Terminating an employee: legal steps, final pay and the termination letter
Based on the WARN Act and the Older Workers Benefit Protection Act · Reviewed in October 2026
Most US jobs are at will, so an employer can end employment for any lawful reason or none. The reason cannot be discriminatory or retaliatory. A clean termination follows a documented reason, a short meeting, a termination letter, final pay on time and notice of benefits.
At-will employment and its limits
In every state except Montana, employment is presumed to be at will. The employer or the employee can end it at any time without cause, unless a contract or a union agreement says otherwise.
At will does not mean any reason goes. Federal and state laws forbid firing someone for protected reasons or in retaliation.
Reasons that make a termination illegal
| Illegal reason | Example |
|---|---|
| Race, color, religion, sex or national origin | Firing an employee after learning their religion |
| Age 40 or older | Replacing older staff because of age |
| Disability or genetic information | Firing someone after a diagnosis instead of accommodating |
| Pregnancy | Ending employment after a pregnancy announcement |
| Retaliation | Firing someone who filed a discrimination or safety complaint |
| Taking protected leave | Firing an employee for using family or medical leave |
| Whistleblowing | Firing someone who reported fraud to a regulator |
Before the termination
- 1Document the reason. Performance reviews, warnings, attendance records or the business reason for a layoff.
- 2Check for risks. Recent complaints, leave requests or protected activity need extra care.
- 3Review contracts and policies. Employment contracts, handbooks and union agreements may set steps.
- 4Check WARN. Employers with 100 or more employees may need to give 60 days notice of a plant closing or mass layoff.
- 5Prepare final pay. Learn the deadline in your state.
- 6Prepare the documents. Termination letter, benefits notices and any severance agreement.
- 7Plan access. Decide when systems access ends and how property is returned.
The termination meeting
- Keep it short and private, with a second manager or HR present.
- State the decision clearly in the first minute.
- Give the reason briefly, without debate.
- Explain final pay, benefits and next steps.
- Hand over or send the termination letter.
- Arrange the return of property and the end of access.
Final paycheck rules
Federal law does not set a deadline for the final paycheck, but most states do. Some require payment on the last day, California among them for a discharged employee. Others allow the next regular payday.
Some states also require paying out accrued vacation. Check your state labor department before the meeting.
Benefits and COBRA
Employers with 20 or more employees that offer a group health plan must offer COBRA continuation coverage. The employer notifies the plan administrator within 30 days, and the administrator sends the election notice within 14 days.
The former employee then has at least 60 days to elect coverage. Many states have similar rules for smaller employers.
Severance and releases
Severance is not required by federal law in most cases. Employers often offer it in exchange for a signed release of claims.
For employees aged 40 or older, a release of age discrimination claims must meet the Older Workers Benefit Protection Act. The employee gets at least 21 days to consider it, 45 in a group layoff, and 7 days to revoke after signing.
The termination letter
A termination letter confirms the decision in writing. It protects both sides by recording the date, final pay and next steps.
- 1Opening. Dear [employee name], this letter confirms that your employment with [company] ends effective [date].
- 2Reason. [Optional, a short factual statement, or omit in an at-will termination.]
- 3Final pay. Your final paycheck, including [accrued vacation if applicable], will be paid on [date] by [method].
- 4Benefits. Your health coverage ends on [date]. You will receive information about continuation coverage separately.
Use the full termination letter
How to sign a separation or severance agreement online
Upload a separation or severance agreement to SignSolú or start from a template. Add each signer with a name and a phone number or email.
Each signer gets a link by WhatsApp or email. On a phone they tap the brown bar at the bottom that says «Sign as …».
They draw their signature once with a finger and press «Sign and Send». Every place in the document that needs it gets filled.
A line next to that button records their consent to sign electronically, with a link to the disclosure.
The signed PDF ends with an audit certificate. It shows each signer, the time, the IP address and a SHA-256 hash of the file.
Want your signature as an image for other files? Create your signature online and download it as a transparent PNG, free.
The employee signs from their own phone, on their own time. For releases under OWBPA, the review and revocation periods still apply, and the certificate records when the agreement was sent and signed.
Common mistakes
- 1No documentation. The reason looks invented after the fact.
- 2Firing right after a complaint. The timing suggests retaliation.
- 3Late final pay. Some states add penalties for each day of delay.
- 4Forgetting COBRA. The employer can face penalties for missed notices.
- 5Long explanations in the meeting. Debating the reason creates statements that can be used later.
Terminating a remote employee
Hold the meeting by video with HR present, never by email or text alone. Send the termination letter and any agreement right after, for the employee to read and sign from home.
Arrange a prepaid shipment for the laptop and other equipment, and close access at the time of the call.
Layoffs and terminations for cause
A layoff ends a job for business reasons, such as lower sales or a closed location. A termination for cause ends it because of the employee conduct or performance.
The paperwork differs. A layoff letter explains the business reason and any recall rights. A termination for cause refers to the warnings and the policy that was broken.
Checklist for the last day
- Termination letter delivered and a copy kept.
- Final paycheck ready for the state deadline.
- Benefits end date and continuation notice handled.
- Company property returned, with a signed receipt.
- Systems access closed at the agreed time.
- Severance agreement sent with the right review period, if offered.
- Unemployment notice given, where the state requires it.
An example
A retail manager has two written warnings for missed shifts and a final warning that says the next absence ends the job. After a third no-show, HR meets with her for ten minutes, with the store manager present.
She receives the termination letter, her final pay on the date her state requires and the benefits notice. The documents show a clear, lawful reason.
People also ask
Can you fire an employee without a reason?
In at-will employment, yes, as long as the real reason is not illegal. Documenting a legitimate reason still protects the employer.
Do you have to give two weeks notice when firing someone?
No federal law requires it. Some contracts and policies do, and WARN notice applies to large layoffs.
What should you not say when firing an employee?
Anything about protected traits, promises you cannot keep, or long debates about the reason.
Can an employee get unemployment if fired?
Often yes, unless the firing was for misconduct as the state defines it.
Should a termination letter state the reason?
It can, briefly and factually. In some states the employee can ask for a written reason.
How do you terminate an employee remotely?
By video call with HR present, followed by the termination letter and documents sent for signature.
Can an employer contest unemployment benefits?
Yes. The employer can respond to the state claim and show the termination was for misconduct, which may disqualify the former employee.
How do you document a termination?
Keep the warnings, reviews, attendance records and the termination letter in the personnel file, with the date and the people present at the meeting.
Can I fire an employee on medical leave?
Not because of the leave. A termination for an unrelated, documented reason may still be lawful, but the timing needs care.
Do I need a witness when firing someone?
It is good practice to have HR or a second manager present.
Can a fired employee ask for a reason?
Some states give that right, especially for service letters. Answer briefly and consistently with your records.
Related templates and guides
Sources
- U.S. Equal Employment Opportunity Commission, «Prohibited employment policies and practices»
- Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101 and following
- Older Workers Benefit Protection Act, 29 U.S.C. 626(f)
- ESIGN Act, 15 U.S.C. 7001, on govinfo.gov
Frequently asked questions
Is it legal to fire an employee at will?
Yes, in every state except Montana, unless the reason is illegal or a contract says otherwise.
When is the final paycheck due?
It depends on the state. Some require it on the last day.
Do I have to offer severance?
Usually no. It is common in exchange for a release of claims.
Can a severance agreement be signed electronically?
Yes, under the ESIGN Act. The review and revocation periods still apply.
What is COBRA?
The federal right to continue group health coverage after employment ends, for employers with 20 or more employees.
Do I need a termination letter?
Not always by law, but it records the date, pay and next steps.