Key takeaways

  • At-will employment provides flexibility but there are still limitations on when and how to terminate an employee.
  • Documenting performance issues is key to avoiding and defending wrongful termination claims.
  • Firing in the heat of the moment is a mistake as is failing to show empathy and humanity.
  • Sep. 12, 2024: Bryan Driscoll added a list of things to avoid during a termination and explained how to handle terminations with empathy and humanity. He also added personal stories and anecdotes from his personal experience helping companies deal with terminations.
  • Jan. 30, 2023: Jessica Dennis published the original version of this article.

As a non-practicing lawyer and HR consultant, I’ve guided numerous businesses through complex employment matters while ensuring they stay compliant. I bring practical, up-to-date knowledge to help you navigate the tricky process of terminating an employee.

How to fire an employee legally

Unlike many European nations, private employers in the U.S. (excluding Montana) are considered “at will.” Even though employment in the U.S. is predominantly “at will,” this doesn’t mean you can (or should) fire an employee for no reason. For example, you cannot fire employees for illegal reasons, such as discrimination or whistleblowing. Moreover, releases without rhyme or reason can negatively affect remaining employees’ morale, leading to reduced productivity, increased requests for time off, or fear of decreased job security. 

Familiarize yourself with the steps below so you can reduce the dread associated with employee terminations and streamline the process for managers across your organization.

Also read: HR’s Role in Change Management

Although at-will employers do not need policies that outline termination procedures like employee handbooks, they are not excused from adhering to applicable federal, state, and local laws. Termination policies are great ways to demonstrate that you are trying to follow these laws. Moreover, they serve as a guidebook for current and incoming employees about company expectations and appropriate conduct in the workplace. 

A good termination procedure is a combination of several different policies, including:

  • Employee codes of conduct.
  • Work rules.
  • Lists of fireable offenses.
  • Progressive discipline steps.
  • Incident investigation procedures.
  • Exit interviews.
  • Benefit termination steps.

Your termination poilcy should also identify who is responsible for handling the employee termination, such as a direct manager, a member of HR, or both. If you don’t have a dedicated HR team, take advantage of your Employment Practices Liability Insurance (EPLI) hotline if available, or contact an employment law attorney to verify that your termination procedure is legally sound.

Don’t forget to review termination precedents

While including policies in the employee handbook is essential, you should also investigate whether any precedents were set during previous terminations and add them as needed. For example, suppose a restaurant granted prior employees at least one week following their last day of employment to turn in their company uniform. In that case, the HR team should include this rule somewhere in their termination procedures or acknowledge a policy change if needed. Doing so creates consistency for future employee terminations and minimizes the risk of discriminatory practices.

2. Communicate with the employee beforehand

Unless an employee commits a serious or inexcusable offense that warrants immediate dismissal, such as sexual harassment, violence, or other illegal activity, employees should not be surprised their jobs are in jeopardy. However, remaining silent and hoping an employee will magically improve is not the answer — until the employee is put “on notice,” they may be unaware their performance is suffering and take no measures to change.

Before deciding to terminate someone, it’s crucial to ask yourself if the company has done everything it can to support that employee’s success. Whether seasoned veterans or fresh faces, employees need and deserve clear guidance, regular feedback, and the resources to improve.

I firmly believe termination should be a last resort only after you’ve exhausted efforts to help the employee succeed. I once worked with a small business owner who really struggled giving tough feedback. They kept hoping the employee would turn things around on their own, but that didn’t happen. By the time they decided to fire the person, it was a much bigger, messier situation than it had to be.

If you’re upfront with someone early on, you can sometimes avoid that awkward, painful termination process later. Of course, there are exceptions, like cases of severe misconduct or a true lack of applicable skills, but most of the time, it’s a matter of putting in the effort to ensure the employee has received the right tools and support.

Communication with employees can take many different forms, including: 

What’s important is sitting down with poor performers and providing ample performance-based metrics and other documentation that shows where they need improvement. Moreover, managers should document these conversations and have employees sign off on the documentation. In some cases, this documentation could be the evidence you need to prove you did not fire an employee for an illegal reason in wrongful termination suits.

