Although it's often not an easy decision to make, most employers have the unenviable task of firing an employee at some point. However, terminating employees can lead to sticky situations – even litigation if done improperly.
You should follow some general steps to give your business the best chance of parting ways with employees amicably and legally. We spoke to legal experts to determine a proper termination process and some best practices.
Checklist for firing employees
One of the best ways to ensure you follow proper legal procedures when firing an employee is to draft policies and termination notices ahead of time. Make sure your staff has access to an employee handbook that clearly outlines expectations, as well as discrimination and discipline policies.
While each business's needs will dictate the specific way an employee is terminated, we asked Barbara Jane Barron, attorney and shareholder at MehaffyWeber, and Trisha Barita, managing partner of Barita Law Firm and founder and owner of Legal Skinny, to share the general termination steps that every business owner should consider:
- Educate your team. To help ensure you don't break any employment laws, confirm that your workers and all supervisors understand your policies and procedures, as well as the necessity to document violations and warnings.
- Determine the employee's offense. You should determine what performance failures, misconduct, or broken policies have occurred that could justify termination (if it is outside of a general layoff).
- Investigate and document the offense. The termination process may look a little different for each employee based on the offense. For example, if the employee is simply a poor performer, you should review the employee's file to see if they were warned they might be fired if their performance doesn't improve. This might entail a performance improvement plan, a series of disciplinary warnings, or comments in the employee's annual review. However, if the employee is a potential threat to the safety or comfort of others, you should conduct an investigation of employee misconduct.
- Consider employment laws and legal protections. You should be familiar with what legal protections the employee has and be careful not to retaliate or discriminate. Violations could include retaliating against a whistleblower or failing to reasonably accommodate an employee protected under the Americans with Disabilities Act.
- Have others review the employee's file. When a decision is made to terminate, the employee's file should be reviewed by others, such as a trusted advisor or your legal team, to ensure there is sufficient documentation in the file to explain the termination to your local unemployment commission or the Equal Employment Opportunity Commission.
- Plan what you will say. An established plan for what you will and won't say is vital in an employee termination. Since at least two company representatives should be present during the termination, predetermine who will speak and what they will say.
- Terminate the employee. Keep the conversation brief but accurate. Let the employee know that today is their last day with the company because their performance (or another issue that has been previously discussed) is not improving. Don't give them a lengthy list, but don't just relay one item if the termination is due to many rule violations or issues. Do not give the employee hope that they will be rehired.
- Collect company property from the employee. You need to get all your company's property (keys, phones, computers, etc.) back from the employee before they leave. If the employee has access to sensitive, confidential or proprietary information, you may want someone to escort the employee as they gather their personal items.
- Escort the employee out. Walk the employee out of the building. If you know the employee will be loud and angry, you may want to have security or police on standby, but that is normally not the case.
- Issue any final payments, notifications and documentation. Many states have short deadlines for when the employee needs to receive their final paycheck. Determine policies on whether the employee must be paid for time off they accrued. If the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) applies to your company, you will need to give the employee the proper notification. Make sure the employee's file is documented accordingly.
Importance of firing an employee the right way
Terminating an employee can be uncomfortable, but it is important that you follow the proper procedure to avoid legal ramifications. If an employee is fired incorrectly, they may be able to file for unemployment or, worse, sue your company for wrongful termination (for example, if they have reason to believe the termination was based on their age, gender, religion or race). In addition to legal fees, this could cost your business money in back damages, future wages and liquidated damages.
"The terminated employee may attempt to fit under a whistleblowers act or allege retaliation for filing a workers' compensation claim or Family and Medical Leave Act (FMLA)," Barron told business.com. "For that reason, it is important that all documentation and investigations be completed prior to termination and that human resources (HR) and the employee do not have a protracted discussion."
Employee termination FAQs
What should you not say when terminating an employee?
Carefully navigate the language you use when terminating an employee. Keep it brief and to the point, and make sure your message is clear. Avoid potentially confusing or ambiguous verbiage. If you are terminating them due to poor performance or misconduct, avoid language that might make them think they are being furloughed or laid off with a chance of being rehired. Communicate the termination as a final decision, not a discussion or debate.
"Do not debate with the employee the reason for why they are being fired," Barita said. "If you are at the point where you have determined that you are terminating the employee, you should have already conducted whatever inquiry or investigation needed to get to that decision, and it is not necessary or relevant to debate the decision with the employee. It also could lead to you saying something that confuses the true reason why the employee is being fired."
