Guide to Firing Employees in the US for Employers

Ending an employment relationship is a challenging responsibility that employers inevitably face.In the United States,  employee firing is overseen by a legal framework designed to ensure fairness and prevent discrimination.

This article provides US employers with a clear and comprehensive guide to the firing process, highlighting essential legal requirements and best practices to navigate challenges and reduce the risk of litigation.

This Article Covers:

Firing Processes and Laws in the US

What Does Firing an Employee Involve in the US?

Firing an employee in the US begins with verifying employment type, whether at-will or just cause, and documenting the reasons for termination clearly and accurately.

Legal Considerations When Firing Employees in the US

When firing an employee, employers must address the following legal considerations:

  • Anti-Discrimination Laws: Employers must ensure the firing does not violate laws prohibiting discrimination based on an employee’s protected characteristics, including race, gender, age, national origin, or disability. 
  • Final Pay Requirements: Employers must comply with federal and state laws on when and how to provide final paychecks, including unused vacation or accrued benefits. Federal law does not require employers to provide final paychecks immediately upon termination, mandating pay at the regular payday for the last pay period an employee worked, yet some states mandate immediate payment.
  • Notification Requirements: Employers planning mass layoffs or plant closings must provide their affected employees with 60 days’ notice. 
  • Documentation: To mitigate potential legal disputes, employers must maintain accurate records of performance reviews, warnings, or incidents leading to the firing.
  • Employment Contracts and Agreements: Reviewing employment contracts for clauses on firing, notice periods, or severance pay is crucial. The Fair Labor Standards Act (FLSA) does not require notice to an employee prior to firing or layoff; such requirements may be outlined in employment contracts or governed by state laws.
  • Retaliation Protections: EEO laws prohibit employers from retaliating against job applicants or employees who exercise their rights to protect themselves.. Such rights are known as “protected activity.” and include filing EEO complaints, reporting discrimination, refusing discriminatory orders, resisting sexual advances, requesting disability accommodations, and inquiring about salary are protected activities.
  • Severance Agreements: Employers who offer severance agreements must ensure that the outlined agreements comply with federal and state laws.
  • Unemployment Insurance: Employers should consider how the firing may affect the employee’s eligibility for unemployment benefits. It is also worth noting that eligibility requirements may vary by state and reason for termination.

Laws Governing Firing in the US

Several federal laws govern lawful firing practices, protecting employees from wrongful terminations. They include:

  • Title VII of the Civil Rights Act of 1964: Title VII of the Civil Rights Act of 1964 prohibits employers from making employment decisions, including termination, based on race, color, religion, sex, or national origin. 
  • Age Discrimination in Employment Act (ADEA): The ADEA protects employees aged 40 and older from employment discrimination and unjust firing. 
  • Americans with Disabilities Act (ADA): The ADA mandates fair treatment of workers with disabilities by prohibiting terminations provided the employee can perform essential job functions with or without reasonable accommodations.
  • Family and Medical Leave Act (FMLA): The FMLA mandates covered employers (those with 50 or more employees) to grant eligible employees the right to take unpaid, job-protected leave for certain family and medical reasons. Employees’ needs for family or medical time off should never be grounds for firing.
  • Worker Adjustment and Retraining Notification (WARN) Act: The WARN Act requires employers with 100 or more employees to provide 60 days’ notice before mass layoffs or plant closures, ensuring employees have ample time to prepare for job loss or seek new employment.
  • Occupational Safety and Health Act (OSH Act): The Occupational Safety and Health Administration enforces the OSH Act, protecting employees who report unsafe working conditions from retaliation or retaliatory firing.
  • National Labor Relations Act (NLRA): The NLRA protects employees’ rights to unionize and engage in collective bargaining, making it unlawful for employers to fire employees due to union-related activities.
  • Uniformed Services Employment and Reemployment Rights Act (USERRA): The USERRA protects employees serving in the military, mandating employers not to discriminate or fire employees because of their military service. Employers must also allow returning service members to reclaim their jobs.

Difference between Firing, Layoffs, and Resignations in the US

Firing, layoffs, and resignation may differ in terms of the initiator, the cause, and legal obligations.

For example, the employer initiates firing and layoffs, the cause of resignation is a personal decision, and while layoffs require advance notice, resignation can be done at any time.

Firing

Firing is an employer-initiated termination due to employee conduct or performance issues. In the US, firing an employee is often immediate.

Layoffs

Layoffs occur when an employer terminates employees due to non-disciplinary reasons, such as financial difficulties, restructuring, natural disasters, or a reduction in the workforce. Layoffs can be temporary or permanent. 

