How to Fire an Employee Legally (Employer Checklist)

“You’re fired” is easy to say, but expensive to defend in court. While 49 out of 50 states follow “At-Will Employment” (meaning you can fire anyone, anytime, for any reason), this freedom has a massive asterisk. If you fire someone shortly after they request medical leave or complain to HR, you are inviting a Wrongful Termination Lawsuit. Here is the step-by-step guide to documenting “Cause” and using Severance Agreements to lock the door behind them.

BMT Legal Team BMT Legal Team · 📅 Feb 2026 · ⏱️ 7 min read · LEGAL › BUSINESS
Rule
At-Will
No Reason NeededFact
Shield
PIP
Performance PlanRule
Cost
Final Pay
Due Immediately (Often)Warn

1. The Rule: Good Reason, Bad Reason, No Reason

At-Will employment is powerful, but not absolute.

The Termination Spectrum
✅ Good Reason: “You missed your sales quota for 3 months.” (Safe).
✅ No Reason: “It’s just not working out.” (Safe, but risky if they suspect discrimination).
❌ Bad Reason: “You are too old,” “You are pregnant,” or “You complained to OSHA.” (Illegal = Lawsuit).

2. Wrongful Termination Risks (Checklist)

Before you say the words, check this list. If any apply, pause.

Risk Factor Scenario Legal Danger
Retaliation Employee filed a harassment complaint last week. Extreme. Looks like punishment for reporting.
Protected Class Firing the only minority employee in the department. High. Must prove performance was the sole cause.
Protected Leave Employee just asked for FMLA (Medical) leave. Illegal. Violates federal leave laws.
Implied Contract Employee handbook says “We only fire for cause.” Medium. You may have voided At-Will status.

3. Timeline: The “PIP” Paper Trail

If you are firing for performance, you need documentation. “He was lazy” doesn’t hold up in court. A signed PIP does.

Stage Document Goal
Day 1
(Warning)
Verbal/Written
Document the specific gap
Day 30
(The Plan)
Start PIP
30-60 Day Goals (Signed by Emp)
Day 60
(Termination)
Notice
Fire for “Failure to meet PIP”
Planning Note
During the termination meeting, have a witness (usually HR) present, keep the conversation brief (under 10 minutes), and do not apologize. Apologies can be misinterpreted as an admission of guilt or wrongdoing.

4. Strategy: The Severance “Bribe”

Severance is not a gift. It is an insurance policy.

  • The Offer: “We will pay you 2 weeks of salary.”
  • The Hook: “…IF you sign this Separation Agreement.”
  • The Agreement: The document includes a General Release of Claims (promising not to sue for wrongful termination), a Non-Disparagement clause (won’t badmouth the company), and confirms they have been paid in full.
  • Why: It is cheaper to pay $2,000 now than $20,000 to a defense lawyer later.

5. Warning: Final Paycheck Laws

Getting the timing wrong creates automatic penalties.

⛔ Immediate Payment

State laws differ on when the final check is due.

  • California/Massachusetts: If you fire them, you must hand them their final check (including accrued vacation) on the spot. Waiting even 1 day triggers “Waiting Time Penalties” (paid as daily salary).
  • Most States: Due on the next regularly scheduled payday.
  • Action: Check your state labor law BEFORE the meeting. Have the check ready.

6. Frequently Asked Questions

Will they get unemployment?
Usually, yes. If fired for “performance” or “fit,” they generally qualify. If fired for “misconduct” (stealing, violence, chronic absence), they generally do not. Do not fight the unemployment claim unless it was gross misconduct; it looks petty.
Can I fire an independent contractor?
Yes. Contractors (1099) have fewer protections. You simply terminate the contract according to its notice terms (e.g., 30 days notice). No PIP is needed, but check the contract first.