Employee Termination Best Practices Practical Law

Bonisiwe Shabane

-Oct 30, 2025, 4:30 AM

employee termination best practices practical law

In a perfect world, employees perform optimally, enjoy high job satisfaction, and stay with one company until retirement. This type of perfection rarely exists. According to the U.S. Bureau of Labor Statistics, the median employee tenure with a single company is 3.9 years. While some staff members resign voluntarily, others are involuntarily terminated. Improper or illegal terminations expose companies to consequential legal issues and financial risk.

Employers must attempt to close all possible doors to post-termination litigation to avoid lengthy and expensive legal battles, adverse publicity, and any detrimental impact on employee morale. Make sure your employees understand their job responsibilities, the company’s policies and code of conduct, any performance issues, and ways to improve their performance. That said, the most important way to avoid litigation is by adhering to all applicable federal, state, and local laws concerning employment. Never fire an employee for an improper or illegal reason. Doing so leads to accusations of discrimination, retaliation, or breach of contract. Emotions run high following an involuntary discharge and some ex-employees are just looking for a fight.

While nothing can totally bar former workers from pursuing legal action, employers can take steps to take the wind out of these individuals’ litigious sails. Get a free trial of Practical Law, the how-to resource with termination best practices, protocols and practical tips for employers on legal risks. The best way to escape a lawsuit it to avoid its inception. Implementing and following proper termination practices minimizes the risk of encountering a wrongful termination claim. Before initiating a dismissal process, employers must understand all applicable federal and state employee termination laws and policy requirements. To protect confidentiality, only include critical individuals in discussions.

Federal and state agencies have laws about how and when employees can be fired. Follow these policies and your company guidelines to avoid wrongful termination claims. All states, except Montana, allow "at-will" employment. This means that an employer or employee can end the employment at any time, for any reason. However, the reason for termination cannot be illegal. This includes:

At-will employment may not apply to everyone. It does not include employees who work: These government resources can help you make sure you are following termination rules: Ask a real person any government-related question for free. They will get you the answer or let you know where to find it. As part of our “Employment Law – What Employers Need to Know Now” webinar series, Garfunkel Wild’s Andy Zwerling and Sal Puccio will present the webinar “Navigating Employee Terminations: Practical Strategies and Best Practices...

This program discusses the legal and practical considerations related to separating from an employee. Join Andy and Sal as they discuss employer best practices related to terminating the employment of an employee. The decision to separate from an employee is never an easy one and may come with claims of wrongful termination. Preparation and organization of a termination process are key, including considering the decision to separate from an employee, potential issues with termination, and steps to deliver the message. Streamlining the process helps to ensure a smooth transition while shielding the entity from potential liability. Copyright © 2025 Garfunkel Wild, P.C.

All Rights Reserved. Attorney Advertising. Prior results do not guarantee a similar outcome. New York • Washington, DC • Connecticut • New Jersey • Florida Firing an employee represents one of the toughest duties business owners and HR managers must confront. Employee termination generates significant stress while draining emotional reserves and creating numerous legal complications.

In March 2025 U.S. employers disclosed 275,240 job cuts indicating an alarming 205% growth from 2024. The problem? Most companies are doing it wrong. Poor handling of terminations can expose your business to costly legal battles, harm your reputation and lower morale among current employees. Employee termination isn’t just about saying goodbye.

Employee termination follows a lawful procedure that includes specific requirements that differ depending on the state. Home U.S. Labor Laws How to Terminate an Employee Master employee termination with this step-by-step guide for compliance and business safety. Ensure fair, respectful, and legally sound terminations. In September 2024, 5.2 million employees separated from their jobs in the U.S., with 1.8 million of these due to layoffs or discharges.

This high rate of turnover underlines the importance of handling employee terminations carefully and in compliance with U.S. labor law to protect your business. Terminating an employee is one of the toughest tasks a manager can face. Beyond the emotional and interpersonal challenges, there are complex legal requirements to follow. In the U.S., both federal and state laws regulate the termination process, requiring businesses to adhere to guidelines under U.S. labor law to avoid wrongful termination claims.

Here are some best practices for handling employee terminations: Before terminating an employee, it is crucial to have a paper trail that outlines the reasons for the termination. Document any performance issues, disciplinary actions, or warnings given to the employee. This documentation will serve as evidence if the termination is ever challenged legally. Having proper documentation is essential in any termination process. It helps ensure that the decision is fair and justifiable, reducing the risk of potential legal disputes.

Whether it’s poor performance, violation of company policies, or misconduct, be sure to thoroughly document each issue and the actions taken to address them. Include specific dates, times, and details of incidents or discussions with the employee. This will provide a clear timeline of events and support your decision to terminate if needed. Remember to maintain confidentiality when documenting sensitive information, keeping it secure and accessible only to authorized personnel. Adhering to company policies and applicable employment laws is crucial when terminating an employee. Familiarize yourself with the local labor and employment laws and regulations to ensure that the termination process is carried out in compliance with legal requirements.

Review your company’s policies and procedures regarding terminations to ensure consistency and fairness in handling employment terminations. Be mindful of any contractual obligations, such as notice periods or severance packages, and ensure they are properly followed. Terminating an employee is one of the most difficult and significant actions an employer or supervisor can take. It should be approached with careful consideration, as its repercussions extend beyond the employee and the employer. Even when employees recognize that a coworker was underperforming, had a negative attitude, or was not a good fit, a termination can create uncertainty and unease among the remaining staff. Additionally, a termination may lead to a wrongful discharge claim, which, even if not legitimate, can be costly, distracting, and detrimental to workplace morale.

Consider the following factors throughout the termination process to ensure that employees’ rights and dignity are protected while also safeguarding your organization’s best interests. First, let’s take a brief look at some important legal issues. Under the traditional doctrine of employment at will, workers without an employment contract serve at the discretion of their employer. The employer has an absolute right to fire employees “at will” for any reason or for no reason at all—except for reasons that violate anti-discrimination laws. Many federal and state laws place restrictions on termination. Title VII of the Civil Rights Act of 1964 prohibits employers from firing employees for discriminatory reasons or retaliating against employees who oppose any unlawful employment practice or who make a charge, testify, assist,...

Similar job protections are extended to employees under the Age Discrimination in Employment Act (ADEA), Family and Medical Leave Act (FMLA), and Americans with Disabilities Act (ADA), which protect them from termination based on... Running a business is difficult — and having to terminate an employee may be one of the hardest things you’ll ever have to do as part of its operations. Employee termination can significantly impact employee morale and company culture. If a termination is not handled correctly, it can also put a business at risk of serious legal repercussions and reputational harm. Not only is firing someone an emotionally difficult task, but there are many statutory and regulatory obligations that must be considered to avoid the potential for litigation. Here are several tips for employers to keep in mind when it comes to employee termination to help ensure the process runs smoothly:

There are a broad range of state and federal employment laws that impact the termination process. It’s essential for employers to have an understanding of both employer and employee rights — as well as ensure they are adhering to all applicable regulations regarding employee termination. Remaining compliant is key to avoiding legal consequences. Notably, upon termination, an employer in California only has 72 hours from the end of an employee’s last shift to provide them with their final paycheck. Failure to do so can result in the company having to pay the equivalent of one day’s earnings for each day the final wages are late. The likelihood that you will have to fire an employee on the spot is usually low, unless there are egregious circumstances.

While there may be violations and issues that warrant immediate action, be sure that the decision to terminate is based on fact, not emotion. Basing your decision to terminate an employee on established facts — rather than emotion or opinion — is key to minimizing the risk of a wrongful termination claim.

Employee Termination Best Practices Practical Law

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