How to Fire an Employee in California Without Getting Sued

Termination decisions are one of the highest-risk moments in the employer-employee relationship. Even when the underlying decision is justified, poor handling can lead to demand letters, retaliation claims, or wrongful termination lawsuits.

John Fagerholm, Managing Partner at DefendMyBiz, explains how California employers should approach termination decisions to reduce legal exposure.

The Two Common Mistakes Employers Make

Employers typically approach termination from two opposite assumptions:

"On one hand, people think that because it's an at-will employment state in California, they can fire for any reason. On the other end, there are clients that say, well, even though the employee is misbehaving, I need to spend some time documenting their misbehavior before I fire them."

Both instincts are partially right. Both can get employers into trouble if taken too far.

What "At-Will Employment" Actually Means in California

At-will employment means an employer can terminate an employee without providing a reason, but not for illegal reasons such as discrimination or retaliation.

John is clear about where the line is: "There are several protected reasons that you can't fire for, for example, age, race, sexual orientation, pregnancy." Terminating someone for any protected characteristic opens the door to a FEHA discrimination or wrongful termination claim, regardless of at-will status.

This is where confusion often arises. John answers: 

"California makes it easy for employees to sue. So even if you fire an employee for a legitimate reason, you often get a demand letter from an attorney saying, 'Give me all the records.' These requests are often used to identify potential grounds for a claim."

The legitimacy of your reason matters, but so does your ability to prove it.

When Immediate Termination Is Appropriate

Not every termination requires a paper trail built over weeks. Some situations call for immediate action.

"Obviously, if the employee has done something that you have to instantly fire for, for example, theft, some act of violence, insubordination, anything like that, then I think you just fire."

Serious misconduct doesn't require a progressive discipline process. Delaying termination in these situations does not reduce risk. It can actually weaken your position by suggesting the conduct wasn't serious enough to act on immediately.

The Documentation Trap Employers Fall Into

For slower-burn situations, an employee who's consistently underperforming, regularly late, or just not working out, John understands why employers want to document first. But the way most employers do it creates a problem they don't see coming.

"The mistake that employers make is that they start documenting, and when they document, they give that evidence to the employee. For example, they'll say, 'Hey, here's a write-up for being late today.' And then when they consistently start getting write-ups, they are tipped off that they are likely gonna get fired soon."

This often leads to a predictable outcome: "They either file a workers' comp claim, or they complain about something else. And if you fire them, it becomes a retaliation claim."

This creates the foundation for a retaliation or wrongful termination claim, and formal written warnings issued directly to the employee create the opening. For more on how retaliation claims are built and defended, see the FEHA retaliation defense, which covers the employer side of that exposure.

How to Document Without Increasing Risk

John's solution preserves the documentation while removing the employee's ability to weaponize it. "If it's someone that you want to eventually get rid of, document it, but document it within management or within HR."

The example he gives: "Just sending an email to HR saying, 'Hey, Henry's late again' is also good evidence. Henry doesn't have to have a document that he signs saying 'yes, I was late,' a write-up, or anything."

You still address the behavior with the employee verbally. You just don't hand them a signed paper trail that signals what's coming. "Of course, you mention to Henry that he was late verbally, but then you document it with HR or management or whoever else."

How Documentation Protects You During a Claim

When termination occurs, and a lawyer sends a demand letter alleging discrimination, your internal documentation becomes your defense.

"Once you do fire Henry and some lawyer comes back and says, 'Well, you fired Henry because he's Chinese,' you can say, 'No, look at all the times that Henry was late. We fired Henry because he couldn't come to work on time."

In many cases, this level of documentation can significantly weaken or deter a claim. A clean paper trail of internal documentation, such as

• timestamped emails 

• HR notes 

• manager records

tells the real story of why the termination happened. It doesn't require the employee's signature to be effective. It just needs to exist before the termination, not after.

If you're currently managing a difficult employee situation and aren't sure how to document it correctly, our published post on Strategic Defense Against California Minimum Wage covers related principles that apply here, too.

Watch John's full breakdown below:

Get the Termination Right Before It Happens

At-will employment allows termination without cause, but not without risk. Immediate termination is appropriate for serious misconduct, while performance-related terminations require careful internal documentation to avoid retaliation claims.

How you prepare for termination often determines whether it leads to a claim.

If you're managing a difficult employee situation or planning a termination, DefendMyBiz works with employers to structure decisions and documentation correctly. Schedule a free 15-minute consultation.

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Disclaimer: The above content is for informational purposes only. This is not legal or tax advice. Laws, IRS guidance, and withholding requirements can change, and outcomes depend on specific facts. You are advised to contact a qualified attorney for any legal advice.