Fire Well: What the Research Says About Letting an Employee Go
Why the way you end a job matters as much as the reason, and a five-step method for doing it right
Abstract
Small business owners often delay firing and then handle it hastily. This paper reviews evidence that both habits are costly. A study of 996 fired and laid-off workers in Administrative Science Quarterly found that treatment at termination was among the strongest predictors of wrongful-termination claims; in early results, workers given no explanation were about ten times more likely to report suing. Research on procedural justice shows that a fair process blunts reactions to a harsh outcome among both those let go and those who stay. A Harvard Business School study of nearly 60,000 workers estimated that avoiding one toxic worker saves about twice what a top performer adds, and research on team dynamics finds one negative member can drag down a group. The paper also summarizes at-will employment and its exceptions, federal coverage thresholds, retaliation as the most common EEOC charge, and final-pay and benefits obligations, then presents the Groundwork Fire Well Method: decide, document, deliver, depart and debrief. It closes with guidance on whether firing by text, email or social media is legal, and on how to let go a family member or close friend.
Keywords: how to fire an employee; wrongful termination; firing a family member; fired by text; retaliation
Most owners would rather do almost anything than fire someone. So they wait. They hope the problem fixes itself, they work around the person, and the rest of the team quietly picks up the slack. When the day finally comes, it often goes badly: a rushed conversation, no clear reason, a final paycheck that arrives late.
The research on firing says two things owners rarely hear. First, waiting too long is expensive. Second, how someone is let go matters about as much as why. Workers who were given no explanation and little dignity at termination were far more likely to report suing, while a clear reason and respectful treatment sharply lowered the odds.
This paper sets out what the research says about firing, the legal basics an owner should know before acting (including whether you can fire someone by text or email), the Groundwork Fire Well Method, how to handle firing a family member or close friend, and a checklist for the day itself.
What does the research say?
How you fire predicts whether you get sued
In a study published in Administrative Science Quarterly, E. Allan Lind, Jerald Greenberg, Kimberly Scott and Thomas Welchans interviewed 996 people who had recently been fired or laid off. The strongest predictors of a wrongful-termination claim were how fairly people felt they were treated when they were let go, and how much money they expected to win. [1]
The numbers are striking. Of those who received a complete explanation for their dismissal, 1.7% reported filing a claim; of those given no explanation, 20.3% did. Among those who felt they were treated with a great deal of dignity and respect, 0.4% filed claims, compared with 14.9% of those who felt they received none. [2] As Greenberg put it: "Managers need to stop adding the insult of undignified treatment to the injury of job loss." [2]
A fair process softens a hard outcome
Joel Brockner and colleagues studied both people who lost their jobs and the coworkers who stayed. When people saw the process as fair, how bad the outcome was had little effect on their reactions. When the process seemed unfair, the worse the outcome, the more negative the reaction. [3] Fairness does not make firing painless. It keeps a painful decision from turning into anger, both in the person leaving and in the team watching.
Waiting on a toxic worker costs more than hiring a star earns
A Harvard Business School study by Michael Housman and Dylan Minor analyzed nearly 60,000 front-line workers at 11 companies. They estimated that avoiding one toxic worker (someone eventually fired for harming the company or coworkers) saves about $12,489, nearly double the roughly $5,303 a top-1% "superstar" adds. Toxic behavior also spread: coworkers of a toxic worker became more likely to behave the same way. [4]
Research by Will Felps, Terence Mitchell and Eliza Byington reviewed studies of small teams and found that one "bad apple" (someone who does not do their share, is chronically negative, or bullies others) can drag down a whole group, and that negative behavior outweighs positive behavior: one or two good teammates cannot offset it. [5] [6]
Losing a job hits people hard
A study in the Quarterly Journal of Economics by Daniel Sullivan and Till von Wachter found that mortality rates among the displaced workers it followed were 50% to 100% higher than expected in the year after job loss, and still 10% to 15% higher two decades later. [7] That is not an argument against firing. It is the reason to do it carefully, with a clear explanation, respect and whatever practical help the business can offer.
