By the time a business owner or HR lead calls an attorney about an employee problem, the issue has usually been building for weeks, if not months. This slow burn creates space for risk to build. Most employment termination mistakes don’t happen in the termination meeting itself. Instead, they often happen during “informal” conversations and small decisions that seem inconsequential at the time.
Getting the process right from the first sign of trouble through to the final meeting can be the difference between a peaceful offboarding and expensive, time-consuming litigation. In this guide, we’ll walk through a few of the best practices for terminating an employee.
Common Claims and How to Reduce Exposure
The claims that most frequently follow employee terminations include:
- Discrimination, based on a protected class such as race, sex, age, disability, religion, or national origin
- Retaliation for engaging in protected activity
- Failure to accommodate a disability or religious practice
- FMLA interference or retaliation
Proper documentation and early involvement of legal counsel is the best way to reduce exposure to all of these claims.
At-Will vs. For-Cause: Know What You’re Working With
Start by understanding whether you are working with an at-will or for-cause employee.
Idaho and Washington are both at-will employment states. This means an employer generally does not need to establish good cause to end an employment relationship. For example, an employer may terminate an employee because the working relationship is not a good fit without first documenting a policy violation or performance deficiency.
However, at-will employment does not eliminate legal risk. If the employee is a member of a protected class or has engaged in protected activity—such as filing a complaint, requesting a reasonable accommodation, or taking protected leave—the employer may be required to demonstrate that the termination was based on a legitimate, nondiscriminatory reason rather than unlawful discrimination or retaliation. In practice, that means documentation matters, even for at-will employees. Contemporaneous records of performance issues, misconduct, business reasons, or other legitimate bases for the decision can be critical in defending a termination decision.
For-cause terminations require even greater attention to documentation because the employer is affirmatively relying on a specific reason for the discharge. Inconsistencies in the documentation—such as changing or adding reasons after the fact—are among the most common ways employers undermine their credibility and create unnecessary litigation risk.
Multi-State Employers: Check State-Specific Provisions
Employers with employees in multiple locations should carefully cross-reference the employment laws in all relevant states. Additionally, employers operating across state lines should make sure their legal counsel understands the applicable law in each state where they have employees. Employee handbooks and policy manuals should either differentiate between employees subject to different state laws, or apply the most restrictive state’s rules to all employees.
The Red Flag Test: When You Should Pause Before Acting
Not every difficult situation warrants immediate action. Before moving forward with any adverse action, including a performance improvement plan, demotion, or termination, it’s worth asking:
- Has this employee recently made any complaint, formal or informal?
- Are they currently on, or recently returned from, any protected leave such as FMLA, medical, parental, or military leave?
- Have they recently requested an accommodation?
- Have they participated in any internal investigation?
If the answer to any of these questions is yes, you may want to work with an employment attorney before taking action. Adverse action is still an option, though the risk of a retaliation claim increases significantly in these situations. Consulting with an attorney can help you properly approach the specific situation.
Are You Applying the Same Standard Across All Employees?
One common source of litigation exposure is treating one employee differently from another in a similar situation.
Before moving forward with a termination, employers should conduct a comparator analysis. If one manager has enforced a particular standard more strictly than their peers, that discrepancy can appear in a lawsuit as evidence of targeted or discriminatory treatment. Ask:
- Who else in the organization has exhibited similar behavior or performance issues?
- How were those situations handled?
Employers also need to look beyond the direct supervisor. Comments by other managers, even those outside the employee’s reporting chain, can surface in litigation as evidence of discriminatory intent.
This is especially important in larger organizations where different departments may have developed their own informal standards. Alignment across supervisors is good management practice as well as risk management.
Using Administrative Leave Correctly
When a heated incident like a workplace conflict occurs, the instinct is to act fast. Managers want the employee out immediately. Rushing the process, though, can expose you to more risk later on. A short pause could prevent a one-year lawsuit.
Because the employee remains employed, continues to receive pay, and retains their title, courts generally do not classify paid administrative leave as adverse action. The time the employee is on leave gives the employer time to investigate, consult counsel, and ensure their course of action is defensible.
When placing an employee on paid administrative leave, it helps to have a written notice or contract that the employee acknowledges. This notice should spell out the expected duration and any restrictions on their activities, such as prohibiting them from representing the organization during the period.
If the employee under investigation is in a leadership role, it may be appropriate for them to send an approved, professional message to the team about taking personal time. Done well, this protects the employee’s professional reputation and limits speculation. Ideally, the message should be drafted in collaboration with your attorney.
It’s important to note that unpaid administrative leave is a different story, as it is typically seen as adverse action.
