Have an underperforming employee (6 months in). At-will state. Want to let them go but nervous about wrongful termination claims. They're in a protected class. What's the safest process?
Have an underperforming employee (6 months in). At-will state. Want to let them go but nervous about wrongful termination claims. They're in a protected class. What's the safest process?
Everyone is in some protected class (race, sex, age, etc. — even white males over 40). The question is whether termination is discriminatory or retaliatory. If it's genuinely performance-based, you're fine.
Best practices:
1. Document performance issues in writing BEFORE terminating (emails, performance reviews, PIPs)
2. Be consistent — would you fire anyone else for the same behavior?
3. Don't mention protected characteristics in any communications
4. Have a neutral third party in the termination meeting
5. Keep the meeting short — "We're ending the employment relationship effective today"
6. Provide final paycheck per state law (California = same day)
Offer severance in exchange for a release of claims. Even 2 weeks severance gets you a signed waiver. Use a lawyer to draft the separation agreement — the release language matters.
For employees 40+, you must give them 21 days to consider and 7 days to revoke (OWBPA requirements).
Practical reality: most employees don't sue. The ones who do usually had red flags (threatened litigation, filed internal complaints, etc.). If this is a clean performance issue with documentation, you're probably fine.
That said, if you're nervous, spend $500 for an employment lawyer to review your documentation and bless the termination. Cheap insurance.
This is really helpful. Going through something similar right now - employee has been underperforming for 3 months and I've been documenting everything. The PIP suggestion is good but I'm wondering how long the PIP should typically last before I can terminate if there's no improvement?
Also curious about the severance/release trade-off. Is 2 weeks standard or should I offer more?
@SmallBizSam PIPs typically run 30-90 days depending on the role and issue. 30 days for straightforward performance issues, 60-90 for more complex situations where you want to give them a real chance to improve.
On severance - 2 weeks is minimum for getting a release signed. Industry standard is usually 1-2 weeks per year of service. But honestly for problem employees sometimes offering a bit more (3-4 weeks) gets them to sign faster and leave without drama. Worth the peace of mind imo.
Somewhat different perspective - in my experience the documentation part is what most small business owners mess up. They wait until they're ready to fire someone and THEN start documenting. By then its too late to build a real paper trail.
Start documenting performance issues the first time you notice them, even if termination isn't on your radar yet. Future you will thank you.
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