All too many employers become entangled in costly litigation after making simple, avoidable mistakes when terminating an employee. Even with careful steps, there is no guaranteed way to prevent every claim, but good practices can greatly reduce risk.
Following proper procedures and avoiding common errors will improve your chances of defending a termination. For employers considering risk-transfer options, review Wrongful Termination Insurance to understand available coverages.
Common termination mistakes
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1. Not documenting sufficiently. The reason for a termination can look superficial or groundless without detailed documentation. Record all problems with performance or attendance, including dates, examples, and supporting evidence.
For alleged misconduct, conduct an unbiased, thorough investigation and keep contemporaneous notes that describe findings and sources of information.
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2. Not ensuring performance evaluations are accurate. Supervisors should be trained and encouraged to give fair, honest, and accurate appraisals.
If reviews say performance was adequate and the employee is later terminated for poor performance, that inconsistency can lead to disputes. Supervisors sometimes give unmerited positive ratings to avoid confrontation; document coaching, warnings, and measurable goals to avoid mixed signals.
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3. Not spelling out human resources procedures and policies. Terminations should follow federal and state law and your own written policies.
An employee handbook that clearly explains performance expectations, misconduct definitions, and consequences strengthens your position if a termination is challenged.
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4. Not giving an employee notice of termination. While notice is not required in every jurisdiction, providing clear notice often reduces misunderstanding and the risk that an employee will attribute their termination to unrelated issues.
If you opt not to give notice, be prepared to demonstrate that the employee knew the standards and that repeat infractions would lead to termination.
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5. Not providing just cause. Although many employees are at-will, do not assume at-will status shields every termination.
Base terminations on objective, documented reasons and be mindful of protected classes such as sex, age, race, disability, and religion when making decisions.
Organize documentation in chronological order to show a pattern and a credible foundation for termination decisions.
For policies and coverage that relate specifically to separation events, see Termination of Work Coverage. For guidance tied to hiring and screening processes that can prevent later disputes, review Hiring (Insurance).
If you want help applying this to your business or reviewing options, talk to an agent about appropriate protections and best practices.
Frequently Asked Questions
What records should I keep when managing performance issues?
Keep dated notes of incidents, written warnings, performance plans, investigations, and any supporting emails or documents to show progressive steps taken.
Is notice of termination required?
Notice requirements depend on jurisdiction and the employment agreement; providing notice is often recommended to reduce misunderstandings even if not legally required.
Can an at-will employee be terminated for any reason?
At-will status allows termination without cause in many cases, but employers should avoid actions that could be perceived as discriminatory or retaliatory and should document legitimate reasons.