The step-by-step process for managing performance and conduct issues — before they become legal problems.
Every business owner has had one. The employee who creates drama, ignores feedback, undermines coworkers, or simply refuses to perform at the level the job requires. Handling them poorly — too fast, too slow, or without documentation — is one of the most common ways small businesses end up in legal trouble.
The good news: there's a process. Follow it consistently and you protect yourself legally while giving the employee a genuine opportunity to improve. Here's how it works.
Before you act: If the difficult behavior involves a complaint of harassment, discrimination, or a safety issue — stop. Those situations require a formal investigation before any disciplinary action. Acting too quickly in those cases can make things significantly worse.
Vague complaints don't hold up. "Bad attitude" is not a fireable offense. "Spoke to a coworker in a demeaning tone in front of the team on three documented occasions" is a fireable offense.
Before you do anything else, write down exactly what the employee is doing — specific behaviors, specific dates, specific impact on the team or business. If you can't document it, you can't act on it.
Most performance and conduct issues should start with a direct, private conversation — not a written warning. Tell the employee specifically what you've observed, what the expectation is, and what needs to change. Document that this conversation happened, even if it's just a note in their file with the date.
If the behavior continues after the verbal conversation, put it in writing. A written warning should state the specific issue, prior discussions about it, the required corrective action, the timeline for improvement, and the consequences if improvement doesn't happen. Have the employee sign it — not to agree, but to acknowledge receipt.
For performance issues (as opposed to conduct), a PIP is often the right next step. It defines specific, measurable goals, a timeline (typically 30–90 days), and what support the company will provide. A well-written PIP demonstrates that you gave the employee a genuine chance to succeed.
If improvement doesn't happen, a final warning makes clear that termination is the next step if the behavior or performance doesn't change immediately. This step matters — it closes the loop on your documentation trail and removes any ambiguity.
If you've followed the steps above and nothing has changed, you have a documented case for termination. The decision should be reviewed before execution — by yourself, a business partner, or an HR advisor — to make sure the documentation is solid and there's no protected class issue lurking in the background.
Describe what's happening and Your HR Coach will give you a step-by-step action plan — including what to say, what to document, and what to watch out for legally.
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If it's not written down, it didn't happen. That's the standard courts and unemployment judges apply. Every conversation, every warning, every missed goal, every incident — document it contemporaneously (meaning at the time, not weeks later).
Your documentation should include the date, what was observed or discussed, who was present, and what was agreed to or decided. Keep it factual. Keep it professional. Keep it in the employee's personnel file.
Some behaviors justify skipping the progressive discipline process entirely — theft, physical violence, harassment, insubordination, or serious policy violations. Your employee handbook should list these explicitly. If it does, and the employee commits one of them, you can act immediately — as long as you document what happened and why it triggered immediate termination.
Consistency is everything. If you fired one employee immediately for an offense but gave another employee three warnings for the same thing, you've created a discrimination argument. Whatever process you use, apply it the same way regardless of who the employee is.
If an employee filed an EEOC complaint, reported a safety issue, or took FMLA leave — and you discipline or terminate them shortly after — that timing creates a retaliation claim even if your reasons are legitimate. Be aware of the chronology and document your reasoning carefully.
Age, race, sex, disability, religion, national origin — these are protected classes. If your documentation trail shows that you were more lenient with one group than another, that's a discrimination problem. Apply your policies uniformly.
"I'm sure we can work this out" or "you're not going anywhere" — even said casually — can create implied promises that complicate a future termination. Stay neutral and factual throughout the process.
Your HR Coach gives you instant, expert answers to your toughest employee situations — and generates the documents you need to handle them correctly.
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This article is for general HR guidance purposes only and does not constitute legal advice. Employment laws vary by state. Consult a licensed employment attorney for guidance specific to your situation.