Terminating an employee is never easy, and when done incorrectly, it can expose a business to unnecessary legal and financial risks. A termination that is rushed, poorly documented, or mishandled can lead to wrongful termination claims, discrimination lawsuits, or even damage to workplace morale. Here are the five most common mistakes employers make when firing an employee—and how to avoid them.
5. Failing to Document Performance or Misconduct Issues
Many employers terminate employees without sufficient documentation to justify the decision. This can create problems if the employee later claims they were let go unfairly. Without a record of performance concerns, attendance issues, or disciplinary actions, an employer may struggle to prove that the termination was based on a legitimate and non-discriminatory reason.
How to Avoid This Mistake:
- Keep detailed records of employee performance, including written warnings, performance improvement plans, and disciplinary actions.
- Ensure all documentation is consistent and free from vague or subjective language.
- Conduct regular performance reviews and provide clear feedback to employees before termination becomes necessary.
4. Ignoring Employment Contracts, Handbooks, or Policies
Terminating an employee without reviewing applicable policies or agreements can lead to unintended legal consequences. If the employee has a contract with specific termination provisions or the company’s handbook outlines a required disciplinary process, failing to follow these guidelines can create legal exposure.
How to Avoid This Mistake:
- Before making a termination decision, review any employment contracts, offer letters, or company policies to confirm compliance.
- Ensure that internal policies are followed consistently for all employees to avoid claims of unfair treatment.
- If applicable, determine whether severance, notice periods, or other obligations apply to the termination.
3. Terminating Employees in a Way That Could Appear Retaliatory
Even when an employer has a legitimate reason for termination, the timing and circumstances surrounding the decision matter. If an employee has recently filed a complaint, requested leave, or engaged in other legally protected activity, the termination could be perceived as retaliatory—even if that wasn’t the intent.
How to Avoid This Mistake:
- Evaluate whether the employee has recently engaged in protected activity, such as reporting harassment, requesting an accommodation, or taking FMLA leave.
- Ensure that the termination decision is supported by clear, documented business reasons unrelated to any protected action.
- When possible, maintain consistency in how similar performance or conduct issues have been handled in the past.
2. Mishandling Final Paychecks and Benefits
Failing to comply with state laws regarding final paychecks, accrued vacation payouts, and benefits continuation can lead to unnecessary penalties and disputes. Employers who delay final wages, fail to pay out earned PTO (where required), or improperly handle COBRA notifications may face claims from former employees.
How to Avoid This Mistake:
- Verify state-specific final paycheck laws, including whether unused PTO or commissions must be paid out.
- Ensure all final wages are paid on time and accurately reflect any earned compensation.
- If offering severance, use a well-drafted agreement that includes a clear release of claims.
1. Proceeding Without Legal Oversight
One of the most common but preventable mistakes employers make is moving forward with a termination decision without reviewing it with legal counsel. Even when the reasons for termination seem straightforward, hidden risks—such as potential discrimination claims, ADA accommodations, or wage disputes—can complicate the situation.
Why Legal Oversight Matters:
- An attorney can help assess whether the termination decision could lead to legal claims.
- Proper legal review can ensure that severance agreements, final pay, and other factors are handled correctly.
- Consultation with knowledgeable counsel helps protect the business from costly litigation by ensuring compliance with applicable employment laws.
Final Thoughts: Protect Your Business by Taking the Right Steps
Terminating an employee isn’t just about making the right decision—it’s about handling the process correctly to protect your business. While documentation, consistency, and compliance with policies are critical, seeking legal guidance before a termination can often prevent costly mistakes. If you are considering terminating an employee and want to ensure you do it right, contact our employment law team today. Taking the right precautions now can save your business significant time, money, and risk down the road.