The Retail Management Advisors, Inc. logo


No one relishes an unpleasant task but if you have an employee, eventually you will probably have to deal with firing an employee. The sad truth is that even if the employee is a habitual under-achiever, a trouble-maker, or thief, it is a sad and emotional experience for both parties.

People are normally terminated for one of several reasons including breaking company policy or rules, downsizing/reorganization or poor performance. In any one of these three situations, it shouldn't be surprising to the employee that he or she is being let go. Yet, firing an employee will take more effort than just uttering the words, "You're fired!" even for an "at will" employer.

In most states, employees are considered "at will," which means they can be terminated at any time for any reason except race, gender, sexual orientation, age (40 or over), national origin, religion and/or disabilities. However, the reality of the situation is that you must have documentation to back up your claim of poor performance prior to the event. Therefore, start your "at will" employee relationship on the day you hire.  Provide each employee his or her own copy of the rules and procedures and have them sign that they received 
it, read it and their questions were answered.

Employees who feel they were unjustly dismissed may go to great lengths for vengeance; they may steal, become competitors, or bring lawsuits. Take the necessary steps to protect your company from a future disgruntled employee.

1. Firing an employee begins during the interview process. Talk to potential employees. While there may not be anything "wrong" with them, will they be a good fit with the company? Many candidates can complete the assigned tasks, but will their personality and demeanor mesh with that of their co-workers and your vision for your store? Avoid employment contracts for specified durations. Also, avoid any references to guaranteed or lifetime employment or wording like "the employment relationship will last as long as work is satisfactory." When making a job offer, do not quote an annual salary, but quote a salary in the smallest increment possible, i.e. hourly or weekly. This way you have not implied an employment contract.

2. When you hire a new employee, give them your employee policy manual. The policy manual should clearly state the you are an "at will" employer. Your policy manual need not cover any and every possibility, just basic policies and procedures. Include an explanation that this is not an "exclusive list." The policy manual will address attendance expectations, rules on conduct, dress codes, vacations, benefits, sickness, etc. Keep in mind this does not have to be a static document; make changes as needed and distribute the changes to all employees. Date the changes as they are added to the policy manual.

3. Issue the policy manual to each employee and have them sign that they have read it. Keep each employee's signed acknowledgment in their personnel file. That means that for each employee you have, you should have at least 2 pieces of paper in their file, their acknowledgement of the handbook and their original application. The employee policy manual will be of no benefit if it is kept exclusively on the boss's computer or as a lovely leather-bound copy on a shelf. Remember, if the matter goes to court for a wrongful discharge and the employee did not have the handbook or had not read it, the courts will probably choose in the favor of the employee-because the employer had the opportunity to communicate his policies but failed to do so. A rule of thumb is "If its not in the file, it didn't happen."

4. Document performance reviews and warnings! Be specific. "Lately, you have been slacking off" is little more than a critical opinion. But, "You have arrived late to work 11 times in the last 3 weeks, and your break 4 of 5 days this week exceeded the 15 minutes allotted. I need you to be at work and ready to work on time every time" is a specific warning.. If there is a discipline problem that needs to be addressed, put it in writing (i.e. chronic tardiness, absenteeism, insubordination, etc.) Note the day and time you spoke about this to your employee. I repeat, a good rule of thumb: If there is no paper in the file, the (mis)conduct did not occur. Another good idea is don't put anything in your employees' personnel files you do not want a jury to see. Be factual, be objective, and be fair.

A special note about fairness: It is sometimes hard to see things from the employee's viewpoint but it is critical that you do. Example: You have one 60 year old employee who opens the store each morning and she is tardy 2 to 3 times a week frequently opening the store a few minutes late. Before you speak to her, consider your other 2 employees, both in their thirties, who work later in the day until the store closes. They also arrive tardy most days. No matter how you say it, if only the opening employee is disciplined, i.e. the only 60 year old employee, that employee has grounds for an age discrimination suit. The matter of being tardy may not enter into the discussion.  In this case, all the employees should be disciplined about excessive tardiness.

5: There are five words that you must use when warning an employee that he/she is in danger of being terminated: YOUR JOB IS IN JEOPARDY. Yes, you have to say the words and write them. Put all "job in jeopardy" warnings in writing and ask the employee to sign it. If they refuse to do so, try to make sure that there are two of you representing the employer in the disciplinary counseling session. Then, simply write on the document, "This final warning was given to (employee name) on June x, 20xx; he refused to sign the document, but is aware that his job is in jeopardy." Put the document in the employee's personnel file and be prepared to provide it as evidence if the employee is ultimately fired and files for unemployment benefits.

6. If you give regular performance evaluations, good for you. These go a long way in demonstrating that you are willing to talk with your employees and help them improve. However, make sure the reviews are honest and fair. Evaluations are your opportunity to let your employees know what they are doing well, where they need to improve, and what is going to happen if they do not improve. If you are ever sued, all of these documents are discoverable and therefore admissible as evidence in a court of law. Imagine explaining to a jury why an employee who has been evaluated as "excellent" in all categories for the past five years was suddenly fired for substandard performance. Either make performance evaluations work for you, or do not do them at all.

7. Always use progressive discipline. Your employees should be able to talk to you and you to them. The first warning should be verbal followed by a written warning if there is no improvement. However, both warnings should be noted in their personnel file. There is no magic number of warnings to give unless you have stated in your employee handbook that there will be "3 written warnings before termination." Follow the procedure you defined in your handbook. Short of serious criminal activity at your store, there is almost nothing an employee can do only once and reasonably expect immediate termination.

8. If possible, appoint one person in your company to objectively review the reasons for each and every termination to ensure that your company's actions are consistent, fair, legal, and in compliance with your policies. Again, if not possible, always note in the employee's file what happened, why and when.

9. When you tell you employee he/she is being fired, candidly and briefly state the reasons for discharge.  (The less you say here, the less you may need to justify in court.) Do not attack the employee personally. Do
not try to justify your decision. Many employers think it a good idea to rehearse what they will say before they meet with their employee.

Treat the employee with dignity and compassion. Frequently, it is the manner in which the termination is handled, rather than the termination itself, that leads to litigation. Keep in mind some people will get angry when they are fired even though the termination is their fault. Keep your cool, listen to what they say, but do NOT engage in an argument or justify your decision. Just listen. If you do not give the employee an opportunity to be heard at the firing, they may make sure to be heard by filing a lawsuit. Further, courtesy on your part will help you appear "fair" to a jury of 12 average people, most of whom will be employees rather than business owners or managers.

10. Finally monitor all post-employment claims with various state and federal agencies. Make sure that you tell the same story each time you are called upon to explain your actions. Do not destroy your credibility by telling one story to the state unemployment department and an entirely different version of the facts to OSHA, the EPA, the EEOC or any other agencies involved. Again, keep what you say brief. Just answer the questions. This is why it is so important to have an individual designated as the person responsible for the final review of all terminations (number 8). You want to present your facts consistently and honestly each time you are called upon to do so, but only your facts. Avoid expressing opinions or feelings.