How to Terminate an Employee During the Meeting
The termination meeting is not the place for winning an argument. Statements made during these meetings often become key pieces of evidence during litigation. It’s becoming increasingly common that employees record these conversations on their own devices, so being prepared and sticking to a plan is a good way to reduce risk.
When creating a plan for the termination meeting, consider:
- Who should conduct the meeting. Whenever possible, Human Resources should lead the termination meeting rather than a direct supervisor. A supervisor may have too much personal history or emotional investment to be objective.
- What should be said. The message should be clear, brief, and consistent with the documented rationale. Introducing new reasons or expanding on grievances creates inconsistency that can undermine the employer’s credibility.
- What should be saved. All relevant documentation, including Slack/Teams conversations and email threads, must be preserved before and after the meeting. Managers involved in the process should be debriefed. Err on the safe side and over-document rather than under-document.
Proactive Severance Agreements
Even a modest severance can help close a difficult termination more cleanly.
A well-drafted severance agreement includes a signed waiver from the employee that limits the employer’s litigation exposure. The agreement often provides benefits beyond those the employee is already entitled to receive, such as severance pay or assistance with COBRA premiums. By offering additional consideration, the employer receives a documented release of potential claims, providing greater certainty and allowing both parties to move forward without the uncertainty of future disputes.
With employment litigation on the rise and more employees expecting some form of settlement offer, proactively offering a severance package is often less expensive than a lawsuit.
What to Do After the Termination Meeting
The termination meeting is not the finish line. A handful of steps immediately following the meeting can prevent new claims from forming even after the decision is made.
- Confirm the final paycheck timeline: Many states, including Washington, require final wages on the employee’s last day or within a short window after. Missing this deadline can create a wage claim that exists independently of any discrimination or retaliation issue, and it is one of the easiest exposures to avoid.
- Deactivate access before the employee leaves the building: This includes email, shared drives, building access, and any client-facing systems. A delay here creates both a data security risk and, in some cases, evidence that the termination was not handled professionally.
- Collect company property: Laptops, badges, keys, and any physical documents should be accounted for at the meeting itself whenever possible, not left to a follow-up email.
- Prepare for the unemployment claim: The employer’s response to an unemployment claim should be consistent with the documented reason for termination. Inconsistency here is often the first thing a plaintiff’s attorney will point to if litigation follows.
Should we require an exit interview?
Exit interviews are optional and not a legal requirement. If used, keep them brief and focused on logistics such as final pay and benefits questions, not on revisiting the reasons for the termination.
Work With Employment Attorneys Who Know This Territory
Every termination carries some legal risk, even when the process is handled well. Malek + Malek works as an outsourced general counsel partner, which means the same team advising you on this termination can also help you build stronger policies going forward, not just respond after a problem arises.
If your organization is navigating a difficult employee situation or wants to build a stronger termination process, the attorneys at Malek + Malek are available to help.
Frequently Asked Questions (FAQs)
Does at-will employment mean I can fire someone for any reason?
At-will employment means an employer generally does not need to provide a reason for termination. However, if a reason is given, it cannot be discriminatory. And even when no reason is stated, an employee who belongs to a protected class may assert that the absence of a stated reason implies a discriminatory motive. Documentation and timing matter even in at-will states.
When should I get an attorney involved in a termination decision?
The earlier, the better. The point in a termination process where legal counsel adds the most value is before any action is taken. Especially if the employee has engaged in any protected activity, recently requested an accommodation, or the timing of the decision looks close to a protected event, involve counsel before moving forward.
Is a performance improvement plan required before termination?
Not always. In at-will states, a PIP is not a legal requirement. However, if your organization uses PIPs as standard practice, skipping one for a particular employee can look inconsistent. If you do use PIPs, they need to clearly define the expected improvement, the timeline, and the consequences for falling short, including what it means for the employee’s standing in the organization.
What is the risk of unpaid administrative leave?
Courts generally treat unpaid administrative leave as an adverse action, which creates the same litigation exposure as a formal demotion or termination. If the goal is to create space while you investigate a situation, paid administrative leave is the far safer tool.
Should we offer severance even if we don’t think we’re at risk?
Yes, in many cases. A modest severance agreement with a signed waiver is one of the least expensive ways to reduce litigation exposure. Even when the risk feels low, a clean, documented close-out is almost always worth the investment.
This blog is not legal advice and does not create an attorney-client relationship with our firm. The content is intended to promote a general understanding of legal concepts and should not be relied upon as a substitute for obtaining legal advice from a qualified attorney regarding the reader’s specific circumstances. Readers should consult legal counsel for advice concerning their individual situations. All content is provided without any representations or warranties regarding completeness, accuracy, or timeliness.