- You can fire employees due to poor performance, misleading or unethical behavior or statements, property damage, or violating company policy.
- You cannot discriminate or retaliate against employees in your firing practices, nor can you fire them for any reasons related to immigration status or refusing to take lie detector tests.
- You should fire employees respectfully and privately with another colleague present, providing well-thought-out reasons for your decision.
- This article is for employers, human resources professionals, and managers who want to know some legal and acceptable reasons for firing an employee.
Almost every business owner will fire an employee at some point, but that doesn't make the process pleasant. It's even more unpleasant when you fire an employee and are later served with a wrongful termination lawsuit. To keep your company's practices legally sound, here is a list of valid reasons to fire someone and the best practices for doing so.
11 reasons to fire an employee
Technically, if your employment contracts include the provision that employment with your company is at will, you don't need a reason to fire an employee. Under at-will employment – which is only illegal in Montana – you can fire your employees for any reason that isn't illegal. Many reasons justify an employee termination beyond just the fact that you legally can do so. Those reasons include:
1. Sexual harassment, bullying, violence or disregard for safety
Employees who sexually harass or otherwise discriminate against a fellow employee are typically subject to an immediate firing. So, too, are employees who disobey workplace safety policies or bully their colleagues. It's also acceptable to immediately fire employees who are violent, or who merely threaten violence, toward other employees.
2. On-the-clock drug or alcohol use
It's one thing if your employee has a glass of wine at the company holiday party. It's another, though, if the employee is so inebriated they can't perform their work functions. Employees who are intoxicated in work settings not only reflect poorly on your company, but they also pose a danger. Drug and alcohol use in the office, at worksites, or work functions is a perfectly valid reason to fire someone.
3. Unethical behavior
Unethical behavior encompasses infractions like falsifying company records, lying about work tasks, and hiding information that could, if revealed to the public, lead to disastrous public relations. It can even include expressing strong, disagreeable political stances inside or outside the workplace. Any instance of unethical behavior, no matter how severe, is grounds for firing.
4. Damaging company property
If an employee damages company machinery, computers, or office space that results in significant financial or operational consequences, you can fire them.
5. Theft or misuse of company property
Theft is illegal, even if your employee takes a small bag of rubber bands home from your supply closet. That said, workplace theft is common, so you may want to only fire individuals who pilfer expensive items or items that represent a great cost to your business. Similarly, certain instances of company property misuse – for example, extensive use of company computers for personal purposes during work hours (or any amount of company computer use for morally dubious or illegal purposes) – may be a firable offense.
6. Misleading job applications
A 2017 study found that 85% of job applicants submit misleading or false resumes. If you learn that a current employee's resume contained fabricated information, you can fire them. However, if the employee overstated some minor qualifications and is doing their job well, you may want to think twice before firing them.
7. Poor job performance
Perhaps the most self-explanatory item on this list, poor job performance is a perfectly reasonable and legal reason to fire someone. Before firing an employee for poor job performance, however, meet with the employee, inform them of the areas they are struggling in and ways they can improve. While you still can fire an employee without taking these steps, doing so can lead to decreased employee morale.
8. Excessive absence
It's one thing for an employee to take an occasional vacation or sick day. It's another thing for them to constantly arrive late or rarely work a full week. Excessively absent employees prevent your company from meeting deadlines and goals – excessive absence is an acceptable reason to fire someone.
9. Poor culture fit
A poor culture fit could mean one of many things: Maybe your employee is constantly negative. Maybe they don't commit to their work or have a passion for it. Maybe they're constantly making jokes, talking to their colleagues or otherwise distracting your team. All of these are acceptable reasons to fire someone.
10. Violations of other company policies
While a violation of company policies can merit firing, think twice before dismissing employees for this reason. If your employee violates your social media policy by posting something that could drastically harm your company's public image, you can justify firing them. However, if your employee checks their personal social media accounts during work hours, that's not a severe enough infraction to justify a firing. Instead, gently remind the employee of the policy. If they continue to do so after your warning, then more extreme measures may be warranted.
