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.
1. The Rule: Good Reason, Bad Reason, No Reason
At-Will employment is powerful, but not absolute.
✅ 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 | |
| Day 30 (The Plan) |
Start PIP | |
| Day 60 (Termination) |
Notice |
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.