Replacing someone is expensive too
Gallup estimates that replacing an employee costs one-half to two times the employee's annual salary. [8] That cost cuts both ways: it argues for trying to fix a fixable problem first, and for not keeping someone who is costing the business more than a replacement would.
Groundwork's assessment: Firing is sometimes the right decision. Delaying it is expensive, and doing it carelessly is expensive in a different way. The research points to a process that is prompt, documented, explained and respectful.
What owners need to know first
This section is general information, not legal advice. Employment law varies by state, and Groundwork is not a law firm.
"At-will" does not mean "any reason"
Most U.S. employment is at-will: an employer can end employment at any time for any reason, except an illegal one. [9] Montana is the main exception: after a probationary period, its law requires good cause. [9] Courts in many states also recognize exceptions for firings that violate public policy or an implied contract, such as promises in an employee handbook. [9]
The illegal reasons
Federal law bars firing someone because of race, color, religion, sex, national origin, disability, genetic information or age, and bars retaliation for protected activity. Coverage depends on size: most federal discrimination laws apply once a business has 15 or more employees for at least 20 weeks in the current or prior year, the age law at 20 or more, and the Equal Pay Act to virtually all employers. [10] Many state laws reach smaller businesses.
Retaliation is the most common charge
Retaliation was the most frequently alleged basis in charges filed with the U.S. Equal Employment Opportunity Commission for the seventeenth straight year: 42,301 of 88,531 charges in fiscal 2024, or 47.8%. [11] Firing someone shortly after they complained, asked for an accommodation, took protected leave, filed a workers' compensation claim or reported a safety issue is the classic pattern. The timing alone can make a sound decision look like retaliation.
Final pay, benefits and paperwork
Federal law does not require an immediate final paycheck, but some states do, and deadlines vary. [12] If the business has 20 or more employees and a group health plan, federal COBRA continuation rules generally apply, [13] and many states have their own continuation laws for smaller employers.
Can you fire someone by text, email or social media?
Generally, yes, it is legal. It is rarely wise. No federal law requires that a firing happen in person; whether a termination is lawful depends on the reason, not the method. [14] But some states require specific written notice whatever method you use. New York, for example, requires a written notice within five working days stating the exact termination date and the exact date benefits end. [15] California requires written notice of the change in the employment relationship and a state unemployment pamphlet on the last day. [16] Check your state's rules.
The research gives the bigger reason to avoid a text or email firing. A message with no conversation is the textbook version of "no explanation and little dignity," the treatment most strongly linked to wrongful-termination claims. [1] [2]
Social media is different again. Never announce, explain or discuss a firing on social media, and never post about the person. Publicly stating why someone was fired can expose the business to claims such as defamation or invasion of privacy under state law, and it tells every remaining employee and customer how you treat people.
The Groundwork standard: deliver the decision in person, or by phone or video call for a remote employee, then confirm it in writing (email is fine for the written follow-up). Use a written-only notice only when safety genuinely requires it.
The Groundwork Fire Well Method
Five steps, in order. Each one is built on the research above.
| Step | What to do | Why it matters |
|---|---|---|
| 1. Decide | Confirm the reason is real, job-related and consistent with how others have been treated. Rule out the red flags. | Consistency is your best defense; inconsistency invites claims. [1] [11] |
| 2. Document | Written expectations, dated warnings, examples and the person's responses, kept as you go. | A clear record supports the explanation you will give. |
| 3. Deliver | A short, private, face-to-face conversation. Give the real reason in one or two sentences. Be respectful and final. | Explanation and dignity sharply reduce claims. [2] |
| 4. Depart | Final pay on time under state law, benefits information, return of property, account access closed, a written notice. | A fair, orderly exit is part of a fair process. [3] [12] |
| 5. Debrief | Tell the team what they need to know, without details. Fix what allowed the problem to grow. | Coworkers judge the process too. [3] |
1. Decide
Before deciding, be sure the problem was made clear and the person had a fair chance to fix it, unless the conduct was serious enough to end employment on the spot (theft, violence, harassment). Ask: would I make the same decision for anyone else who did this? If the answer depends on who it is, stop.