Some employers like Ford Motor Co. have taken unconventional measures, such as offering severance agreements to underperformers in place of rigorous performance enhancement plans that may lead to traditional discharges. This gives underperforming employees a chance to leave with a monetary incentive instead of risking future financial loss if their performance does not improve. Whatever you decide, communicating with employees about their performance and documenting those conversations should come before the termination conversation as often as possible.

Termination is an unavoidable part of managing a workplace. But if you want to learn ways to keep employee satisfaction high, read our top employee retention strategies.

3. Prepare before the termination meeting

It’s time to start preparing for the discharge conversation if there is no improvement in an employee’s performance or behavior after a set number of conversations, performance reviews, and written warnings. You should start gathering the following offboarding documentation for the meeting: 

  • Documentation of past conversations.
  • Disciplinary warnings.
  • Termination form.
  • Termination of benefits information (COBRA).
  • Last paycheck (if applicable).

While at-will employers are not required to have written warnings or other documentation before firing an employee, it can help organize the termination conversation and serve as evidence in the event of a lawsuit.

Direct managers should recruit a reliable witness, such as someone from HR or another higher-up, and prepare a script outlining the important aspects of the termination conversation ahead of time. A witness serves as a way to substantiate the events of the termination conversation in case of a lawsuit. Meanwhile, writing a script allows you to make sure the termination decision aligns with company policies and that management followed progressive discipline steps appropriately.

Planning the date and time when to have the conversation is just as critical. For example, some employers have termination meetings on Fridays, so employees have the weekend to recover; others choose Mondays or Tuesdays, so employees have the week to find new positions. The best solution balances the employee’s particular circumstance with the schedule of the manager hosting the termination meeting.

In contrast, you should avoid holding the termination conversation as an impromptu meeting at the end of the day. A neutral, discreet area increases the chances of privacy for the employee to be emotional. It also mitigates the chances that an employee can take any adverse action against the company, such as stealing clients or causing property damage.

Remember: Clear is kind

I had a client once who thought they could just wing it in the termination meeting. Unsurprisingly, they ended up flustered and unsure of what to say. The conversation dragged on, making the whole experience more painful for everyone. After hearing that, I always tell clients that, even if it feels uncomfortable, write down what you need to say beforehand. It keeps things clear and helps you stay calm in the moment.

4. Make sure risk management protocols are in place

You should plan to secure company property and information following an employee’s termination. Allow them to turn in company property, such as IDs, keys, uniforms, or computers, within a timeframe outlined in your policy guidebook. Administrators or IT should immediately remove the employee’s access to e-mails, applications, or other company programs. If the employee works remotely, you should consider providing pre-paid shipping labels and extra time for them to return their company-issued items. 

If the employee does not return company property, there is little you can do to retrieve it — it’s illegal to withhold final paychecks from employees until they return the company property. However, deducting the cost of company property from the employee’s final pay is permissible in some states if the employee is non-exempt from overtime. 

In most cases, you need a signed company property deduction authorization from the employee before withholding any money from their last check. The deduction should not bring the employee’s last paycheck below minimum wage. Because of conflicting laws in each state, you may want to include in their severance agreements a clause stating that an employee’s severance pay will be deducted for any unreturned company equipment.

Finally, have someone escort the employee to their workstation to retrieve any personal items. An escort can ensure an employee only takes personal items, not company property or proprietary information. They also act as a monitor to make sure that the employee does not create any excessive disruptions. 

In some circumstances, having the employee retrieve their items may be dangerous after the termination conversation. If safety is a concern, you should notify the employee that you will ship their items to their home and a timeframe within which to expect them. In addition, you should make a good-faith effort to return the items to the employee to avoid legal issues later. Finally, if safety becomes a serious concern when returning an employee’s items, you may consider reaching out to their local police department for assistance.

5. Be brief and don’t make it personal

The termination conversation is often stressful for the employee, manager, and witness. However, you can reduce stress and minimize risk by following these best practices in the termination meeting: 

  • Prepare a termination script.
  • Provide evidence that supports the case for termination, such as policy violations, poor performance history, or attendance records.
  • Allow the employee to ask questions and be brief in responses.
  • Have the manager, witness, and employee sign a termination form acknowledging the reason for termination.

During the conversation, you may feel bad for the employee, especially if they become distressed and plead for their job — don’t take this personally. While empathy is important, so is remaining professional, courteous, and unwavering in the decision to terminate. Check your feelings at the door and use the evidence you compiled to explain the termination decision and provide some amount of closure.

