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How to Fire an Employee

Firing an employee can be unpleasant for both the employer and employee, but there are some circumstances where it has to be done. If you have hired employees for your business, it is almost certain that you will need to fire someone at some point. When it comes time to do so, it takes far more than just saying "you're fired." You need to have a legal reason for firing an employee, and there are also proactive steps you should take to protect yourself from a wrongful termination lawsuit.

When You Cannot Fire an Employee

There are certain reasons for which you can never fire an employee. If you do so, you could face a lawsuit from the fired employee as well as government fines.

These protections are provided by federal, state, and local laws. If one set of laws has a protection that another does not, you must follow the strictest law. If you have multiple locations, you must follow the laws in each location for the employees at that location.

Discrimination

Federal equal employment opportunity laws bar discrimination based upon a list of protected classes. These include the following.

  • Age
  • Disability
  • National origin
  • Pregnancy
  • Race
  • Religion
  • Sex

State and local laws can, and often do, add protections to the federal protected classes. For example, many state or city governments have passed laws banning discrimination based on sexual orientation. Other jurisdictions prohibit age discrimination against workers who are considered too young, while federal law only protects workers who are viewed as too old.

Public Policy

Public policy may also prohibit firing an employee in situations that are not discriminatory. One of the most common examples is state and federal laws giving protections to whistleblowers.

A whistleblower is someone who reports safety violations, tax evasion, or other serious misconduct to government authorities. Depending on what is being reported, the whistleblower may be required by law to go straight to the government, or they may need to talk to their employer first to keep whistleblower protections. If an employee makes a report in accordance with whistleblower laws, the employer may not fire that employee in retaliation.

Another common protected situation is military service. Employers must accommodate employees who are called up to the National Guard or military reserves. Firing an employee who is away for protected military service is a violation of federal law.

Contractual Protections

You also must honor any contractual protections you have given an employee. This might include an individual employment agreement or a union agreement.

Pretext Firings

Where the law provides protections against unlawful termination, it also prohibits using a pretext to fire an employee. If you say you have fired an employee for poor performance when you have really fired them because of their race, then this is still a direct violation of anti-discrimination laws.

If you are accused of firing an employee under false pretenses, the court or government investigators may look into your employment records for any disparities in treatment of employees in a protected class. The fired employee will also be able to present evidence showing why they believe they were fired for an unlawful reason.

The potential for these types of claims is why it is important to protect yourself even if you have no discriminatory intent.

Lawful Reasons to Fire an Employee

When you fire an employee, you must have a lawful reason for doing so. In most cases, this simply means that you must have a reason that is not an unlawful one. The following reasons are considered lawful reasons for firing an employee.

  • Poor performance – Poor performance can include when an employee is inefficient, lazy, or just not good at their job. In short, the reason for firing them is because they are not meeting your expectations. It is generally a good business practice to try to coach employees to help them improve their performance. Many good workers simply need a little extra training, and this will help your other employees avoid worry that their own jobs are at risk. However, you can fire a poorly performing employee at any time as long as you did not do so for an unlawful reason.
  • Serious misconduct – Serious misconduct can include things like theft, skipping a shift without notice, or harassing other employees. If you believe a violation is serious enough to fire an employee on the spot, you are free to do so.
  • Budget cuts – At times, you may need to reduce your payroll costs even if you do not otherwise want to fire an employee. When choosing which employee to layoff, it is important that you do not take any unlawful reasons for firing into account when making your decision. Legal reasons to make your choice might include past performance reviews, seniority at your company, or who has the most essential position. Assuming you did not want to fire the employee, you may wish to offer them a few weeks' notice or severance pay, if possible, along with help in finding a new position. In addition to being a nice thing to do, it can help you legally. If you leave things on good terms and help the employee transition to their next position, they will be less likely to pursue a wrongful termination claim.
  • Any reason under an at-will agreement – Nearly all states have at-will employment. This means that, unless there is a contract in place to the contrary, you can fire an employee for any reason at any time unless the reason is an unlawful one. Of course, firing employees lightly is disruptive to your business, is likely to make others leave, and will make future hiring difficult. The key here is that when employment is at-will, you have no burden to prove that an employee should be fired. If you decide an employee should be fired, you can do so in any way that you feel is right for your business.

How to Protect Yourself When You Fire an Employee

To protect yourself from a claim that you have fired an employee for an unlawful reason, there are several steps you should take to protect yourself. While larger companies will generally have more detailed and formal processes, companies of every size should have similar measures in place even if they are slightly less formal.

Don't Have the Paperwork You Need?

If you do not have an employment agreement, employee handbook, or other needed documentation, visit the human resources section of our document library to start creating the legal protections your business needs if you have to fire an employee.