Employers may need to comply with the Worker Adjustment and Retraining Notification (WARN) Act if mass layoffs or plant closures occur, requiring 60 days’ notice for employers with 100+ employees.

Resignation

Resignation occurs when an employee voluntarily ends their employment. Employees can voluntarily end their employment to change careers, dissatisfaction, or any other personal reasons.

Federal law does not mandate a specific notice period when resigning in the US, yet this may be mandated by state laws or on the employment contract. 

Required Documents for Employers and Fired Employees in the US

When a firing happens in the US, employers must retain certain employee records for a specified period. 

The Equal Employment Opportunity Commission (EEOC) recordkeeping requirements mandate employers to keep all personnel or employment records of involuntarily terminated employees for one year from the date of termination.

Under ADEA, employers must also keep payroll records for at least three years. Further, employee benefit plans, including pension and insurance plans as well as written seniority or merit systems must be maintained for the entire duration of the plan or system and for at least one year after it ends.

Under FLSA recordkeeping rules related to the Equal Pay Act (EPA), employers must additionally keep records for at least two years that detail the basis for paying different wages to employees of different sexes in the same workplace, such as wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements. 

These requirements apply to all employers subject to federal anti-discrimination laws, regardless of whether a charge has been filed against them.

Legal Implications of Wrongful Firing in the US

In the US, employers who fire employees wrongfully may face the following potential legal implications:

  • Reinstatement Orders: Federal and state courts may order the employer to reinstate the wrongfully terminated employee.
  • Back Pay: Employers may be required to compensate the terminated employee for lost wages, benefits, and any other wages they missed due to the termination.
  • Front Pay: In some instances where reinstatement is not possible or appropriate, courts may award “front pay” to cover future earnings the employee would have received. Depending on the case, it can also be extended until the employee secures comparable employment or up to a specified period.
  • Punitive Damages: Punitive damages are monetary penalties designed to punish employers for willful violations, such as intentional discrimination or retaliation.
  • Compensatory Damages: Compensatory damages cover emotional distress, pain, suffering, and mental anguish caused by wrongful termination.
  • Legal Fees and Costs: If the court rules in favor of the employee, the employer may be ordered to pay the employee’s attorney fees and court costs.

It is worth noting that state laws may offer additional protections.

Post-Termination: What Happens After Firing an Employee in the US?

In the US, what happens after a person is fired depends on the circumstances surrounding the termination, the type of employment, and whether the employee is covered by any specific laws or agreements. Below are the general steps and key considerations after being fired:

  • Immediate Aftermath: Giving a notice, doing an exit interviews, or providing a termination letter are not mandatory in US federal law. Although the  FLSA does not require employers to give notice before individual terminations or layoffs, the WARN Act mandates that employers provide advance notice in cases of mass layoffs or plant closures. Some states may also have additional provisions for notifying employees before termination or layoff.
  • Final Paycheck: Federal law does not require employers to provide the last paycheck in the US immediately upon termination. However, some states may mandate immediate payment.
  • Severance Pay (if provided): Severance pay is generally offered to employees upon termination and is often calculated based on their length of service. However, there is no federal requirement to provide severance pay. It is solely based on agreements between the employer and the employee.
  • Continuation of Health Coverage (COBRA Notice): Under COBRA, employers with 20 or more employees are legally required to offer this continued health coverage following qualifying events like termination. It is the employer’s responsibility to notify the employee and their dependents of their COBRA rights within 14 days of the termination.
  • Unemployment Benefits Notification: Employers are responsible for notifying employees who lose their jobs through no fault of their own that they may qualify for unemployment benefits. Additionally, employers may need to provide employment records to the state’s Unemployment Insurance agency to help determine the employee’s eligibility and benefit amounts. 
  • Recordkeeping: Employers must retain employee records for a specified period. The Equal Employment Opportunity Commission (EEOC) recordkeeping requirements mandate employers to keep all personnel or employment records for one year from the date of termination.
  • Mitigating Legal Landscape: If an employee is fired due to discrimination, retaliation, or exercising legal rights, they should file a complaint with the EEOC (for discrimination), OSHA (for retaliation), or their state labor department (for state labor law violations). For issues related to wages, leave, or overtime, they can file a complaint with the Department of Labor’s Wage and Hour Division. If the termination is not covered by these laws, the employee should seek legal counsel before suing. Discrimination claims require filing a report with the EEOC before pursuing a lawsuit. If a charge of discrimination is filed or a civil action is initiated by the EEOC, employers must retain all records related to the charge until the final disposition of the case. Final disposition refers to the expiration of the statutory period for filing a lawsuit or the resolution of the case, including any appeals.