Legitimate Reasons to Fire an Employee Without Exposing Your Company to Legal Risk

What You’re Allowed to Do Under At-Will Employment and Where Employers Get It Wrong

Most private-sector jobs in the U.S. are considered at-will, which means employers can terminate the employment relationship at any time, with or without cause. That authority exists because there’s no contract guaranteeing continued employment. But that flexibility doesn’t eliminate exposure to discrimination claims, retaliation allegations, or contract-based disputes.

What At-Will Employment Actually Permits

Employers may end employment without notice or explanation unless internal policies, offer letters, or written agreements place limits on that discretion. For example:

Terminations based on race, sex, age (40+), disability, religion, or other protected categories are illegal under federal and state laws.
Firing an employee for reporting harassment, requesting medical leave, or filing a wage claim may be viewed as retaliation and can result in a wrongful termination lawsuit.
Offer letters, handbooks, and employment agreements may restrict an employer’s discretion by requiring cause, documentation, or specific procedures before termination.

Where Employers Miscalculate

Even when employers terminate an employee for misconduct or performance issues, careless execution can still create legal risk.

Common errors include:

Failing to document performance issues or policy violations
Terminating shortly after an employee engages in protected activity
Applying discipline inconsistently between employees in similar roles

Patterns like this raise doubts about the employer’s true motivation and make the termination harder to justify if challenged.

What to Do Instead

Employers should document each instance of poor performance, policy violations, or other workplace misconduct as it happens. Documentation should include what occurred, when it occurred, and how management responded. A short, dated entry, whether it’s a formal write-up or a brief note, can establish a pattern that supports the decision. When a firing takes place and there’s no written record of the underlying issues, the employer may struggle to justify the action if it’s later challenged.

Consistency is just as important as documentation. Terminating one employee for a violation that others have only been warned about can suggest bias or retaliation, even when the employer’s intent was neutral.

At-will employment allows flexibility, but that flexibility doesn’t eliminate risk. A consistent, well-documented process strengthens the company’s position if the termination is scrutinized later.

When Poor Performance Goes From Frustrating to Actionable

Not every underperforming employee can, or should, be terminated right away. Terminating an employee without giving them a chance to correct the problem or without documentation can trigger a wrongful termination claim. Waiting too long, on the other hand, can damage productivity, weaken team morale, and undermine the employer’s credibility with the rest of the staff.

The Line Between Disappointment and Justification

Poor performance justifies termination when the employee fails to meet job expectations and the employer has documentation to support the decision. Without records that show what the employee was expected to do and how they failed to meet those expectations, the termination can appear subjective or even retaliatory if challenged.

Isolated mistakes or vague concerns often fail to justify termination when the decision is challenged through a legal complaint or administrative process. Agencies and courts want to see whether the employee was made aware of the problem, given a reasonable opportunity to improve, and treated the same as others in comparable roles.

How Documentation Strengthens Termination Decisions

Employers are in a stronger position when they can point to records showing what the employee was expected to do, how they fell short, and when the performance problems occurred. That might include:

Missed production or project deadlines after multiple warnings
Failure to complete core job duties despite written instructions
Poor-quality work that continued even after a performance improvement plan was issued

Internal records provide the context and continuity that explain how the situation developed and why termination became appropriate.

Strong documentation should:

Reference the employee’s specific job duties
Include dates, objective examples, and direct supervisor feedback
Record any guidance, coaching, or formal warnings given to the employee
Show the steps taken to correct the issue

Employers who fail to document performance problems often fall back on language like “poor attitude” or “just not working out.” Phrases like these don’t hold up under scrutiny and can weaken the employer’s defense.

Policy Violations That Justify Immediate Dismissal

Some actions go beyond poor judgment or weak performance. Misconduct that clearly violates company policy may justify immediate termination. If the violation is documented and tied to written rules, same-day dismissal without providing prior warnings can be both defensible and necessary.

Types of misconduct that often support immediate dismissal include:

Theft or misuse of company property
Threats or violence in the workplace
Harassment or discrimination toward coworkers, supervisors, or customers
Intentional disregard for workplace safety protocols
Falsifying company records, time entries, or expense reports
Accessing or sharing confidential information without authorization

Violations like these can threaten the company’s operations, legal position, and workplace safety.

Selective Enforcement Creates Legal Exposure

Firing an employee for violating a company policy may backfire if others have broken the same rule without consequences. Uneven discipline can suggest bias or retaliation, especially if the employee recently filed a complaint or requested protected leave.

To defend the decision, employers need more than a written policy–they need a clear record of consistent enforcement across similar situations.

