How to Protect Your Business While Managing Employee Performance

Terminations and disciplinary actions are some of the most legally sensitive moments in the employment lifecycle. Handle them the wrong way, and even a justified firing can lead to costly claims of discrimination, retaliation, or wrongful termination. Handle them correctly, and you not only protect your business—but reinforce a culture of fairness and accountability.

So how can small and mid-sized employers discipline or dismiss employees without breaking the law? It starts with consistency, documentation, and a clear understanding of federal and state regulations.

1. Document, Document, Document

When it comes to discipline and termination, documentation is your best defense. Every verbal warning, attendance issue, and performance review should be clearly recorded and signed by both the manager and the employee when possible.

Courts and agencies like the EEOC (Equal Employment Opportunity Commission) look for patterns. If your files show consistent feedback, fair expectations, and opportunities for improvement, you’re far less likely to face successful claims.

Tip: Use a centralized HR system to timestamp records and attach supporting data like timecards, emails, and notes.

2. Apply Policies Consistently

Inconsistent discipline is one of the fastest ways to invite legal trouble. If two employees violate the same rule but only one is written up—or worse, fired—it can create grounds for discrimination claims.

Make sure your employee handbook is up to date and that managers are trained to apply policies evenly across teams. A regular HR compliance review can catch outdated policies before they cause problems.

3. Understand “At-Will” Limits

Many employers assume that “at-will employment” gives them unlimited authority to fire anyone, anytime. In reality, at-will has limits. You cannot terminate an employee for reasons that violate:

• Federal anti-discrimination laws (race, sex, age, disability, religion, etc.)

• State or local protections (e.g., sexual orientation, political activity, lawful off-duty conduct)

• Public policy exceptions (e.g., whistleblowing, jury duty, taking protected leave)

Even an at-will termination should be backed by clear, legitimate business reasons—preferably supported by prior documentation.

4. Avoid “Heat of the Moment” Decisions

Terminating an employee in anger—or right after a complaint—is risky. Timing matters. If an employee is fired soon after raising concerns about harassment, safety, or pay, they might allege retaliation, even if the reasons were unrelated.

Before making a termination decision, pause and consult with HR or legal counsel. Review the employee’s recent activity for any protected actions and make sure your reasoning is well-documented and defensible.

5. Conduct Respectful, Private Terminations

How you conduct a termination can be just as important as why. Always:

• Hold the meeting privately with an HR or management witness

• Keep the conversation factual and concise

• Avoid debate or emotional language

• Provide final pay according to state timelines

• Collect company property respectfully

A professional, calm approach reduces tension and minimizes the risk of post-termination backlash.

6. Use Progressive Discipline When Appropriate

Progressive discipline helps demonstrate fairness and gives employees the opportunity to correct behavior. Common steps include:

• Verbal warning

• Written warning

• Final warning or performance improvement plan (PIP)

• Termination

While not legally required in all cases, this approach shows good faith and helps you avoid claims that an employee was “blindsided.”

7. Partner with Compliance Experts

Navigating complex and changing employment laws is challenging—especially for small businesses without in-house HR teams. Partnering with an HR Outsourcing provider can help ensure your policies, handbooks, and disciplinary processes are aligned with federal and state laws.

Asure’s HR Compliance Services provide access to expert HR advisors who can help you draft compliant policies, document discipline correctly, and avoid common legal pitfalls before they happen.

Firing or disciplining employees doesn’t have to be a legal landmine. With the right policies, consistent enforcement, and solid documentation, you can protect your organization—and maintain trust and fairness within your team.

Need help reviewing your HR policies or handling a sensitive termination?
👉Connect with Asure’s HR experts to stay compliant and confident.