While termination due to downsizing or budget cuts is often grouped separately from firing, it, too, is a valid reason for employee dismissal. If you need to let employees go, it's courteous to give them ample notice. The federal Worker Adjustment and Retraining Notification (WARN) Act requires certain employers to give advance notice ahead of layoffs.
With all of the 11 reasons cited above, the severity of the incident may determine whether a firing is justified. In some instances, you may be inclined to issue a written warning rather than terminate the individual's employment. In many cases, regardless of being absolutely justified for let the employee go, you are best served discussing the situation with your attorney before terminating an employee to ensure you aren't at legal risk for a wrongful termination lawsuit.
Key takeaway: The most common reasons for firing someone involve poor performance, property damage, misleading or unethical behavior or statements, or violation of company policies.
Illegal reasons to fire an employee
There are entirely illegal and impermissible reasons to fire someone, even in situations of at-will employment. These reasons include:
- Discrimination. You are breaking federal law if your firing practices are discriminatory. Read more in our article about equal employment opportunity compliance.
- Retaliation. You cannot fire employees who threaten lawsuits, whether for alleged discrimination, workplace safety violations or other reasons. You also cannot fire employees who don't comply with illegal requests.
- Refusing to take lie detector tests. In most cases, your employees have the right to decline taking lie detector tests. Refusal to take these tests is not a firable offense.
- Immigration status. As long as an employee can legally work in the U.S., you cannot fire them due to their immigration status.
Key takeaway: You cannot fire employees for retaliatory, discriminatory or immigration-related reasons, nor can you fire employees for refusing to take lie detector tests.
How to terminate an employee
Regardless of your reason for letting an employee go, remain respectful and tactful when doing so. [Read related article: Time to Let Go? 15 Expert Tips for Firing Employees]
Take the following steps when notifying an employee that you are terminating their employment:
1. Communicate openly and honestly with the employee well before the firing.
If you have an employee who isn't performing well, try tactfully and respectfully talking about these challenges with them in private without mentioning anything about discipline or firing. In some cases, the employee may agree with your assessments and leave on their own.
2. Set a time, date and place.
Choose a time and date to meet with the employee in a private area away from other staff. You should also choose a meeting time that allows the employee to gather their belongings discreetly, out of sight of other employees, immediately afterward.
3. Prepare beforehand.
Write a script for what you want to say. Outline your reasons for firing them, whether it's because of a one-time offense or a series of long-term infractions. Make sure the reasons aren't behaviors for which you're letting other employees off the hook, though. Your script should state that the decision is final and there isn't a chance that you will change your mind.
4. Have a colleague with you.
Ideally, a business partner, direct supervisor or HR employee should be present to keep affairs calm if the employee becomes angry or upset. Additionally, having another person in the room is important in case the terminated employee makes any legal claims about what was said in the termination meeting.
5. Don't make it personal.
If an employee isn't a fit for your company's culture, be kind about it. Don't insult the employee – just because they don't fit your company culture doesn't mean they won't fit in elsewhere. Likewise, if an employee is performing poorly, don't say they're bad at their job or insult their intelligence. Inform them that their performance doesn't meet your expectations.
6. Keep it short.
Plan a sufficient amount of time to present your case and for your employee to ask questions – perhaps no more than 10 minutes total. If they ask questions, keep your answers short and to the point.
8. Retrieve the employee's company materials.
When you fire an employee, you'll need to retrieve any company materials in their possession. That means keys, ID cards, work computers and more. You should also change all company software passwords that the employee has access to.
9. If applicable, provide and explain severance benefits.
If your company offers severance pay or COBRA insurance to fired employees, explain how the employee will receive these benefits. Be clear about when the employee can expect to be paid their final wages – you must pay for all work done, even if it's poor quality. If the employee must sign any nondisclosure agreements, have them do so before leaving.
Key takeaway: When firing an employee, be brief and respectful. Provide well-prepared reasons, have another colleague present, and retrieve the employee's company materials before they leave.