Letting someone go is never easy, even when it’s clearly the right decision for your business. However, firing an employee doesn’t just affect the workplace dynamic or productivity. If it’s not handled carefully and within legal boundaries, it can turn into a full-blown lawsuit that costs your company time, money, and reputation. Wrongful termination claims can be emotionally charged, and even if you know the firing was justified, defending your actions in court is the last place most employers want to end up.
Why Termination Can Be Risky for Employers
Employment laws and contracts are designed to protect workers from unfair treatment, but they also create traps for business owners who don’t fully understand them. Whether you’re dealing with poor performance, misconduct, or a restructuring decision, the steps you take leading up to and during the termination are what ultimately determine your legal exposure.
Understanding At-Will Employment, and Its Limits
Many employers assume they can terminate anyone at any time because of “at-will employment.” While it’s true that most states follow this rule, which means either party can end the employment relationship without cause, there are major exceptions. Firing someone for an illegal reason or violating company policies during the process can override the at-will presumption.
For example, you can’t fire someone for discriminatory reasons, such as their race, gender, age, religion, disability, national origin, or pregnancy status. You also can’t violate current employment contracts or retaliate against someone for engaging in legally protected activity, like filing a workers’ compensation claim, reporting harassment, or requesting medical leave. Even if the firing wasn’t for one of these reasons, the timing alone can raise red flags. That’s where documentation and consistency become critical.
Build Your Case with Documentation
If you want to avoid a lawsuit, your first line of defense is proper documentation. Don’t wait until you’re ready to fire someone to start writing things down. You should have a clear record of the employee’s behavior or performance over time, which includes performance reviews, written warnings, disciplinary meetings, and notes about specific incidents. These documents not only help justify the decision but also show that the employee was made aware of the issues and had a chance to improve.
Follow a Fair and Transparent Process
Before you terminate someone, pause and make sure you’ve followed a fair process. A fair process doesn’t mean you need a lengthy trial, but you should give the employee a reasonable opportunity to address any problems that have come up. Ideally, you’ve had several discussions, documented their progress or lack of it, and provided support along the way.
Retaliation Claims
Retaliation claims are also rising in number and complexity. If an employee is a member of a protected class that faces discrimination, has filed a complaint, acted as a whistleblower, or exercised a legal right like medical leave or jury duty, firing them afterward, even for unrelated reasons, can create legal headaches.Â
Consider Offering a Severance Agreement
While not legally required in most cases, offering a severance package can help reduce your risk. A severance agreement usually includes a financial payout in exchange for a signed release waiving the employee’s right to sue. The terms must be fair and follow specific legal requirements to be enforceable.Â
Conduct the Termination Respectfully and Professionally
How you deliver the news matters just as much as the reasons behind it. Terminating an employee should be handled with empathy and professionalism. Avoid humiliation or confrontation. Schedule the meeting in a private setting, have a witness present (such as someone from HR), and keep the discussion brief and clear. Don’t engage in a debate or let emotions take over. You don’t need to go into exhaustive detail, but you should be honest and stick to the facts.
Consult Legal Counsel Before Termination
Even if everything seems straightforward, it’s wise to consult with an employment attorney before moving forward. A brief review can help you spot any red flags you might have missed. For instance, your attorney can evaluate whether your documentation is strong enough, whether the timing could be perceived as retaliatory, and whether your policies have been followed correctly.
Legal advice becomes especially important when terminating someone who recently filed a complaint, has a disability, is pregnant, or belongs to another protected group. Employment lawyers can also help you draft a legally compliant termination letter and a solid severance agreement, if needed.
Protect Your Business from Future Claims
After a termination, keep a copy of all relevant records, including emails, performance reviews, witness statements, and disciplinary documents. These may be crucial if a claim arises later. Avoid discussing the termination publicly or within the company beyond what’s necessary. Gossip can lead to defamation claims or morale problems with your remaining team.
Seek Legal Guidance: Preparation Is Your Best Protection
Firing someone is a serious decision, and while you can’t prevent every legal threat, you can dramatically reduce your risk by following a clear, consistent, and fair process. Know your legal obligations, document thoroughly, consult professionals when needed, and treat the employee with respect throughout the process. Doing so doesn’t just protect your business legally, it also reinforces your company’s values and sets the tone for a healthy workplace culture moving forward.
Ultimately, the key to legally terminating an employee without risking a lawsuit comes down to preparation, empathy, and making sure the law is on your side before you make your final move.
Call Fisher Stone, P.C. at 516-908-9519 to schedule a free consultation with our team today.
