Terminating an employee is one of the most difficult responsibilities of owning a healthcare practice. Whether you operate a dental office, medical practice, optometry clinic, or veterinary hospital, ending an employment relationship requires careful planning, thorough documentation, and compliance with applicable employment laws.

While California is generally an at-will employment state, that does not mean an employer can terminate an employee for any reason without legal consequences. A poorly handled termination can expose your practice to claims of wrongful termination, discrimination, retaliation, wage-and-hour violations, and costly litigation.

On the other hand, a well-documented and professionally executed termination helps protect your practice while treating employees with fairness and respect.

Below are the essential steps every healthcare practice owner should take before terminating an employee.

Step 1: Confirm You Have a Legitimate Business Reason

Before making the decision to terminate an employee, take a step back and evaluate why the termination is necessary.

A legitimate business reason is the foundation of every legally defensible termination. Common examples include:

• Poor or declining job performance
• Repeated attendance or punctuality issues
• Failure to follow office policies or procedures
• Misconduct or unethical behavior
• Insubordination
• Position elimination due to restructuring or financial reasons
• Patient or client complaints supported by documentation

Whether you're terminating a dental assistant, medical assistant, registered nurse, optician, veterinary technician, receptionist, or office manager, the reason for termination should be based on objective facts, not frustration or emotion.

Avoid making termination decisions in the heat of the moment. Instead, ensure the decision is supported by documented performance issues or legitimate business needs.

Step 2: Review Your Documentation

Documentation is often your strongest defense if a former employee challenges the termination.

Before scheduling a termination meeting, review the employee's personnel file and gather all relevant records, including:

• Performance evaluations
• Written coaching or counseling notes
• Attendance records
• Written warnings
• Emails documenting concerns
• Incident reports
• Signed acknowledgments of workplace policies
• Patient or client complaints, when appropriate

If your practice uses progressive discipline, verify that each step was followed consistently unless the employee engaged in serious misconduct warranting immediate termination.

Good documentation demonstrates that the decision was based on legitimate business reasons rather than discrimination, retaliation, or bias.

If documentation is limited or inconsistent, consider consulting a healthcare employment attorney before moving forward.

Step 3: Review Employment Agreements and Practice Policies

Before terminating an employee, review every document governing the employment relationship.

These may include:

• Employment agreements
• Employee handbook
• Confidentiality agreements
• Bonus or incentive compensation plans
• Commission agreements
• Non-solicitation agreements
• Arbitration agreements, if applicable

Your practice should follow its own written policies whenever possible.

For example, if your handbook outlines a progressive disciplinary process, failing to follow that process without a legitimate reason may create unnecessary legal risk.

Likewise, review any contractual obligations relating to notice requirements, severance, or post-employment restrictions.

Consistency is one of the strongest defenses in employment disputes.

Step 4: Evaluate Potential Legal Risks Before Termination

Not every employee presents the same legal considerations.

Before making a final decision, determine whether the employee has recently engaged in any legally protected activity.

Examples include:

• Taking medical or family leave
• Requesting a disability accommodation
• Reporting harassment or discrimination
• Filing a workers' compensation claim
• Reporting wage violations
• Participating in a workplace investigation
• Requesting pregnancy accommodations
• Raising concerns about patient safety or regulatory compliance

Even if termination is justified, these situations require additional care because they often become the basis for retaliation claims.

Healthcare employers should also evaluate whether the employee belongs to a protected class under federal or California law, including protections based on:

• Age
• Disability
• Race
• National origin
• Religion
• Sex
• Pregnancy
• Sexual orientation
• Gender identity
• Military status

Being an at-will employer does not eliminate the obligation to comply with anti-discrimination and anti-retaliation laws.

If there is any uncertainty, consult legal counsel before proceeding.

Step 5: Plan the Termination Meeting

A termination meeting should never feel rushed or improvised.

Instead, prepare in advance by determining:

• Who will attend the meeting
• What will be communicated
• When the meeting will occur
• What documents will be provided
• How company property will be returned
• How electronic access will be disabled

In most healthcare practices, it is advisable for another manager or HR representative to be present as a witness.

