Should You Hire a Lawyer to Write an Employment Contract?
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Terminating an employee is rarely a pleasant experience. Beyond the emotional and practical challenges, employers often wonder about the legal risks involved and whether they should consult an attorney before proceeding. While not every termination requires legal counsel, understanding when and why you might need a lawyer can save you significant headaches—and potentially substantial costs—down the road.
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This guide explores the considerations that should inform your decision about whether to engage legal counsel when terminating an employee, providing practical insights for businesses of all sizes.
Understanding At-Will Employment and Its Limitations
Most employment in the United States operates under the "at-will" doctrine, which theoretically allows employers to terminate employees for any reason (or no reason at all), provided it's not an illegal reason. This gives employers significant flexibility, but that flexibility has important boundaries.
The reality is that numerous federal, state, and local laws create exceptions to at-will employment. These exceptions generally fall into three categories:
First, discrimination laws prohibit termination based on protected characteristics such as race, color, national origin, religion, sex, age, disability, and in many jurisdictions, sexual orientation and gender identity.
Second, retaliation protections prevent employers from firing employees for engaging in legally protected activities, such as reporting workplace safety issues, filing workers' compensation claims, or complaining about discrimination or harassment.
Third, public policy exceptions (which vary by state) prevent termination for reasons that would violate established public policy, such as firing someone for serving on a jury or refusing to engage in illegal activity.
The at-will employment doctrine may seem straightforward, but as employment attorney Christopher Lenzo explains, "You could be wearing a white shirt, and your employer could say, 'We're firing you because you're wearing a blue shirt.' You say, 'No, it's a white shirt!' It doesn't matter as long as the real reason isn't one that's unlawful." This highlights a crucial point: the stated reason for termination matters less than ensuring the actual reason isn't legally problematic.
High-Risk Termination Scenarios
Certain termination situations carry substantially higher legal risk and are more likely to benefit from attorney involvement. Be particularly cautious when:
The employee belongs to a protected class. While every employee belongs to some protected classes (everyone has a race, gender, etc.), be especially careful when terminating employees who might claim the action was based on their protected characteristic, particularly if they are in a minority group within your organization.
The employee recently engaged in protected activity. According to labor specialists, "retaliation" claims occur when an employee is fired after reporting safety violations, filing wage complaints, or reporting harassment. This is all protected activity, and employers cannot legally fire employees for engaging in such actions.
The employee has recently taken leave. Terminating employees who have recently used Family and Medical Leave Act (FMLA) time, requested accommodations for disabilities, or taken other legally protected leave can trigger claims of retaliation.
The employee has an employment contract. If your employee works under an employment contract rather than at-will, the contract likely specifies the conditions under which they can be terminated. Legal experts note that "verbal and written contracts qualify under state laws" and can limit an employer's ability to fire a worker at will.
The termination involves multiple employees. Mass layoffs or reductions in force may trigger additional legal requirements under laws like the Worker Adjustment and Retraining Notification (WARN) Act.
The employee has made recent complaints. Firing an employee who has recently complained about workplace issues—whether about harassment, safety concerns, or wage violations—significantly increases the risk of a retaliation claim.
Pro Tip – Assess Your Termination Risk Level
Before making a final decision to terminate an employee, evaluate your risk by considering:
- Is the employee in a protected class that is underrepresented in your workforce?
- Has the employee recently engaged in any protected activity (complaints, leave requests, accommodation requests)?
- Does the termination timing coincide with any protected activity?
- Do you have solid, consistent documentation supporting the termination reason?
- Have other employees with similar issues been treated the same way?
If you answer "yes" to the first three questions or "no" to the last two, consulting with an attorney is strongly recommended before proceeding.
The Value of Documentation
Perhaps nothing reduces termination-related legal risk more effectively than proper documentation. One of the best ways to minimize legal risk is "to make sure that the grounds for the decision are thoroughly documented in the employee's personnel file" with evidence of performance problems saved, such as screen printouts, customer complaints, time card records, and other relevant materials.
