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Letting Go: How to Properly Fire An Employee

hostile Firing an employee can be one of the thorniest tasks for business owners. Like any relationship that goes south, letting go of an employee requires planning, care, and more importantly, tactfulness.  Most employment claims arise not because the employer has actually acted unlawfully, but because the employee feels disrespected and treated unfairly during the termination process. However, defending unwinnable claims by aggrieved employees is still time-consuming, expensive, and stressful – and often serves as a distraction from more fruitful business endeavors. So how can you let an employee go and minimize the potential for dispute? Here are some tips.

 Can You Terminate? Before a decision to terminate is made, it is worthwhile for employers to check employee handbooks, discipline policies, internal dispute resolution policies, or any employment agreements to make sure that you can let employees go “without” cause.   Does the company have a progressive discipline policy? If not, this could increase the likelihood of a dispute being raised, as there are no policies that guide how the employer responds when employee job performance falls short, and aggrieved employees can assert that they were treated disparately.  It is also worthwhile to review the employee’s HR file to make sure that there is sufficient documentation concerning the employee’s performance. Generally, employment claims begin with a request for the employee’s HR file. If the file is not properly documented, it could result in the employee having better grounds to argue that the termination was improper. If you do not have a paper trial, resist the urge to go back and create one – just start now and follow the process cleanly.

 What Can’t You Terminate For?  If there are concerns about the reasons for the employee’s termination, here is a quick and very brief overview of a few laws that protect certain kinds of employees:

  • American with Disabilities Act protects employees that have physical or mental disabilities, and requires reasonable accommodation  of the employee’s disability that are well-documented.
  • California’s Fair Employment and Housing Laws protect the termination of employees on the basis of race, religion, national origin, sexual orientation, gender, maternity status/pregnancy, and other grounds. Common FEHA allegations assert that employees were treated disparately, and that there were no legitimate non-discriminatory reasons for the employee’s termination.
  • Pregnancy. California entitles pregnant employees to four months off for pregnancy-related conditions.
  • Worker’s Compensation. A worker who is injured on the job and who has filed a worker’s compensation claim can allege discrimination or retaliation if treated adversely for doing so.
  • Whistleblowing. Whistleblower claims arise if an employee has reported illegal activity of the company to state or federal agencies. Even if the company was not doing anything inappropriate, firing the employee can be construed as retaliation.

Out of the Blue Firing. There are very few acts that would justify firing an employee on the spot. For employees being let go for performance reasons, poor attendance, or other “non-emergency” reasons, the firing should never come as a surprise. Rather, the termination should be the last in a series of progressive disciplinary measures, that should always include verbal warning, written warning, a probationary period, and then ultimately, termination. In between the warnings, employers should give employees a meaningful period of time to actually improve, generally 30-60 days or longer, depending on the nature of the improvement required. You will need to make it clear to the employee that, unless improvement is made, the employee will be let go, so the employee understands what is required from them. Specific goals are always better than more vague or ambiguous messages.

Your Bedside Manner: How and When to Fire. Employers should take every step to avoid publicly humiliating the employee. The firing should be done privately, gently but while being firm.  The firing should not be done over a lunch, or coffee run, over email, or over text. The ideal location is a conference room or some other neutral place that ensures confidentiality.  When delivering the news to the employee, it is OK to be kind and compassionate, but overly sugarcoating the reasons for the firing will not work in your favor. Some lawyers counsel employers to “say as little as possible,” quickly escort the employee out the door, and confiscate their belongings, computers, and tell them their personal possessions will be shipped to them later on.  Although this is done to maximize the protection of the company, it almost always leaves the employee very sore, and feeling as though they are not only being fired, but treated like a criminal. These types of feelings are good motivators for bringing employment claims, and can leave other still-employed employees who witnessed the firing feeling as though they will suffer the same terrible fate.  There is a way to be firm, but respectful, without getting into an argument or debate with the employee about the rightfulness or fairness of your decision. The firing should also not be done alone, as you may need witnesses in case you are accused of impropriety later on.  You should also avoid letting employees go on Fridays, which will result in them stewing over it all weekend.

Exit Interview. The questions you would ask in an exit interview are not only for departing employees who are resigning or quitting voluntarily – the same issues should be discussed with employees who are being terminated. Employees should be asked for their key cards, keys, and other devices used for the employee’s access to the workplace, and any other company property the employee has or has access to. The employee should be noitifed they have a duty to maintain the confidentiality of company trade secrets and passwords. The employee will likely have questions as well, about what to do with meetings that might be scheduled for later in the week, what to tell clients, and what to do with pending work assignments. You should have answers to those questions, and plan for the transfer of work before firing the employee, since they will have very little incentive to be helpful after they have been fired.  If you need help with the exit interview, check out our sample Exit Interview Checklist.

References. Employment claims also arise when a fired employee has trouble landing a new job and suspects that your company is saying negative things to prospective employers and preventing the employee from acquiring work. Giving the employee reassurance that your company’s policy is to provide only neutral reference information could help soften bad feelings. What should a neutral reference consist of? The employee’s job title, rate of pay, start date, end date, and a statement that your company does not provide other information.

Severance and Release. Some employers preempt employment claims by offering the employee a small bit of severance pay in exchange for a release of all claims. This is not necessarily a bad idea, but employers should be up front and honest about what the document is – instead of calling it something like a “bonus” that will arouse the employee’s suspicions, or presenting it along with other papers for the employee’s signature, on which receipt of their final paycheck is conditioned (which is improper).  Once they consult with a lawyer, they will inevitably be lead to the belief that the company is trying to trick or deceive them.  Those type of facts never look good in front of a jury. If you do decide to offer a severance in exchange for a release of all claims, have an attorney help you with it, because special provisions have to be included to avoid certain types of claims, such as age discrimination.

When Firing is a Necessity. For certain types of situations, firing an employee is not merely a business decision, but a legal necessity. For employees that have been violent or threatened violence, have sexually harassed other employees, or violated the law in other respects, the employer must take action or risk the ramifications of failing to do so.

Last Paycheck, Insurance, and Other Details.  In California, upon termination, all outstanding wages, salaries, expenses, and unused vacation pay must be paid immediately.  Under the Consolidated Ombibus Budget Reconciliation Act of 1985 (COBRA), companies with 20 or more employees that provide health insurance to their employees must give terminated employees the opportunity to remain on the policy for up to eighteen (18) months after termination, provided that the employee pays the premiums. In California, businesses with 2-20 employees may have to provide the same benefits under Cal-COBRA.

Wrap-Up. After the employee has left the premises, do not forget to take steps to delete the employee’s name from company letterhead, website, stationary, email address lists, and other locations. The employee’s email account should be disabled so that access remotely is not permitted, whether online or by mobile phone/PDA.

Letting go of an employee is not a pleasant experience for either side, but it does not have to lead to legal claims and years of dispute. Taking a few prophylatic measures can help avert claims and approaching the termination with tact can ease the blow and allow a departing employee to move on without harboring ill-will or resentment.

Getting Legal Help

AXIS Legal Counsel’s Business and Corporations Practice provides legal advice to numerous businesses with a wide range of business matters. Axis  represent small, medium-sized, and large business clients with a wide variety of business and corporate law matters. We represent early-stage companies as well as established businesses on a wide variety of business law matters, ranging from contracts and transactions, intellectual property, labor/employment law, business financing, mergers and acquisitions, real estate, insurance, business succession planning, and general advice and counsel.  For information on retaining AXIS Legal Counsel to represent your business in connection with any legal matter, contact [email protected] or call (213) 403-0100 for a confidential consultation.


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