While mass layoffs and company closings bring their own set of unique legal challenges, employers must be equally careful when terminating an individual employee for performance reasons. This is especially true in today’s troublesome economic climate when a terminated employee may be more likely to resort to filing an action against his former employer in an attempt to make up any lost wages and to gain other monetary relief.

Following certain best practices for the termination of an individual employee will reduce the likelihood of the employee pursuing legal action and will put the employer in a more favorable position in the event the employee does decide to challenge the termination.

Below is a list of tips for employers to consider when deciding whether to terminate and if so, how to proceed with the termination of an employee due to unsatisfactory job performance:

Thorough Investigation. Thoroughly investigate the employee’s conduct, including allowing the employee the opportunity to explain his or her side of the story. Make sure you document interviews with witnesses, and have them review and sign off on their statements. You should also document other evidence of wrongdoing or poor performance that may be useful if the employee challenges your action. Include in your documentation the date(s) on which you conduct interviews and take other key steps in the investigation. Retain the original, or at least make a copy, of all key pieces of information. For example, print the computer screen that shows the falsified work production numbers; keep a copy of the employee’s telephone log if the performance issue is related to excessive personal phone calls; keep a copy of the unprocessed mail (including envelopes) that you find in the secretary’s desk on the day she was absent, etc. If the employee’s most recent performance evaluation is positive, be prepared to explain the subsequent performance changes.

Follow Policies. Follow your organization’s policies and procedures (e.g., progressive discipline, if applicable), and apply them consistently to employees engaging in similar misconduct to avoid a claim of disparate treatment. Consider how the organization has treated other employees who engaged in the same or similar misconduct in the past as a guidepost.

Termination Meeting Preparation. Before the termination meeting, you should have: (1) a true and succinct reason for the termination, (2) created any necessary paperwork needed to process the termination, (3) reviewed a plan for the employee’s departure, (4) a list of all the Company property of which you need to take possession, (5) made arrangements to lock the employee out of his computer during the time of the termination meeting, and (6) a witness that will be present for the termination meeting and who will take notes. Carefully think through the reason for the termination. Later deviation from the stated reason can be used against the Company as evidence of pretext for discrimination or retaliation. Plan to hold the meeting at a time that is least disruptive to the Company.

Release / Severance Agreement. Consider whether to offer the employee a severance agreement. If an employee agrees to sign a release waiving the right to pursue legal claims related to her employment and termination, remember that there are certain requirements when asking employees age 40 and over to release age discrimination claims.

Consult Legal Counsel. Consult legal counsel BEFORE the termination to discuss your plan of action and any risks associated therewith.