Effective documentation:
- Creates a paper trail showing the legitimate business reasons for termination
- Demonstrates that the employee was aware of performance problems
- Shows that the employee received opportunities to improve
- Establishes that the employer followed its own policies and procedures
- Helps refute claims that the stated reason for termination was merely a pretext for discrimination or retaliation
When documentation is weak or nonexistent, the risk of successful legal claims rises substantially. Without documentation, "you might have legitimate performance-based reasons for the firing, but unless you can prove it with documentation, you might have a hard time defending against a lawsuit."
Progressive Discipline: A Key Risk Management Tool
Many employers implement progressive discipline policies to address employee performance and conduct issues in a structured way that both helps employees improve and creates documentation that can protect the company legally.
Employers can minimize legal risks "by developing clear performance standards, conducting regular performance reviews, implementing progressive discipline policies, maintaining detailed documentation, and seeking legal advice before proceeding with a termination."
A typical progressive discipline approach includes:
- Verbal warnings for initial issues (which should still be documented)
- Written warnings that clearly outline the problem and expected improvements
- Final written warnings informing the employee that failure to improve will result in termination
- Termination as a last resort after other efforts have failed
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Following a consistent progressive discipline process accomplishes several important objectives:
- It gives employees fair notice of problems and opportunities to improve
- It creates a record of performance issues and the employer's efforts to address them
- It demonstrates that the termination wasn't arbitrary or discriminatory
- It shows that the employer acted in good faith
When implementing a progressive discipline policy, remember that employees can dispute the process if they "disagree with the facts of the case, feel they've been treated unfairly, or believe the punishment is too severe." In such cases, you should "review the case, consider their perspective, and consult with HR or legal counsel, if needed."
Example – How Progressive Discipline Protected an Employer
Sarah managed a call center and had an employee, James, who consistently arrived late and had poor call metrics. Rather than simply firing him, Sarah implemented progressive discipline:
- She had an initial conversation about the tardiness and documented it
- When the problem continued, she issued a written warning specifying the improvement needed
- After further issues, she issued a final written warning clearly stating that termination would follow if improvements weren't made
- When James's performance didn't improve, she proceeded with termination
Six months later, James filed a discrimination complaint, claiming he was fired because of his religion. Because Sarah had thoroughly documented the performance issues and progressive discipline steps, the company could demonstrate that the termination was based on legitimate performance concerns, not discriminatory motives. The claim was dismissed.
Without this documentation, the company would have faced a much more difficult defense, potentially leading to a costly settlement.
When Legal Counsel Is Essential
While not every termination requires attorney involvement, certain situations strongly warrant legal guidance:
Complex legal issues: If the termination involves complex legal considerations, such as disability accommodations, contractual obligations, or potential whistleblower protections, legal counsel can help navigate these complexities.
High-level employees: Terminating executives, highly compensated employees, or those with specialized contracts often involves additional legal considerations around stock options, non-compete agreements, and severance packages.
Employees likely to sue: Some employees are more litigation-prone than others. If an employee has threatened legal action, has a history of making complaints, or has previously sued employers, legal counsel becomes more important.
Tense situations: When a termination is likely to be emotionally charged or confrontational, having an attorney review your approach can help prevent actions that might escalate the situation.
Special circumstances: If an employee was fired for reasons that might appear retaliatory—such as after filing harassment claims or discrimination complaints—consulting with an attorney is essential because "the legal process can be challenging" and expert advice is needed.
The Cost-Benefit Analysis of Legal Counsel
Attorney fees for consultation on an employee termination typically range from $500 to $2,000, depending on the complexity of the situation and the level of involvement needed. While this cost may seem significant, it must be weighed against the potential costs of wrongful termination litigation.
The average cost to defend an employment lawsuit through trial exceeds $200,000, not including potential damages if the employer loses. Even settling such claims typically costs tens of thousands of dollars.
Beyond direct financial costs, litigation consumes management time, creates workplace disruption, and can damage company morale and reputation. From this perspective, legal consultation becomes a prudent investment rather than an unnecessary expense.
