How to Fire Someone Without Getting Sued: A Founder's Guide to Termination

Most founders have never been trained to fire someone. When the moment comes they either move too fast, say too much, or have no documentation to stand on. Terminations that get litigated are almost never the result of a bad decision to let someone go — they’re the result of how that decision was executed.

Before the conversation: build your documentation

The termination conversation should never be the first time performance issues are on record. There should be documentation of at least one verbal feedback conversation noted in writing, a written warning or PIP if the issues were serious or ongoing, and a record of any accommodations or support offered. A timestamped email to your HR folder is enough. What it can’t be is nonexistent.

The conversation: what to say

Opening (first 30 seconds): “I need to let you know that today is your last day with the company.” Say this immediately. Do not build up to it — prolonging the opening makes it worse for everyone and creates more opportunities for things to go wrong.

Brief rationale: Give one clear, factual reason in one sentence. Don’t list everything that went wrong or relitigate the performance history.

Logistics: Cover the final paycheck timeline, COBRA notice, equipment return, and system access cutoff. Have this in writing to hand them at the meeting.

Close: “I know this is hard news. We’ll make sure the transition is handled respectfully.” Then stop talking. The instinct to fill silence leads to statements that appear in lawsuits.

What not to say — ever

“We’re eliminating your position” — unless you actually are. If you backfill the role within 60 days, this becomes evidence of pretext in a wrongful termination claim. “We’ve had so many complaints about you” — even if true, vague references to unspecified complaints are not defensible. “I personally wanted to keep you but was overruled” — never helpful and undermines the company’s position.

Final paycheck timing: know your state’s rules

Getting this wrong is an automatic violation. In California: final pay is due at the time of termination for involuntary separations — not the next pay cycle. In New York: by the next scheduled payday. In most other states: within the next regular payday. COBRA notice must go out within 14 days of coverage ending. Confirm your state’s requirements before the conversation happens.

Severance: when it makes sense

Severance is not legally required in most states, but offering a modest amount in exchange for a signed separation agreement and general release of claims significantly limits your exposure to a lawsuit. A typical formula: one to two weeks of pay per year of service. Have the agreement reviewed by an attorney or use a properly reviewed template — a bad separation agreement is worse than none.