Keep the meeting respectful, professional, and concise.

Avoid debating the decision or listing every past mistake. Instead, clearly communicate that the decision has been made and explain the next steps regarding final pay, benefits, and the return of company property.

Showing professionalism during the termination process can significantly reduce the likelihood of conflict.

Step 6: Prepare the Final Paycheck Before the Meeting

One of the most common, and costly mistakes employers make is mishandling an employee's final paycheck.

California has strict laws governing when final wages must be paid.

Generally:

• Employees who are terminated must receive all final wages immediately at the time of termination.
• Employees who resign with at least 72 hours' notice must receive final pay on their last day of work.
• Employees who resign without sufficient notice generally must receive final wages within 72 hours.

Final wages may include:

• Regular wages
• Overtime
• Earned commissions or production bonuses
• Accrued but unused vacation or PTO, where required by law
• Approved expense reimbursements

Waiting until the next payroll cycle is not permitted under California law and may expose your practice to waiting time penalties.

For healthcare employers with multiple locations or decentralized payroll systems, preparing the final paycheck before the termination meeting helps ensure compliance and reduces unnecessary legal risk.

Step 7: Protect Your Practice After the Employee's Departure

The termination process does not end when the employee leaves the building. Healthcare practices must take immediate steps to protect patient information, business operations, and sensitive data.

As soon as employment ends, ensure your practice:

• Disables access to electronic health records (EHR) or practice management software.
• Revokes email accounts, remote access, and cloud-based applications.
• Collects office keys, ID badges, company credit cards, and any employer-issued devices.
• Changes passwords for shared systems, if necessary.
• Documents the return of all company property.
• Removes the employee from scheduling software and internal communication platforms.

Whether you own a dental practice, medical office, optometry clinic, or veterinary hospital, protecting confidential patient and business information should remain a top priority after every employee separation.

If the departing employee signed confidentiality, non-disclosure, or non-solicitation agreements, remind them of their continuing obligations before they leave. A professional reminder can help prevent future disputes while reinforcing the importance of safeguarding confidential information.

Common Mistakes Healthcare Employers Make When Terminating Employees

Many employment disputes do not arise because an employer lacked a legitimate reason for termination, they arise because the termination was handled improperly.

Based on our experience advising healthcare practice owners, these are some of the most common mistakes we see.

Failing to Document Performance Issues

If an employee's personnel file contains little or no documentation, it becomes much more difficult to demonstrate that the termination was justified.

Performance concerns should be documented as they occur—not after the decision to terminate has already been made.

Acting Emotionally

Employee misconduct can be frustrating, but termination decisions should never be made in anger.

Taking time to review documentation, consult advisors, and prepare for the meeting often results in a smoother process and fewer legal risks.

Applying Policies Inconsistently

Treating employees differently for similar conduct can create the appearance of discrimination or favoritism.

Consistent enforcement of workplace policies is one of the strongest protections against employment claims.

Ignoring Protected Leave or Accommodation Requests

Employees who recently requested medical leave, disability accommodations, pregnancy accommodations, or other legally protected rights require additional consideration before termination.

Even when termination is appropriate, the timing and documentation matter.

Mishandling Final Pay

California employers frequently underestimate the importance of final paycheck compliance.

Waiting until the next payroll cycle or overlooking accrued vacation payouts can expose a practice to waiting time penalties and additional wage-and-hour claims.

Discussing the Termination with Other Employees

Once the termination is complete, resist the urge to explain every detail to the remaining staff.

Instead, communicate only what is necessary for business operations while respecting the former employee's privacy.

Professionalism helps maintain workplace morale and reduces the likelihood of unnecessary conflict.

How to Reduce the Risk of Wrongful Termination Claims

No employer can eliminate every employment-related risk, but thoughtful planning can significantly reduce the likelihood of litigation.

Healthcare practices should establish clear hiring, performance management, and termination procedures that are applied consistently across the organization.

