Navigating At-Will Employee Termination

If we hire an “at-will” employee to work for our company and we have to let him go, is there any law(s) that we need to be aware of, or this is all based on our company policy? Are we supposed to keep him for a certain period of time?

Answer: As you know, we are not lawyers and do not provide legal opinions. The comments that we offer on legal topics are not based on any legal qualifications and should not be considered as anything other than general feedback. Our ability to find information that is directly responsive to legal and regulatory questions is limited to referencing documents published by the government or other sources. If you are uncertain of your obligations under federal and state labor laws with respect to a particular employee termination or other employment matters, you should consult a local labor lawyer to ensure compliance.

We do not know the details of your company’s formal termination policy (if any) or whether your company has formal employment agreements with its employees, which could affect your notice and monetary obligations in employee terminations, but companies can generally terminate employees for lack of work due to a business slowdown or project completion or for other valid reasons.

While your state may be an “employment at-will state,” which generally provides employers with discretion to terminate employees with or without cause, employers should always use caution to avoid committing a wrongful termination. While you may not be able to stop an employee from suing you (many people file unsubstantiated or frivolous lawsuits), you can greatly lessen the likelihood of a former employee suing you and winning a judgment with effective hiring procedures, timely employee performance reviews, formal steps of discipline, and other written policies and procedures that protect against non-compliance of labor laws. Wrongful terminations can be based on discrimination or other claims. Also, the state and federal governments do protect employees from discrimination and other wrongful terminations even in employment at-will states.

Labor laws, employment contracts, company policies, and other factors can influence an employee discipline and termination. Some employee actions that violate company policy, like theft for example, are the basis for immediate termination, while performance issues are often handled with steps of discipline, whether required by law or not. As discussed in the information below, formal steps of discipline are not required but can be useful to help a potentially good employee improve their performance and avoid termination, which in turn saves you the time and cost of replacing the employee. Steps of discipline like other HR policies, if adopted, must be consistently enforced to avoid discrimination or other potential legal claims by employees. Performance related issues are best done with timely written reprimands to reinforce the policy. Termination for cause (fighting, drinking on the job, theft, etc) can usually be immediate. For discussion with your lawyer, you can review wrongful termination and related information at the following websites:

Basic steps to terminate an employee:

Wrongful terminations:

Steps of discipline:
Pros and Cons of Progressive Discipline: blogspot.com

Potential paperwork and other issues with employee terminations:

Sample company policies:

Links and references to samples and template documents have been provided above. Templates and sample documents can be very useful but businesses should exercise caution in the use of such documents. Sample employee handbooks for example may not include every topic needed to address your particular fringe benefit programs, compensation plans, and other circumstances. A well-conceived document will, however, be relatively easy to modify, allowing you to add and delete sections as appropriate. Due to the complexity of labor laws, and the potential for liability in such areas as discrimination and confidentiality, we recommend that all employee handbooks and personnel policy statements be reviewed by a qualified labor lawyer.

Published: May 29, 2013
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Rick Gossett

As COO of Tarkenton Companies for more than 20 years, Rick has been responsible for business software development, unique partnerships, business educational content and consulting, and more. Rick was the originator of Tarkenton Companies’s consulting service and initially handled all of the questions himself. Prior to joining Tarkenton Companies, Rick owned and operated a private practice as a CPA. Prior to that, he was a Senior Manager at Pannell Kerr Forster in tax and audit, as well as Principal in Ernst & Young's small business advisory group.