How to Legally Fire an Employee in Texas

Texas is an at-will employment state. That means you can terminate an employee for any reason or no reason, as long as the reason isn’t an illegal one. What it doesn’t mean is that terminations are automatically clean, or that a fired employee can’t make your life difficult if you handled it poorly.

This guide is for Texas small business owners navigating a termination. It covers what at-will actually means, how to document before you act, what Texas requires for final pay, how unemployment exposure works, and the situations that warrant a call to an attorney before you have the conversation.

What “At-Will” Actually Means

At-will employment means the employment relationship can be ended by either party, employer or employee, at any time, for any reason that isn’t prohibited by law. You don’t owe an employee a reason, a warning, or a severance package.

What at-will doesn’t protect against:

Discriminatory termination. You can’t fire someone because of race, color, sex, national origin, religion, or disability. The Texas Commission on Human Rights Act (TCHRA) applies to employers with 15 or more employees for most protections, and 20 or more for age discrimination. Federal law (Title VII, ADA, ADEA) has similar thresholds. Below those counts, you may still face federal liability depending on the facts.

Retaliation. Terminating an employee shortly after they filed a workers’ compensation claim, reported a safety violation, engaged in protected activity under the Texas Payday Law, or took legally protected leave can look like retaliation, even if your actual reason was legitimate. Timing matters.

Contractual obligations. If your offer letter, employee handbook, or a side agreement includes language suggesting termination requires cause or a specific process, you may have created a contractual obligation. “We issue three warnings before termination”, if that’s in your handbook, you’ve created a process you’re expected to follow.

Before you terminate, briefly ask yourself whether any of these exceptions could apply. If the answer is yes, or even possibly yes, talk to an attorney first.

The Documentation Imperative

Our position is straightforward: documentation on termination decisions is essential and must be contemporaneous, meaning created when events happen, not reconstructed afterward.

A stack of write-ups created the week before a termination looks exactly like what it is. Documentation created in real time, close to the actual events, carries credibility. Documentation assembled after the fact does not.

What good documentation looks like:

• Written records of specific incidents: date, what happened, who witnessed it, what was said
• Emails or text messages preserved at the time
• Prior verbal warnings noted in writing on the day they occurred
• Performance reviews conducted on schedule
• Corrective action with the employee’s signature or a note that they declined to sign

A business owner navigating an employee conduct problem, patterns of insubordination, threatening to walk off the job, needed to both address the situation and protect the business. The practical framework: document each incident when it happens, issue a written warning, frame the next step as job abandonment if the employee walks out. Documentation built before the termination conversation is documentation you can actually use.

The Performance Improvement Plan (PIP)

A PIP isn’t legally required before termination in Texas. But it documents that you communicated the problem clearly before acting, and gives a marginal employee an opportunity to correct.

A useful PIP includes:

• Specific, measurable performance or conduct expectations
• A defined time period (30, 60, or 90 days is typical)
• Clear statement of consequences if expectations aren’t met
• Employee acknowledgment (signature, or documentation that they refused to sign)

A healthcare practice owner dealing with a therapist employee who was consistently missing appointments used the PIP process over several months before terminating. Without it, an allegation that the termination was discriminatory would have had stronger footing. With it, the termination was well-supported and the outcome was clean.

When to Skip the PIP

A PIP is for performance and conduct issues that develop over time. You skip it when:

The conduct is serious enough to warrant immediate termination. Theft, fraud, violence, harassment, or conduct causing immediate harm doesn’t require a warning process. A food service employee caught on camera accessing the cash register without authorization is a same-day termination. The conduct is the documentation.

The business is doing a layoff. A layoff isn’t a performance issue. No PIP needed.

The business is closing, being sold, or restructuring. Document the business reason.

Two Situations That Require an Attorney Call Before You Act

Layoffs involving multiple employees. If you are terminating a group of employees at once, due to a downturn, restructuring, or closing a location, contact us before you act. Federal WARN Act requirements can apply depending on your employee count and the scope of the reduction. Texas does not have its own WARN Act, but the federal law applies at 100 or more employees. Even below that threshold, larger layoffs benefit from legal review before execution.

Termination because an employee can’t perform an essential function. If you’re considering terminating because an employee is physically or cognitively unable to do their job, especially if they have a documented medical condition or recently returned from medical leave, contact us before you have the conversation. The ADA’s interactive accommodation process must be completed first. Getting this sequence wrong is one of the more expensive termination mistakes Texas employers make.

Texas Final Paycheck Law

Texas final paycheck timing depends on how the employment ended:

If you fire the employee: All earned wages must be paid within 6 calendar days of the date of discharge. This is a strict Texas Payday Law requirement.

If the employee resigns: Wages must be paid by the next regular payday. If they gave at least one pay period’s notice, you have until the next regular payday. If they quit without notice, you still have until the next regular payday.

The Texas Payday Law does not allow you to withhold a final paycheck as leverage for equipment return, noncompete compliance, or any other reason. Withholding triggers a TWC wage claim. Your recourse for unreturned equipment is a separate civil matter.

Unemployment Insurance: How Exposure Works

When you fire an employee in Texas, they may file for unemployment benefits through TWC. Whether they receive benefits depends on the reason for termination.

Terminations for misconduct generally disqualify employees from receiving benefits. Texas defines misconduct as mismanagement of a position of employment, violation of a company rule, violation of a law, or similar conduct. To deny benefits, you need to show:

• A work rule or expectation existed
• The employee knew about it
• They violated it
• The violation was willful or deliberate

Documentation is everything. If you can’t demonstrate these elements, benefits will be paid, and they will affect your TWC experience rating, which affects your SUTA tax rate.

Terminations without cause (layoffs, position elimination) generally result in benefits being paid.

Voluntary resignation, when an employee quits, generally disqualifies them from benefits, unless they quit for “good cause connected to the work.” Job abandonment (not showing up without notice) is treated as voluntary resignation. Document no-call/no-show situations precisely.

Workers’ Comp and Termination

If you’re a workers’ comp subscriber and you terminate an employee who has an open workers’ comp claim, or who recently filed one, the timing creates a retaliation risk. Texas law specifically prohibits terminating an employee for filing a good-faith workers’ comp claim.

This doesn’t mean you can’t terminate them. It means your documentation needs to clearly establish that the termination was based on conduct or performance unrelated to the claim. The documented reasons for the termination must predate or be independent of the claim.

If the employee’s position has been legitimately eliminated, document the business reason before the termination conversation.

The Termination Conversation

Keep it brief, factual, and private:

• Have a witness present
• State clearly that employment is ending effective today
• State the reason simply if it’s a conduct termination
• Cover next steps: equipment return, final paycheck timing, COBRA if applicable
• Nothing inflammatory or personal

Don’t do it by email or text unless there are safety concerns. Don’t do it on a Friday, it creates a weekend of escalation before any follow-up is possible.

After the Termination

• Revoke system access and collect equipment promptly
• If the employee has client relationships, communicate the transition professionally
• If they’re subject to a confidentiality or non-solicitation agreement, remind them in writing
• Document the termination meeting contemporaneously
• Pay the final paycheck within 6 days (discharge) or by next regular payday (resignation)

Related Reading

• Texas Employee Handbook Guide
• Texas Wage Claim Response Guide
• What to Do After Employee Theft or Fraud
• Non-Solicitation and Trade Secret Protection

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