Do I Need a Reason to Terminate an Employee?

February 13, 2013

In most states, absent a contract or policy to the contrary, the employment relationship between an employer and employee is “at will.” This means either party can terminate the employment relationship at any time, with or without notice, and for any reason not prohibited by law. That last part is important – even though employers in most states don’t need a reason to terminate an employee, an employer should carefully review (with legal counsel if necessary) the facts surrounding a termination to determine whether they are leaving themselves open to a lawsuit.

Also recognize that just because you can do something, doesn’t mean you should do something. An employer should consider the effect of a “no reason” termination on its reputation and current workforce. While employers may technically be allowed to terminate someone “just because,” employee morale may suffer and potential applicants may be discouraged from applying, if word of this practice gets out in the marketplace.

Why should I warn an employee about his/her deteriorating job performance?

Termination for poor performance should never come as a surprise to an employee. To begin, terminating an employee without any written record of performance issues makes it difficult to defend against allegations that the termination was based on unlawful reasons.

On the other hand, providing ongoing performance feedback (including disciplinary warnings) gives the employee a “heads-up” that he/she must either change the problematic behavior or begin looking for another job. It gives the employee a way to depart the company while maintaining a degree of dignity if the employee realizes the job is not for him/her, and (provided the feedback is properly documented) gives the employer the coveted “paper trail” it is looking for in the event the employee doesn’t get the message and has to be involuntarily terminated.

Finally, giving an employee an opportunity to improve his/her job performance is just the fair thing to do. We purposely refer to discipline as corrective action – – many times employees improve their performance or develop the skills necessary to meet your company’s performance standards.


Absent a contractual obligation, policy or promise, you are typically not required to offer departing employee severance pay (although some additional pay may be required in the event of a mass layoff / plant closing).

However, it may still be a good idea to offer severance in order to maintain positive employee relations and reputation as an employee-friendly place to work. Employers may also make the strategic decision to offer departing employees severance in exchange for signing an agreement releasing the organization from any claims related to their employment.

Do I have to provide employees with disability leave?

Employers with 50 employees are covered by the federal Family Medical Leave Act (FMLA), which grants eligible employees up to 12 weeks of job-protected leave in a 12-month period for their own “serious health condition.”

In addition, employers with 15 employees are subject to the Americans with Disabilities Act (ADA). While the ADA does not specifically require employees receive disability leave, the ADA does require a covered employer “reasonably accommodate” an “otherwise qualified” employee with a “disability” absent “undue hardship.” Under certain circumstances, a job-protected unpaid leave of absence may be considered one type of “reasonable accommodation” employers must consider providing disabled employees, even if that employee has already used up all of his/her FMLA leave.

Employers may also be obligated to provide disability leave under various state and local laws, including state and city versions of the ADA which grant broader protection to employees who work for smaller employers.

Is it true that salaried employees are not eligible for overtime?

This is one of the most misunderstood concepts in all of employment law. Even though you pay an employee a set salary, you may still be required by law to pay that employee overtime.

Yes, it is true that in some cases, “exempt” employees (i.e., those exempt from the laws requiring overtime pay) must be paid a set salary. The federal Fair Labor Standards Act (FLSA) sets this amount at $455 per week for some exempt employees, and certain state laws may provide for a higher weekly salary.

However, in order to be truly exempt, the employee’s job duties must also fit into one of the federal Fair Labor Standards Act (FLSA)’s narrow exemptions. For example, in order to be an exempt executive or manager under the FLSA, (1) the employee’s primary duty must be “managing” the enterprise or “a customarily recognized department or subdivision” of the enterprise, (2) the employee must “customarily and regularly” direct the work of at least “two or more other full-time employees” or their equivalent; and (3) the employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change fo status of other employees must be given “particular weight.”

Other common exemptions include ones for administrative, professional, computer and outside sales employees. Certain “highly compensated’ employees who make $100,000 per year and who perform at least one of the duties of an exempt executive, administrative or professional employee are also exempt under the FLSA.

In addition, employers should familiarize themselves with the laws of the states in which they operate, as these laws may differ from the FLSA and provide employees with greater protections (i.e., make more employees eligible for overtime).

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