Handling Employee Terminations Legal Best Practices

Bonisiwe Shabane

-Oct 27, 2025, 10:47 AM

handling employee terminations legal best practices

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. This Employment Best Practices ‘Conversation with the Experts’ section is produced by the LA Times Studios team in conjunction with Lewitt Hackman and Scali Rasmussen. Businesses have been navigating through a continuously altering and evolving landscape when it comes to employment issues. Return-to-work mandates, new technological advancements and workforce shortages in many industries have led to a new set of expectations, protocols and best practices when it comes to businesses determining the management methodologies for their... What should C-suiters and HR professionals be focusing on in terms of current standards?

To answer that and other questions while taking a closer look at what businesses need to know in terms of the latest developing trends in employment laws and best practices, we have turned to... Bendavid of Lewitt Hackman and Jasmin Bhandari of Scali Rasmussen, who graciously weighed in for a discussion and shared insights. Q: What do you see as the most pressing legal challenges employers face in today’s employment landscape? Sue M. Bendavid, Chair, Employment Practice Group, Lewitt Hackman: Wage and hour compliance always challenges employers. Ever-evolving laws (statutes, ordinances, regulations, case law) make it nearly impossible for employers to maintain perfect compliance.

Plaintiffs bring a barrage of complaints, often involving meal and rest breaks, overtime and minimum wage claims. While some complaints are valid, many are not. The greater threat lies in potentially business-crippling penalties (e.g., waiting time, Private Attorneys General Act and attorneys’ fees), rather than the original wages owed. Mitigation requires continuous supervisor and HR training, as well as periodic internal audits to correct practices. Good faith efforts and practices may reduce or eliminate liability. 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. Employee terminations are an inevitable part of running a business, but they are often one of the most challenging responsibilities for HR managers and business owners. Terminating an employee requires a careful balance of legal compliance, empathy, and strategic planning. A compliant and ethical approach can help your business avoid costly lawsuits, protect your company’s reputation, and ensure smooth team transitions. This guide will walk you through the key aspects of handling terminations effectively, with a focus on compliance best practices. Poorly managed terminations can lead to a host of issues:

By following sound HR practices, you can mitigate these risks while upholding fairness and professionalism. hbspt.cta._relativeUrls=true;hbspt.cta.load(9337998, 'ea198024-2368-4de0-b985-261b41d8f7e8', {"useNewLoader":"true","region":"na1"}); Terminating an employee in the United States can be straightforward in theory, thanks to “at-will” employment in most states. However, in practice, failing to follow legal protocols can lead to costly wrongful termination claims. Federal laws, such as Title VII of the Civil Rights Act, protect employees from discrimination, while state laws may impose additional safeguards. Understanding the scope of these laws ensures employers make lawful, fair, and defensible termination decisions.

Employers must also be aware of special protections for employees on medical leave, those who have filed workplace complaints, or individuals belonging to protected categories such as age, disability, or religion. Ignoring these protections can result in severe legal and reputational consequences. Preparation is critical to ensure a termination is handled both legally and respectfully. A poorly planned meeting can escalate emotions and increase the likelihood of disputes. Employers should prepare a clear script, gather all relevant documentation, and involve an HR representative or legal counsel during the process. The goal is to communicate the decision professionally, avoiding language that may be interpreted as discriminatory or retaliatory.

Timing also matters—avoid terminations during sensitive moments, such as right after an employee’s medical leave or while they are actively engaged in protected workplace activities. Such timing could raise suspicion and invite legal scrutiny. Good documentation is the cornerstone of a legally sound termination. Performance reviews, attendance records, and documented warnings create a paper trail that demonstrates the decision was based on objective, lawful reasons. This is especially important if the employee later files a wrongful termination lawsuit. 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. 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...

Handling Employee Terminations Legal Best Practices

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