Some best practices include:

• Maintaining an up-to-date employee handbook.
• Conducting regular performance evaluations.
• Training supervisors on employment law compliance.
• Documenting coaching conversations and disciplinary actions.
• Reviewing employment agreements periodically.
• Consulting legal counsel before terminating employees in high-risk situations.
• Ensuring payroll procedures comply with California wage-and-hour laws.

A proactive approach is almost always less expensive than defending a wrongful termination lawsuit.

How a Healthcare Employment Attorney Can Help

Employment laws continue to evolve, particularly in California, where healthcare employers face complex wage-and-hour regulations, anti-discrimination laws, leave requirements, and workplace compliance obligations.

Whether you own a dental practice, physician group, optometry clinic, or veterinary hospital, every employee termination presents unique legal considerations.

At Dental & Medical Counsel, we help healthcare practice owners navigate employment matters before they become costly disputes. Our attorneys regularly assist clients with:

• Employee discipline and termination strategies.
• Employment agreements.
• Employee handbook development.
• Wage-and-hour compliance.
• Independent contractor classification.
• Workplace investigations.
• Wrongful termination defense.
• HR policy development and compliance.

When handled properly, employee terminations can minimize disruption while protecting both your practice and your legal interests.

If you are considering terminating an employee, consulting a healthcare employment attorney before making the final decision can help identify potential risks and ensure the process complies with applicable employment laws.

Frequently Asked Questions

Q: Can I terminate an employee without giving a reason?

A: In many states, employment is considered "at will," meaning employers may generally terminate employees for any lawful reason. However, employees cannot be terminated for discriminatory, retaliatory, or otherwise unlawful reasons. Before terminating an employee, healthcare employers should ensure the decision is supported by legitimate business reasons and appropriate documentation.

Q: Should I document performance issues before terminating an employee?

A: Yes. Documentation is one of the strongest defenses against wrongful termination claims. Performance evaluations, written warnings, coaching notes, attendance records, and policy acknowledgments help demonstrate that the decision was based on objective business reasons.

Q: What should happen during a termination meeting?

A: A termination meeting should be brief, respectful, and professional. Clearly communicate the decision, explain final pay and benefits, collect company property, and answer logistical questions without debating the decision.

Q: When should a terminated employee receive their final paycheck in California?

A: California generally requires employers to provide all final wages immediately upon termination. Employees who resign with at least 72 hours' notice are generally entitled to receive final wages on their last day of work, while employees who resign without notice generally must receive payment within 72 hours. Failure to meet these deadlines may result in waiting time penalties.

Q: Does accrued vacation need to be included in the final paycheck?

A: In California, accrued but unused vacation is generally considered earned wages and must be paid out upon separation. Employers should carefully calculate final wages to ensure compliance with state law.

Q: Does this guidance apply to all healthcare practices?

A: Yes. While every practice has unique operational needs, the principles discussed in this article generally apply to dental practices, medical offices, physician groups, optometry clinics, and veterinary hospitals. Healthcare employers should also consider industry-specific confidentiality obligations and regulatory requirements when managing employee separations.

Q: When should I contact a healthcare employment attorney?

A: If an employee has requested protected leave, reported workplace concerns, requested accommodations, has an employment contract, or if you are uncertain about the legal risks surrounding a termination, consulting an attorney before taking action can help protect your practice and reduce the likelihood of costly employment disputes.

About the Author

At Dental & Medical Counsel, PC, we understand navigating the legal process can be tricky. We believe every dentist, optometrist, and doctor deserves the best advice and service, so they can focus on what they do best: treating their patients. We make their lives easier by providing expert guidance, so they can focus on their personal and professional aspirations. We are healthcare attorneys.

About Ali Oromchian, Esq.

Your Dental, Optometry, Healthcare Lawyer

Ali Oromchian, JD, LL.M., is the founding attorney of the Dental & Medical Counsel, PC law firm, and is renowned for his expertise in legal matters

In addition to being a healthcare lawyer for almost 20 years, Ali is also a renowned speaker throughout North America, on topics such as practice transitions, employment law, negotiation strategies, estate planning, and more! Ali has helped thousands of doctors realize their professional goals and looks forward to aiding you in navigating the legal landscape.