Having to let an employee or employees go is a stressful event for any startup, particularly if they are being let go for economic reasons. It is also likely that a startup founder may have never terminated an employee before. However, if you have to terminate an employee, there are some important issues to remember. – Have a legitimate reason for termination: Even though most states have employment at will by default, it goes without saying that you shouldn’t fire someone out of retaliation, or out of discrimination, or someone who has taken a protected action (for example, someone who has taken time off under the Family Medical Leave Act). However, at-will employees can be terminated for economic reasons (e.g.: downsizing). If the employee is under contract, the employee can only be terminated according to the terms of the contract (if there are any provisions for termination). – Keep records before terminating an employee for deficient behavior/performance: If you’re terminating an employee for behavioral- or performance-related reasons, you’d ideally first have documented instances of the deficient behavior or performance and your steps to correct it and educate the employee — many instances of deficient work behavior or performance are the result of the employee not understanding what is expected of them. Most importantly, having a record of behavioral or performance problems and the steps taken to correct them allows you to protect yourself and the company if a terminated employee levels accusations of wrongful termination – Handle the process professionally: Terminating an employee is a difficult process, and therefore should be handled in as professional a manner as possible, so as to avoid claims against the company later. First, you should give the news to the employee in a private setting, or at least without other employees around. You don’t want to compound a stressful situation by further embarrassing the employee, and you don’t put other employees on edge; plus you avoid claims of discrimination or retaliation. Second, you’d ideally have someone else with you when delivering the news, such as (depending on the size of the company) the employee’s supervisor or a co-founder; this person can corroborate what was said, in the event the employee accuses the company of retaliation. Finally, plan out what you’re going to say to the employee — you want to avoid giving the wrong impression about why the employee is being terminated, or promise things you can’t deliver, such as help looking for new employment. Also, you want to be sure that you fully convey the process of how the employee will depart the company — when does the employee depart the company, how and when will the employee receive his/her last paycheck, will there be severance, etc.