Pro Tip – Maximizing Value from Legal Consultation
To get the most value when consulting an attorney about a termination:
- Prepare all relevant documentation before the consultation
- Develop a clear understanding of the business reasons for termination
- Create a timeline of events leading to the termination decision
- Identify specific legal concerns you want addressed
- Ask about alternatives to termination that might reduce legal risk
By coming prepared, you can maximize the value of your legal consultation while minimizing its cost.
Alternatives to Full Legal Representation
If budget constraints make traditional legal representation challenging, consider these alternatives:
Limited-scope representation: Many employment attorneys offer "unbundled" services where they review your termination documentation and plan without handling the entire process.
HR consulting firms: These organizations often have employment law expertise and can provide guidance at lower costs than law firms.
Employer associations: Industry organizations frequently offer members access to legal hotlines or basic consultation services.
Employment practices liability insurance (EPLI): If your company carries EPLI, your insurer may provide access to legal resources or counsel before a claim arises.
Example – The Cost of Skipping Legal Review
Michael owned a small manufacturing company and decided to terminate his operations manager, Teresa, after receiving complaints about her management style. Though Teresa had recently filed a worker's compensation claim for a minor injury, Michael believed the termination was unrelated and decided to save on legal fees by handling it without attorney consultation.
Three months later, Teresa filed a retaliation claim, arguing that her termination was motivated by her worker's compensation filing. With no clear documentation showing performance issues predating her injury claim, Michael's company faced an uphill legal battle. The case ultimately settled for $75,000, plus $30,000 in legal defense costs.
Had Michael invested in a $1,500 legal consultation before the termination, the attorney would likely have advised creating better documentation or delaying the termination to establish a clearer separation between the worker's compensation claim and the performance issues. This small investment could have saved Michael more than $100,000.
A Middle-Ground Approach
For most businesses, a balanced approach to termination-related legal counsel makes sense:
- Establish solid documentation and progressive discipline practices with attorney input during policy development
- Handle routine, low-risk terminations internally using established procedures
- Consult with counsel for moderate-risk situations, particularly to review documentation and approach
- Engage full legal guidance for high-risk terminations
This approach balances legal protection with cost management, focusing resources where they're most needed.
Conclusion
While you don't need an attorney for every employee termination, legal counsel becomes increasingly valuable as risk factors accumulate. The decision to involve legal counsel should be based on a careful assessment of the specific circumstances, with particular attention to protected classes, recent protected activity, documentation quality, and the likelihood of litigation.
For employers without in-house legal departments, developing a relationship with an employment attorney before urgent issues arise can provide significant advantages. This relationship allows the attorney to understand your business and provide more tailored, efficient guidance when termination situations arise.
Remember that the cost of preventing legal problems through proper counsel is almost always lower than the cost of defending against claims after they're filed. As with many business decisions, prudent investment in prevention can yield substantial returns in risk reduction.
FAQs About Legal Counsel for Employee Termination
If we're an at-will employer, why do we need to worry about legal issues when firing someone?
While at-will employment gives employers broad discretion, it doesn't override anti-discrimination laws, anti-retaliation provisions, or other legal protections. The burden often falls on employers to prove a termination wasn't illegal if challenged.
Can we just give a generous severance package instead of consulting a lawyer?
Severance packages can reduce litigation risk if properly structured with appropriate releases, but they don't eliminate all legal exposure. Additionally, without legal guidance, you might offer more severance than necessary or fail to include terms that properly protect the company.
Does following our employee handbook protect us legally?
Following your own policies reduces certain risks, but handbooks that are poorly drafted can actually create additional legal obligations. Have your handbook reviewed by counsel periodically to ensure it provides protection rather than exposure.
If we have solid documentation of performance issues, do we still need legal counsel?
Good documentation significantly reduces risk, but an attorney can evaluate whether your documentation would withstand legal scrutiny and identify any gaps or issues that might weaken your position.
Can't our HR department handle terminations without legal involvement?
HR professionals provide valuable expertise, but they are not attorneys. While HR can handle routine terminations, they should have access to legal counsel for complex situations, and many HR best practices include consulting with attorneys on higher-risk terminations.
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