Policy Violations That Commonly Lead to Termination

Some company policies carry more weight than others when justifying a termination. Employers should identify which rules, when broken, create legal, financial, or operational consequences and make sure those policies are clearly written, acknowledged, and enforced.

Policies that are frequently cited in termination cases include:

Workplace conduct policies, including rules against harassment, threats, discrimination, and physical or verbal abuse
Data security and confidentiality rules, especially those involving access to client data, trade secrets, or internal records
Attendance and timekeeping expectations, particularly when unexcused absences or timecard fraud create workflow or payroll issues
Safety requirements, especially in industries where compliance affects legal liability, insurance, or OSHA standards
Conflict of interest or outside employment restrictions, when the employee’s outside activities interfere with business operations or client trust

Employers should also keep records showing that employees received and understood these policies. That includes signed handbook acknowledgments, onboarding checklists, and any refresher training. When enforcement is tied to documented expectations, terminations are easier to justify and harder to challenge.

What to Do When an Employee Puts the Company at Risk

Not every termination results from ongoing poor performance or clear misconduct. In some situations, an employee creates exposure that puts the business at risk financially, legally, or reputationally. The behavior may not violate a specific policy, but the consequences are serious enough to require action.

When Risk Justifies Termination

Employers should take action when an employee’s behavior threatens the company’s interests. Risk-based concerns may arise when an employee:

Disregards security procedures and compromises confidential data or trade secrets
Makes public statements that damage the company’s reputation or share private information
Violates safety protocols in a way that could endanger others, even if no harm occurred
Fails to disclose a conflict of interest or engages in behavior that appears self-serving
Mishandles company funds or raises credible concerns about fraud, even without direct evidence of intent

In situations like these, the threat to the business may be too significant to justify a progressive discipline process. However, employers should still be prepared to justify the decision through clear documentation.

What to Record When Business Risk Drives the Decision

When an employer terminates an employee because of a risk the employee created, they should focus on documenting:

The nature of the risk (for example, unauthorized data access, reputational damage, or compliance failures)
The potential impact (such as client loss, regulatory scrutiny, or public backlash)
Internal reactions (including leadership response or concern from clients or stakeholders)
Connections to business obligations (like contract terms, licensing requirements, or investor expectations)

The documentation should not simply reflect that the behavior was concerning. It should explain why the employer viewed the situation as a risk to the business, and how that conclusion was reached through facts, not assumptions or subjective frustration.

How to Protect the Company During and After the Termination Process

Employers who mishandle the termination process risk triggering retaliation claims, wage disputes, or allegations that the firing was generally unfair or inconsistent with company policy. The process should involve documentation, communication, and actions that reduce risk.

Prepare Before the Conversation

Before moving forward with a termination, the employer should review the employee’s file to confirm that documentation is complete and up to date. It’s also important to consider whether similar conduct has been handled the same way in other cases. If the employee recently took medical leave, filed a discrimination complaint, or raised a wage concern, the documentation should make clear that the termination is unrelated to that activity. If the record is incomplete or inconsistent, the employer should resolve those issues before proceeding.

Communicate Clearly and Stick to the Facts

Employers should conduct a termination meeting, where they clearly state that the employee is being fired, when it takes effect, and what the next steps are. Any attempt on the part of the employer to soften the message with vague explanations or personal opinions could potentially confuse the employee and increase the risk that they might challenge the decision down the line.

Follow Through After the Meeting

After the meeting, employers should record who was there and what was said. Employers should immediately revoke the former employee’s access to systems, company records, and sensitive materials to protect the business from unnecessary risks. Employers should issue the employee’s final paycheck on time and provide any notices that might be required under state or federal law.

What to Watch for After Termination

After a termination, an employer may still need to respond to unemployment claims, personnel file requests, or outside inquiries about the decision. A designated contact—typically an HR manager—should handle those responses using only the facts documented in the employee’s file. If the former employee makes public accusations or files a complaint, no one at the company should contradict the record, speculate, or offer casual commentary.

Get Strategic Support Before and After Termination

Terminating an employee is one of the most scrutinized decisions an employer can make. Conn Maciel Carey helps businesses prepare for what comes next—whether that means handling pushback from the departing employee, responding to agency inquiries, or defending the decision months later. Our attorneys work with employers to reduce liability, preserve credibility, and carry out terminations that hold up when challenged.

This article is for informational purposes only and does not constitute legal advice. While we strive to ensure accuracy, laws and regulations may change, and unintended errors may occur. This content may not address every aspect of the relevant legal requirements. For guidance on your specific situation, consult your attorney.