In the same vein, you should avoid insulting or demeaning the employee. Instead, aim to be polite and professional in the termination conversation. In doing so, you will set a standard to treat all employees respectfully, even during difficult times.

Avoid backtracking

I sat in on a client termination conversation once where the manager felt so bad, they started apologizing and almost talked themselves out of the decision. I totally get it — firing someone is tough. But when you let emotions take over after you’ve come to the logical decision to terminate the employment relationship, it just makes things harder on everyone.

Also read: How to Transition to a Results-Only Work Environment

6. Provide information on any necessary benefits

During the employee’s termination conversation, managers should set aside some time to discuss the following:

  • Last paycheck: Depending on the state, you may be required to provide the employee’s last paycheck immediately, within 24 hours to a few days, or by the next regularly scheduled payday. Failing to follow the appropriate laws could result in severe fines. In California, for example, penalties accrue for every day an employee’s last paycheck is withheld.
  • COBRA paperwork: Most employers who offer medical insurance benefits qualify for COBRA and must provide the necessary paperwork to the employee within 30 days of termination. Considering COBRA includes information on extending employee benefits, you should have this paperwork ready to present to the employee during the termination conversation.
  • Severance agreement: If you offer a severance agreement to the employee, carefully outline the details. For example, employees should know how much, when, and for how long their severance pay will last. Employees must also understand what kinds of future claims they are releasing from the company’s responsibility.
  • Unemployment insurance information: Employees are entitled to apply for unemployment insurance benefits following termination, regardless of whether or not they are eligible. In most cases, states require employers to provide information about how to apply for unemployment benefits during the employee’s exit, along with the employer’s FEIN, unemployment account number, and business name and address. Failure to do so may result in fines or future lawsuits.

7. Communicate the employee’s exit with the rest of the staff

No matter what you do, you can’t prevent news of an employee’s exit from spreading to the rest of the staff. However, you can be tactful in how they present the information. 

You should consider the reason for the employee’s termination before sharing the news with the staff. For instance, firing someone for sexual harassment requires a different approach than firing someone for poor performance. In these cases, before sharing, it’s wise to consult outside counsel to avoid any legal missteps, such as privacy violations or adverse effects on remaining employees’ morale.

Regardless of the circumstances, brevity is key. Don’t elaborate on the reason for the employee’s termination since there may be legal consequences (for example, being sued for slander). Instead, focus on short-term and long-term backfill plans so the rest of the team understands how this decision will impact their jobs. Additionally, clarify any changes in reporting structure, especially if the former employee was a people manager.

According to Zeeshan Arif, CEO and founder of the software development company Whizpool, “Terminations can lead to feelings of abandonment or betrayal if the terminated employee has been with the company for a long time.” They could also cause remaining employees to feel their jobs are also in jeopardy. Therefore, it’s important to remain impartial and professional when sharing the news and focus on the company’s future. Doing so will allay any fears among remaining staff that their jobs are in jeopardy and increase feelings of trust in a company’s transparency. 

Also read: 6 Strategies to Reduce High Employee Turnover + Free Calculator (2024)

Employer’s rights

Even though the U.S. largely operates under at-will employment laws, you can’t just terminate an employee without considering your legal boundaries. As an employer, you have the right to make decisions about your workforce that are in the best interest of your business, including letting employees go. However, it’s important to know where your rights end and employee protections begin.

If you’re in an at-will state, you’re allowed to terminate an employee with or without cause at any time during their employment. On the other side of the same coin, an employee can leave the job anytime, with or without reason or notice. Employment contracts or union collective bargaining agreements are the only ways to modify an employer’s at-will status.

Limitations of at-will employment

While at-will employment gives you broad ability to terminate employees, there are several legal limitations to keep in mind. Firing an employee for an unlawful reason, even if you don’t think you’re doing anything wrong, can lead to significant legal consequences. Here are a few key exceptions to at-will employment you need to know.

Under federal and state laws, you cannot fire an employee based on race, color, national origin, religion, sex (including pregnancy, sexual orientation, and gender identity), disability, age, or genetic information. Even if you have another reason for terminating the employee, if they belong to one of these protected groups and the termination can be perceived as discriminatory, you could be at risk of a lawsuit.