The termination is about the employee, not the one doing the firing. Don't make the termination about you and your feelings, even if you were friends with the employee or disagree with the termination. Avoid language that makes it seem like you are upset or not in line with the company's decision to terminate. For example, Barron said to avoid phrases like "I'm not sure how to say this" and "this is really hard for me."
Barron also suggests avoiding the word "we," as in "we've decided to terminate." Instead, you can say something along the lines of "I am terminating you today" or "you are being terminated." Never say, "We will work out details later," because there likely won't be a "later."
Avoid relaying unnecessary information that will prolong the conversation – such as comparing the employee's performance to a co-worker's. This will likely invite discussion, which is not what you want.
It's particularly important to avoid phrases that may make the termination appear discriminatory. Barron said phrases like "we need new blood" and "we are looking for someone with a fresh perspective" may be construed as age discrimination, and "we don't feel you are loyal" can be turned into a whistleblower complaint. The company's decision to terminate shouldn't be based on discrimination, so don't make it look like it is.
What notice must an employer provide for a job termination or layoff?
Although general job terminations due to poor performance or misconduct are similar to layoffs, the type of notice federal and state laws require you to provide may differ between the two.
According to Barita, whether a general termination notice must be provided to an employee generally depends on the employee's legal contract with the employer, the relevant state laws (such as at-will employment laws), and the company policies of the employer.
If you have a plant closing or a mass layoff, the federal Worker Adjustment and Retraining Notification (WARN) Act requires you to provide advance notice and planning mechanisms to your workforce and communities.
"The United States Department of Labor (DOL) has set guidelines for employers to properly follow WARN requirements," Barron said. "Certain states have analogous state laws, referred to as 'mini-WARN acts.'"
Barron said the WARN Act applies to the following employers:
- Employers with 100 or more full-time workers in the event of a unit's permanent or temporary closing that affects at least 50 full-time workers
- A unit closing with under 50 full-time workers, but other layoffs bring the total number to 50
- Mass layoffs of 500 or more full-time workers at a single site during a 30-day period or two layoffs of more than 50, which constitute 33% of the employer's total active workforce
Exceptions may apply to companies with extenuating circumstances (e.g., natural disasters or unforeseeable situations).
When can you fire an employee without a performance improvement plan?
Depending on the circumstances, you may be able to fire an employee without first putting them on a performance improvement plan if they've displayed egregious misconduct, such as stealing from the company, threatening violence against another employee, harassing or bullying others, or any other criminal activity. They may also be terminated without a performance plan if your employee handbook clearly states that the offense is subject to immediate termination.
These instances are about employee conduct as opposed to employee performance, rendering a performance improvement plan unnecessary. However, if there are questions regarding the facts and circumstances of the misconduct, you may need to conduct an investigation into the incident before terminating the employee.
Can you fire an employee without a written warning?
Yes, most of the time. Every state except for Montana has at-will employment, meaning you can terminate an employee for any reason without warning, so long as you don't violate anti-discrimination laws or state exceptions regarding public policy or implied contracts.
Just because you can, though, doesn't mean you should. It is in your best interest to provide employees with a warning before making the final decision to terminate. You don't want it to come as a total surprise to the employee if you can help it.
"By providing warnings, you are illustrating that you want to help the employee improve their performance and give them a chance to understand what needs to be fixed," Barron said. "If you provide verbal warnings, document the day and time of the warnings and what they did and what the supervisor or you said. Sit down with them if they are struggling and ask how you can help them. If they file a claim with EEOC for discrimination, you have evidence to show that you tried to help."
Barron recommends implementing a written performance improvement plan that includes clear goals. This can not only help the employee stay on track but also serve as legal documentation should you enter into litigation with the employee after termination.
"After you have given two or three warnings on job performance and provided an improvement plan, if their performance is still not improving, document the file and terminate," Barron said. "Remember, documentation after the fact is not documentation."
Do employers have to give a reason for termination?
This depends on which state governs your business. Federal law does not require you to provide a reason for termination, but some states have a "service letter" law that requires you to provide a reason for termination if the former employee requests one. For this law to come into play, the former employee typically submits a written request, after which the employer has a limited amount of time to respond.
Should you fire someone on a Monday morning versus a Friday afternoon?
There is no "best" day of the week to fire someone. However, many employers prefer to fire employees at the beginning of the week so their HR department has enough time to complete the necessary paperwork, finalize payments and address any follow-up concerns the employee may have.
If an employee is being fired due to egregious misconduct, it is important to terminate them as soon as possible, whichever day it falls on.