Fire Hazard
How to dismiss an employee without getting sued

The risk of a “wrongful discharge” lawsuit is an unfortunate fact of life for today’s business owner. Nevertheless, sometimes an unsatisfactory employee must be fired. Here’s the right way to do it, while minimizing the chances of costly and time-consuming litigation.

If you are forced to fire an employee, keep two key objectives in mind:

  • Make sure the employee understands the reasons for the dismissal. That makes it less likely that the worker will imagine unacceptable reasons for it, and sue you.
  • Handle the dismissal in a manner that minimizes the chances that the employee can win in court if a suit is filed.

It sounds simple, but the policies and procedures that lead to success in those two objectives begin well before an employee has a chance to fail or succeed at the job.

Here are some of the basics:

Put the rules in writing.
Before hiring anyone, an employer should decide how and why an employee could face dismissal, and that policy should be in writing and handed to each new hire.

Many employers have an “at will” policy, meaning that the relationship may be terminated by either employer or employee at any time, with cause or without it. If you have an “at-will” standard, it should be formalized in a written contract signed by the employee.

Be consistent.

Human nature being what it is, most employers have a tougher dismissal policy in place than they are willing or able to enforce. For the sake of fairness and consistency, you have to decide the “real” minimum standard of performance and conduct you demand.

The keys to meeting that standard are properly trained supervisors and regular performance evaluations. Both give the employee a fair chance to improve performance, and avoid dismissal.


If an employee is not doing the job, the supervisor should tell him or her what the problem is, suggest ways to correct it, and make it clear what will happen if there is no improvement. The employee must be given  time to improve, and feedback on progress.

Formality helps. A performance evaluation must clearly state how an employee is performing relative to expectations. It should be both discussed with the employee and put it writing for the employee to sign.

Of course, the worst forms of misconduct, like theft, are so intolerable that the employee must be fired immediately. Few cases are so clear-cut. That’s why an employer needs to be clear about what types of misconduct will lead to immediate dismissal, and consistent in dealing with less serious failings.

Before you consider firing an employee, try disciplinary action, and make sure the employee understands why it is being taken. If the employee exhausts every opportunity for improvement, the employer should issue a final warning.

No frontline supervisor should have the authority to fire an employee on the spot.  In fact, it would be wise to designate an impartial “discharge czar” to make the final decision.

When all else fails.

Even if you’ve done all you can to prevent it, at some point you may have to dismiss an employee. When it gets to this stage, it is always wise to seek the advice of legal counsel.

Some other commonsense steps to take:

  • Make sure another person is present to take notes at the final interview.
  • Protect the employee’s privacy and dignity, but explain clearly and honestly why his or her continued employment is not in the company’s best interests.
  • Don’t just talk, listen. The employee should be given a chance to respond.
  • Consider pre-emptive resolution of any likely point of dispute. Many can be headed off early and inexpensively through the offer of a severance agreement or settlement. In such cases, legal counsel may be needed.


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