You can’t fire an employee for reasons that violate public policy. For example, if an employee files a workers’ compensation claim, serves on a jury, or refuses to engage in illegal activities on the job, they are protected under public policy. Terminating them under these circumstances would be illegal.

Employees who report illegal activities, unsafe working conditions, or other violations are protected from retaliation, including termination. It’s essential to take these claims seriously and ensure any actions taken afterward, including firing, aren’t seen as retaliatory.

Even if there isn’t a formal employment contract in place, implied contracts — whether through company policies, other agreements, or promises or guarantees made by managers — can override at-will employment. For instance, if your employee handbook says you’ll follow a certain process before termination without any variances for egregious misconduct, you could be held to that standard in court if you don’t follow it explicitly.

Some states recognize an implied covenant of good faith and fair dealing, which prevents employers from acting in bad faith when terminating employees. This means you can’t fire someone to avoid paying benefits or bonuses they’ve earned, or for any other dishonest reasons.

Mistakes to avoid when firing an employee

Understanding the legal boundaries is key but it’s only part of the goal. The other part is to avoid mistakes when terminating an employee. These errors can easily be avoided with proper planning, communication, and documentation.

Firing someone without a paper trail can create problems down the line. Without documentation, it’s your word against theirs if they file suit or claim wrongful termination. This is especially important if you’re dealing with employees who are members of a protected class, as it helps establish the firing wasn’t discriminatory. Don’t worry if you don’t have absolutely everything documented, but do your best to make sure important items are accounted for.

Termination decisions should almost never be made out of frustration or anger. Firing someone on the spot after an argument or because of a single mistake could come across as retaliation or unfair treatment, unless the mistake or misconduct is egregious. Even then, my recommendation is to let a few moments pass so you can mentally remove yourself from the heat of the moment and come to a logical and reasonable conclusion. It’s always a good idea to take time to assess the situation, review any performance issues, and even consult your legal counsel before moving forward.

Consistency is key when enforcing any company policy, especially discipline and termination. If two employees break the same rule, they should be treated similarly. For example, if one employee receives a warning for being late, but another is immediately fired for the same offense, the terminated employee could claim they were treated unfairly. If you’ve set a precedent in the past, be sure to follow it to avoid claims of unfair treatment.

Even in at-will employment, you need to follow your company’s termination procedures. If your employee handbook says employees are entitled to progressive discipline and you don’t provide for any exceptions, skipping these steps could result in a wrongful termination claim. If your policies are out of date or unclear, it’s a good idea to update them to reflect your actual practices.

While not legally required in most cases, offering severance of some kind of assistance can help smooth the termination process and prevent any potential backlash. Severance agreements can also include waivers that protect you from future claims, which can be beneficial if you’re concerned about a lawsuit. Helping the employee transition out of your company, whether through career coaching, a reference, or even a simple discussion about unemployment benefits, can leave a positive impression and reduce the risk of legal action.

Remember the humanity in termination

When you’re in the position of firing someone, it’s easy to focus on the logistics — following procedures, protecting the company, and making sure you’ve ticked all the legal boxes. At the end of the day, though, you’re delivering life-changing news to another human being. They have bills, families, and emotions tied up in this job, and that’s something we can’t ignore, no matter how routine the process might feel.

No matter how hard the conversation, remember that people are resilient, but they’re also vulnerable in moments like these. Taking an extra minute to listen, even if the decision is final, or offering a small gesture of goodwill can go a long way. After all, the employee’s experience in that moment will likely shape how they view your company, and it might even influence how other employees feel about their job security and value within the organization.

Lead with empathy

I’ve been in rooms where managers have handled terminations like they were reading off a checklist, never making eye contact, and it was heartbreaking to see the employees crumble. In contrast, I’ve also seen terminations where managers treated the employee with respect, acknowledging their contributions and showing empathy. Even though the outcome was the same, the latter situations left the employee feeling like they were still valued as a person, not just discarded as a problem.

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Bryan Driscoll
HR Consultant & Content Writer
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Bryan Driscoll is a non-practicing lawyer, HR consultant, and legal content writer who uniquely blends legal insight and HR expertise. Offering innovative HR solutions and engaging content, Bryan’s mission is to empower businesses towards growth. His approach is straightforward, informative, and assertive. For more information or to schedule a consultation, visit VBryan’s website.