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How to Fire an Employee Without Causing Legal Trouble

By George Khoury, Esq. | Last updated on

Sometimes an employee just doesn't work out. Although the employee you want to fire may need the job, as an employer, you have a business to worry about. Running a business requires making the tough decisions, which includes firing employees.

However, many small business owners become concerned about the legal liability of firing an employee. It may feel rotten to have to fire someone, but unless there was something more going on, there is nothing illegal about terminating employees for valid business reasons, such as poor performance, downsizing, or restructuring.

Avoid Discrimination and Retaliation

Legal trouble can arise when an employee simply suspects that they have been fired because of their race, gender, sexual orientation, religion, nationality, and/or disability. Additionally, employees will be suspicious about their termination if it closely follows their complaints about corruption, safety violations, or retaliation for participating in protected activity.

If you received a notice from the EEOC or a state agency about discrimination or retaliation, you may want to think twice and contact an attorney before disciplining or terminating that employee. 

Document, Counsel, Repeat, Then Fire

Since nearly all employment is at-will, employers can fire most employees at any time. However, unless an employee does something to warrant immediate termination, like intentionally kicking the office dog, it's a good idea to document the employee's poor performance, and also to advise the employee that you have documented the poor performance.

Although you may just want the employee gone, providing an opportunity to correct the poor performance could lead to a surprise turn around. When an employee is counseled about poor performance, they should be made aware that failing to improve will result in termination.

Be wary however of the appearance of discrimination. If you have never documented poor performance, you may want to advise employees of the new policy before handing out your first write ups.

Keep Ex-Employees in the Dark

While employees may push for a reason as to why they were terminated, you do not have to provide one. Even if you have a perfectly reasonable explanation, you need to decide whether there is any benefit to the business by sharing the explanation. If you believe the ex-employee could sue, providing an explanation at the time of termination will only make it easier for them. If you are unsure about whether the employee might sue, providing a bad explanation is more likely to prompt action than not providing an explanation at all.

Beware Contract Employment

If you have signed a contract with an employee, make sure you read the contract before terminating their employment. There may be certain remedies in the contract available to the employee if they are terminated, as well as certain requirements that must be met before a termination can occur.

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