2. Document
Documentation is not paperwork for its own sake. It is the evidence behind the explanation. Good records are specific and dated: what was expected, what happened, what was said, and what the employee said back. A performance review form that the owner actually uses is the simplest version.
3. Deliver
Keep it short. Do it privately, in person where possible, with a second person present if the business has one. Lead with the decision, give the reason plainly, and do not debate it. Do not apologize for the decision, but do treat the person with respect. Avoid surprises in the reason: if the real reason was never raised before, the conversation will feel unfair, and fairness is what the research says matters most. [1] [3]
4. Depart
Have everything ready before the meeting: final pay calculated under your state's rules, information about benefits and continuation coverage, a list of property to return, and a plan for closing accounts and passwords the same day. If you offer severance in exchange for a signed release of claims, have an attorney draft it.
5. Debrief
The team will notice. Tell them briefly that the person no longer works there and who will handle their work. Do not share the reasons. Then fix whatever let the problem grow: unclear expectations, no reviews, no written procedures. Our paper Before You Chase More Customers, Find the Bottleneck covers the "people and quality" constraint that often sits underneath.
When it is family or a close friend
Small businesses run on relationships, so many owners eventually face the hardest version: letting go a relative or a close friend. The legal rules do not change. The stakes do, because the relationship continues long after the job ends.
Research on family firms describes "bifurcation bias," the tendency to treat family employees differently from everyone else, and links that unequal treatment to weaker firm performance. [17] Advice on family business governance from Harvard Business School stresses keeping family roles and business roles separate. [18] And the termination research applies with extra force: a relative or friend who feels blindsided or disrespected will tell people the owner sees at holidays, at gatherings and around town.
How to handle it
- Hold them to the same standard, from day one. Written job expectations, the same reviews and the same warnings as anyone else. Skipping the paper trail "because it's family" is what makes the final conversation feel like an ambush.
- Try a different seat before the door. If the problem is fit rather than conduct, consider a role change, fewer hours or a defined project first. Say clearly that it is a last chance, not a fresh start.
- Name the two hats out loud. Open the conversation with: "I'm talking to you as the owner of the business right now, not as your brother." Then keep to business: the decision, the reason, the next steps.
- Get a second opinion before you decide. Ask an outside adviser, your attorney or a trusted business mentor to review the decision and the records. It tests your judgment, and it lets you honestly say the decision was checked.
- Tell them first, privately, and plan who tells the family. They should never hear it from a cousin or a coworker. Agree together on what will be said to relatives and customers.
- Be generous where you can afford it. Transition time, a positive reference for their strengths, help finding the next role or severance if the business can carry it. The research says a fair, respectful exit protects everyone, and that matters more when you will see the person again. [1] [3]
- Check ownership before employment. If the relative or friend is also a co-owner or LLC member, ending their job does not end their ownership. The operating or partnership agreement governs that, and an attorney should be involved.
- Repair the relationship on purpose. After the job ends, invite them to dinner, ask how the search is going, and keep business out of it. The relationship is worth saving even when the job was not.
Our paper Should You Hire a Family Member? covers how to set family employment up so this conversation is less likely to be needed.
Example: the same decision, two ways
This is a hypothetical example to show the method at work.
A landscaping company decides to let go of a crew lead who has repeatedly missed start times and left jobs unfinished.
| Step | Done badly | Done well |
|---|---|---|
| Decide | Owner snaps after a customer complaint | Owner reviews three months of records and confirms others were held to the same standard |
| Document | Nothing written down | Two dated written warnings with specific jobs, dates and the crew lead's responses |
| Deliver | Fired by text on a Friday night, no reason given | Ten-minute private meeting Monday morning; reason stated in two sentences |
| Depart | Final check mailed weeks later; truck keys never collected | Final pay on the state deadline; keys, fuel card and app access handled the same day |
| Debrief | Crew hears rumors | Crew told the same morning who leads tomorrow's jobs |
Both owners made the same decision. Only one made it fairly, and the research says that is the one far less likely to end up defending it.
