Catch or Release? (Part 2) How to Fire an Employee

It may surprise you to learn that in 2020 and also in 2021, the most searched topic on Google, for small businesses in the state of Texas, was “How to fire an employee.” Sounds a little crazy, with the US unemployment rate peaking at 14.7 in April of 2020. Luckily the unemployment rate has dropped significantly, but the search results in Google still point toward small businesses, having trouble with employees.

We’ve had several blogs on how to find and hire great employees and on how to keep them. Let’s now talk about that uncomfortable subject:

How to fire an employee:

Texas is an “employment at will” state, which means employees can be terminated for any lawful reason. (Unless, of course, there is an employment agreement that has guaranteed employment for a specified period of time.) However, just because you, as a small business owner are entitled to hire and fire at will—it doesn’t mean you should. If you need to fire an employee, you need to make certain you have a lawful reason, and you need have documentation of that reason, to make certain you aren’t dragged into litigation.

Litigation is expensive, and ultimately winning your case can be both expensive and frustrating. In this blog, we’ll talk about the best way to handle employee terminations, while minimizing the risk to you and your business.

1^st thing to remember:

Never fire an employee in the heat of the moment.

We get it, Les is late…again. In fact, he’s never, ever been on time and he likes to leave his shift early – asking other co-workers to clock out for him. You, the employer, after covering the first hour of Les’s shift (and missing your daughter’s recital) have had enough. Time for Les to go! But wait! Even when Les wanders in, an hour late…again…and says “Wassup Dude?” don’t lose your cool!

Instead, take a deep breath, formulate a plan, and follow the steps we’ve compiled. We’ve pulled the best information for you from the Harvard Business Review, several local employment attorneys and the Texas Workforce Commission.

Step 1:

Give a warning to the employee:

It’s time for Les to go. But first, you need to plan to let him go the correct and legal way. The first step in Les’s termination is to let him know he’s doing something wrong.

Put his/her bad behavior in writing: Sit down with Les and have the discussion about his tardiness, and how it is unacceptable.
Tell the employee about the consequences: “Les, if you are late again, or if you ask Betty to clock out for you again, you will be fired.”
Document everything: Keep a copy of Les’s written warning. Document the day and time of your conversation.

Step 2:

Give the employee time to improve:

Maybe Les didn’t understand that being late was unacceptable and he immediately stops the behavior. It can sometimes happen. Allow some time for improvement. Put a time-limit on when he is expected to improve. It’s okay to say: “Les, you are only going to get one more warning, and then we’re going to have to let you go.”

Step 3:

Decide when to fire the employee:

The timing of the employee termination needs to be individualized to the small business. Determine when the best time would be for you and the employees who are still working. If Monday is the best time, do it early so you can encourage them to seek other employment. If Fridays will be the less disruptive time to the staff or your business, do it then.

Step 4:

What to say when firing an employee:

You’ve done your homework, given warnings and have given plenty of time for improvement and you still need to fire the employee. What do you say?

Get right to the point: You need to let them know they are being fired FOR CAUSE. “Les, today is your last day. You are being dismissed for cause, and it is time for you to find work elsewhere.”
Tell them when they will be leaving: “You will gather the things from your locker and leave the building when we are finished here.”
Tell them what to expect: “Your final check will be mailed to you in 2 business days.” Or – here is your final check.

Step 5:

Ask for a legal release:

Let the employee know of any benefits or severance: Some employers find it beneficial to offer a severance package. For instance, you can offer them a week’s worth of wages, if they will agree to sign a full release of all claims.
- Keep in mind if the employee is over 40 (a protected class) you must comply with the Older Workers Benefit Protection Act, which requires you, the employer, to give the employee at least 21 days to consider the claims release and to consult with an attorney (at their own expense). They may also sign the release, but you still need to give them 7 days to revoke the release after it’s signed.

Step 6:

Make sure they leave the building immediately:

You don’t need to kick the employee out, or hover over them while they clean out their desk, but you do need to let them know they are expected to leave immediately. If they don’t leave, you’ll need to escort them out. Remain respectful and don’t intimidate them with threats.

Turn off their IT access!

Don’t forget to turn off their access to your business computers, terminals and other areas where they might be able to log in.

Step 7:

Reassign the employee’s tasks immediately:

This should be part of your Step 1, when planning to terminate the employee. Have someone ready to step into that employee’s position or be ready to assign the employees tasks to someone else. You can also divide up the employee’s tasks, if necessary.

What do I do if the employee files a claim for unemployment benefits?

This often happens, and there really is not a lot you can do about it. As a small business owner, you pay unemployment taxes and even if you try to fight it claim, the likelihood that they will receive benefits anyway is high. You want to be careful not to say anything out of line, or you may open yourself to a lawsuit. Instead, experts suggest you comply with requests from the State Work Commission. This may include proof of written warnings and an explanation of why the employee was fired.

Can I fire someone without a warning?

You can fire an employee in cases of gross misconduct.

The official definition in Section 201.012 of the Texas Labor Code is as follows: “‘Misconduct’ means mismanagement of a position of employment by action or inaction, neglect that jeopardizes the life or property of another, intentional wrongdoing or malfeasance, intentional violation of a law, or violation of a policy or rule adopted to ensure the orderly work and the safety of employees”, but “does not include an act in response to an unconscionable act of an employer or superior.”

Some examples of gross misconduct:

Theft
Vandalism
Illegal use of drugs or alcohol at work
Fraud
Sexual harassment or assault
Fighting or violent threats while at work
Intentionally causing harm
Health or safety breaches

Make sure you don’t fire an employee for unlawful reasons. Some of those include age, religion, race, color, gender, sexual orientation, marital status or disabilities.

For additional information on how to fire an employee or on the best practices for termination in your small business, please contact us at the Small Business Development Center – SBDC – Serving Paris area: Lamar, Hunt, Hopkins, Delta, and Red River counties.

Paris SBDC