When a growing tech company noticed declining performance in one of their IT specialists, they assumed the solution would be straightforward: terminate the employee and move on. Since they were in an “at-will” state, they believed they didn’t need to provide a reason or advanced notice. After all, at-will employment means either the employer or employee can end the relationship at any time, for any lawful reason or for no reason at all. Confident in their rights, the HR team set a meeting with the employee, informed him of immediate termination, and escorted him out of the building.

Since the employee felt blindsided and upset, he decided to pursue legal action. He claimed that the termination wasn’t related to performance but rather discriminatory practices, pointing to their recent complaints about working conditions and citing age as a factor. The employee’s lawyer argued that the company failed to provide sufficient documentation of poor performance or evidence that the termination was solely job-related. Despite having the legal right to terminate the employee under at-will employment, the lack of documentation and hasty process left the company open to serious legal challenges.

The company faced a long legal battle, which not only drained financial resources but also damaged its reputation. When the word got out, current employees became anxious, questioning the security of their positions and fearing they could be let go at any moment without warning. Trust and morale within the team plummeted, and turnover rates rose as skilled employees left for companies with better communication practices and transparent HR procedures.

In the end, the company settled with the former employee, agreeing to a hefty payout to avoid further litigation. They learned a hard lesson: while at-will employment offers flexibility, it doesn’t shield employers from the risks associated with improper documentation and lack of clear communication. Following the settlement, the company overhauled its termination procedures. They implemented a rigorous performance management system that required supervisors to document performance issues consistently. HR also conducted training sessions for managers, emphasizing that all conversations about performance should be clearly documented in employee files. Additionally, they created a policy that required multiple warnings and improvement plans before terminating an employee for poor performance.

For this company, the experience highlighted an essential truth: at-will employment doesn’t eliminate the need for careful documentation and respectful employee relations. By taking the time to document performance issues and communicate concerns to employees, companies can avoid the pitfalls of abrupt, unplanned terminations and protect themselves from costly and damaging disputes.

If you are looking for an HR Audit for your business where we analyze personnel, pay scales, and safety, then contact us at info@wpihr.com.