating an employee on the basis of alien status, as long as the employee is legally eligible to work in the United States.


Complaints about OSHA Violations

The federal Occupational Safety and Health Act (OSHA) makes it illegal for employers to fire employees for complaining about work conditions that don’t meet state or federal health and safety standards.


Violation of Public Policy

Most states prohibit employers from firing an employee for reasons that would be considered by most to be morally or ethically corrupt. Because morals and ethics are relative concepts, laws governing this prohibition vary from state to state. However, most states find that the following reasons for termination violate public policy and are therefore illegal:

  • Employee refuses to commit an illegal act (i.e. employee refuses to lie to government agencies or falsify legal documents). 
  • Employee complains about the employer’s illegal conduct (i.e. employer fails to pay minimum wage).
  • Employee exercises his/her legal right (i.e. employee exercises the right to vote or take family leave). 


Final Thoughts – How to Legally Terminate an Employee


Even if you follow the guidelines in this article, terminating an employee won’t be easy or enjoyable. However, if an employee acts in a manner that places the company and coworkers in peril, it’s something that has to be done. As an employer, you’re still expected to handle the termination with professionalism and empathy. By doing so you’ll not only avoid negative reviews on social media and employer review sites, but you could avoid a wrongful termination lawsuit. 


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