Five firing myths
| Myth | What the evidence says |
|---|---|
| "At-will means I can fire for any reason." | Any reason except an illegal one, and retaliation is the most common charge. [9] [11] |
| "Giving a reason just invites a lawsuit." | People given no explanation were about 10 times more likely to report suing. [2] |
| "Keeping a difficult star is worth it." | A toxic worker cost about twice what a superstar added, and the behavior spread. [4] |
| "One bad attitude won't affect the team." | Negative behavior outweighs positive; one bad apple can drag a whole team down. [5] [6] |
| "The final check can go out with the next payroll." | Some states require faster payment. Check yours. [12] |
The Groundwork Fire Well Checklist
| Question | Yes / No |
|---|---|
| Is the reason job-related and consistent with how others were treated? | |
| Was the problem made clear in writing, with a fair chance to fix it (unless serious misconduct)? | |
| Have I ruled out recent complaints, accommodation requests, protected leave or claims, or talked to an attorney? | |
| Can I state the reason in one or two plain sentences? | |
| Is final pay calculated to meet my state's deadline? | |
| Are benefits, property return and account access handled? | |
| Do I know what I will tell the team? |
Seven yeses means you are ready. Any "no" is the next thing to fix.
Frequently asked questions
Can I fire an employee for no reason?
In most states, employment is at-will, so an employer can end employment for any reason or no reason, except an illegal one such as discrimination or retaliation. Montana requires good cause after a probationary period, and other state exceptions apply.
Should I tell an employee why they are being fired?
Research on nearly 1,000 fired and laid-off workers found that those given no explanation were about 10 times more likely to report suing than those given a complete explanation. A short, honest reason, delivered respectfully, is usually the safer course.
When is the final paycheck due?
Federal law does not require immediate payment, but some states do, and deadlines vary by state and by whether the employee quit or was fired. Check your state labor department's rules before the meeting.
What is retaliation?
Retaliation is punishing an employee for protected activity, such as complaining about discrimination, requesting an accommodation, taking protected leave or reporting a safety problem. It was the most common allegation in federal discrimination charges in fiscal 2024.
Is it legal to fire someone by text or email?
Generally, yes. No federal law requires an in-person firing; legality depends on the reason, not the method. Some states, including New York and California, require specific written notices. But research links firings with no explanation and little dignity to more legal claims, so deliver the decision in person or by call and confirm it in writing.
How do I fire a family member or close friend?
Use the same standards and records as for anyone else, consider a role change first if the problem is fit, separate your owner role from the relationship in the conversation, get a second opinion, tell them privately before others hear, be generous with the exit where you can, and check any ownership agreement with an attorney.
Should I offer severance?
Severance is not generally required by federal law. Some employers offer it to ease the transition, sometimes in exchange for a signed release of claims. If you ask for a release, have an employment attorney draft it.
Groundwork's final assessment
Firing is one of the hardest decisions an owner makes, and one of the most avoided. The research gives owners two reasons not to avoid it and one reason to do it carefully. Toxic and disengaged workers cost more than most owners assume, and the damage spreads. But the way a person is let go strongly shapes what happens next: a clear reason and respectful treatment are associated with far fewer legal claims, and a fair process steadies the people who stay.
Decide on real, consistent reasons. Document as you go. Deliver the news plainly and respectfully. Handle the exit properly. Then fix what allowed the problem to grow.
Put Groundwork to work for your business
Most firing problems start earlier, with an unclear job or no written expectations. Groundwork writes clear job descriptions that come with a free performance review form, documents your procedures so expectations are written down, and offers a Second Pair of Eyes review of a difficult people decision before you make it. Every Groundwork project is fixed-price. Groundwork is not a law firm and does not provide legal advice; for a termination with any red flags, talk to an employment attorney in your state.
