Toxic or Terminated? How to Legally Fire a Problem Employee

 Posted on July 24, 2025 in Business Law

Firing an employee - even one who fails to perform or is clearly toxic - requires considerably more than a pink slip. New York is an at-will employment state, but this does not mean that employers can escape lawsuits for wrongful termination. In particular, if the employee recently filed a complaint or falls within a protected category, a mishandled termination can lead to costly litigation.

When dealing with a disruptive or underperforming employee, there are effective and legal ways to protect your company while parting ways. If your company is dealing with a problematic employee, your first step should be to consult an experienced New York Metro Area employment lawyer to ensure everything is handled legally.   

What Does "At-Will Employment" Mean?

Every state in the United States, except Montana (including Washington, D.C.), operates under at-will employment laws. This means that employers can terminate an employee’s employment at any time, for any reason, or no reason at all, as long as the reason does not include one of the following:

• Termination based on discrimination due to race, creed, national origin, age, disability, gender, sexual orientation, marital status, or other protected characteristics.
• Termination based on retaliation for engaging in legally protected activities, including filing a workers’ compensation claim, participating in political or recreational activities outside of work, seeking workplace accommodations, or reporting discrimination.
• Terminations that violate public policy, including whistleblowing or refusing to break the law.
• Termination when an implied contract exists can create an exception to at-will employment, but this is rare.

What Are Some Signs of a Toxic Employee?

Toxic employees can harm productivity, morale, and the overall work environment. A toxic employee goes far beyond the employee who consistently arrives late to work. The toxic employee may complain constantly, exhibiting negativity on a regular basis. He or she may be resistant to constructive criticism and, rather than taking responsibility, will blame others or external factors for mistakes.

There may be a lack of cooperation and collaboration, which could escalate into sabotaging the work of others or even stealing their ideas or accomplishments. The toxic employee may exhibit bullying or harassing behaviors, creating a hostile work environment for other employees, and may display inconsistent performance or a total lack of motivation.     

Why Does Firing a Toxic Employee Who Is a Part of a Protected Group Require Extra Care?

A toxic employee who belongs to a protected group requires extra caution when terminating his or her employment. This is due to an increased risk of discrimination claims, even when the termination is based on legitimate reasons, such as misconduct or poor performance. If the employee has previously engaged in protected activity or filed a complaint, the termination could be viewed as retaliation, even when it is not.

How to Conduct a Lawful, Defensible Termination

Before terminating a toxic employee, ensure that you have maintained a detailed, thorough, and objective record of the employee’s performance issues, including attempts to address these issues. There must have been clear performance expectations, including definitions of job responsibilities and expectations.

A termination letter, reviewed by HR and legal counsel, must be drafted, stating the decision and the reasons for termination. The termination meeting should be held in a private, neutral location with an HR representative or other witness present. From this point, conduct the meeting in the following manner:

• State the termination decision clearly and respectfully.
• Briefly state the factual, objective reasons for termination.
• Outline the next steps, including final pay, benefits, return of company property, etc.
• Give the employee the opportunity to respond, but avoid debating the decision.
• Remain professional and calm.
• Provide the termination letter.

Contact a New York Metro Area Employment Attorney

While firing a toxic employee can be a necessary move, doing it the wrong way can leave your business vulnerable. Consulting with an experienced New York Metro Area employment lawyer from Ivey, Barnum & O'Mara, LLC is a necessary step before you inadvertently make a misstep that could result in a lawsuit. Our attorneys are actively involved in civic and charitable organizations, serving in various capacities. Call 203-661-6000 to schedule your free consultation.