References
- Lind, E. A., Greenberg, J., Scott, K. S., & Welchans, T. D. (2000). The winding road from employee to complainant: Situational and psychological determinants of wrongful-termination claims. Administrative Science Quarterly, 45(3), 557–590. DOI: 10.2307/2667109. doi.org
- The Ohio State University News. (1998, May). Bad treatment at termination may lead to lawsuits (early results of the Lind, Greenberg, Scott and Welchans study, presented at the 1998 Academy of Management meeting). news.osu.edu
- Brockner, J., Konovsky, M., Cooper-Schneider, R., Folger, R., Martin, C., & Bies, R. J. (1994). Interactive effects of procedural justice and outcome negativity on victims and survivors of job loss. Academy of Management Journal, 37(2), 397–409. DOI: 10.5465/256835. doi.org
- Holland, R. (2016, January 18). Hazard Warning: The Unacceptable Cost of Toxic Workers. Harvard Business School Working Knowledge, on Housman, M., & Minor, D., Toxic Workers (HBS working paper). www.library.hbs.edu
- Felps, W., Mitchell, T. R., & Byington, E. (2006). How, when, and why bad apples spoil the barrel: Negative group members and dysfunctional groups. Research in Organizational Behavior, 27, 175–222. homepages.se.edu
- University of Washington News. (2007, February 12). Rotten to the core: How workplace bad apples spoil barrels of good employees. www.washington.edu
- Sullivan, D., & von Wachter, T. (2009). Job displacement and mortality: An analysis using administrative data. Quarterly Journal of Economics, 124(3), 1265–1306. ideas.repec.org
- McFeely, S., & Wigert, B. (2019, March 13). This Fixable Problem Costs U.S. Businesses $1 Trillion. Gallup. www.gallup.com
- National Conference of State Legislatures. At-Will Employment: Overview (last updated 2008). ncsl.org
- U.S. Equal Employment Opportunity Commission. Coverage: Businesses/Private Employers. www.eeoc.gov
- Council on Workplace Compliance (CWC). (2025). FY 2024 EEOC enforcement statistics show increase in filings, with retaliation claims most prevalent. cwc.org
- U.S. Department of Labor. Last Paycheck. www.dol.gov
- U.S. Department of Labor, Employee Benefits Security Administration. elaws Health Benefits Advisor: COBRA coverage for employers. webapps.dol.gov
- EmploymentLawHelp.org. Can you get fired by text or email? (attorney-referral site; not a law firm). www.employmentlawhelp.org
- New York State Department of Labor, Division of Labor Standards. Letter of termination (New York Labor Law § 195(6)). dol.ny.gov
- California Employment Law Report. Five documents employers should provide to employees separating from the company (Cal. Unemployment Insurance Code § 1089; EDD pamphlet DE 2320). www.californiaemploymentlawreport.com
- Madison, K., Daspit, J. J., Turner, K., & Kellermanns, F. W. (2018). Family firm human resource practices: Investigating the effects of professionalization and bifurcation bias on performance. Journal of Business Research, 84, 327–336. DOI: 10.1016/j.jbusres.2017.06.021. doi.org
- Davis, J. A. (2001, November 12). The Three Components of Family Governance. Harvard Business School Working Knowledge. www.library.hbs.edu
Editorial note. General information, not legal advice. Employment law varies by state; consult an employment attorney before a termination with any red flags, and before ending the employment of anyone who also holds an ownership stake. The family-and-friends steps are Groundwork guidance drawn from the cited research, not findings of a single study. The 10x and percentage figures on explanations and dignity come from the study's early results as reported by Ohio State; the published paper reports the same direction of effect. The landscaping example is hypothetical. Groundwork is not a law firm.
Spotted an error? See our corrections policy. Disclosure: Groundwork sells services related to this topic; see conflicts of interest.
How to cite
Woodson, M. (2026). Fire Well: What the Research Says About Letting an Employee Go The Groundwork Review, No. 9. https://projects.groundworkbusinessadvisory.com/research/fire-well/