How to Fire a Lying Employee: Protect Yourself From Lawsuits

How to Fire a Lying Employee: Protect Yourself From Lawsuits
Page content

Accusing an employee of lying can be harsh, especially if you have no proof. Because of the Federal Government’s Employee Polygraph Protection Act of 1998 or (EPPA) you can’t hook them up to a lie detector—this is entirely illegal.

But, what if you see Joe taking copy paper home every Friday? When asked about it, Joe lies and says he’s never taken anything out of the stock room. Or, what if a co-worker also sees Joe’s thievery and you confront Joe again, and he still denies it? Unless Joe drives a company car, you can’t ask to search his personal vehicle or even his briefcase. You could follow Joe home and see what he’s dragging into his home or hope he leaves the curtains wide open and try and spot your precious copy paper, but the chances of firing your employee after you’ve stalked them won’t hold up in court.

Many HR managers and business owners are tired of all the new laws continually offered by the US Department of Labor, OSHA and the Wage and Hour Division—it never seems to end. But if you know your employee is lying, how can you terminate the problem employee?

State Laws

Actually, all states except Montana follow the “at will” clause meaning you can terminate an employee for any reason or he or she can quit for any reason without either offering an explanation. In Montana, you must offer “just cause” as to why you fired the employee and be able to prove it—here’s where a coworker witness would help, especially if your business is in Montana.

There are other rules, both on the federal and state levels, that protect employees from termination. When it comes to termination for lying, some states enforce employment contracts and protect government and union workers. What this means if your employee has a signed employment contract listing the reasons you can terminate or they can quit, and lying isn’t one of the reasons, chances are if the case goes to court, the judge will lean toward the employment contract.

So, what’s left for employers to do with a lying employee without fear of the treat of a lawsuit? No business owner wants to be on the losing side of an employee lawsuit, but they often are.

What you must do is investigate, verify, and provided written warnings before you terminate. Again, while accusing anyone of lying is problematic, if you don’t have certain processes in place, chances of your winning a wrongful termination lawsuit are slim. Follow these steps below on how to fire a lying employee.


State Laws on Termination

Start by downloading the free employee investigation log from our Media Gallery. The log simply allows a supervisor, HR manager or business owner to keep track of suspected lying incidents. This should be the initial phase of documenting employee untruths.

You can modify the form, however, simply entering each lying incident. Completing the notes section on what the suspected employee said upon confrontation will give you the first piece of documentation you’ll need if you feel termination is the goal.

There is also a place for any witness who may have overhead the employee lying—write names of witnesses and ask for written statements with times and dates from each one. Investigation logs should be kept in a separate binder until the investigation is complete. Avoid placing the logs within the employee’s file during the investigation—only insert them in the employee’s file when the termination process is complete.


The comments you make on your investigation log need to be verified. For example, if one of your witness is a customer who informed you of the lying employee, it’s best to verify the statement with the customer. If it’s a coworker, you will also need to verify what your log states compared to what the customer, witness or co-worker told you.

The more time you take to ensure your investigation is correct, the better chance you’ll have if you want to terminate the employee. Why? Documentation of facts is key in any employee investigation.


Bright Hub also offers a free written warning form you can use to confront the employee. Make sure you attach your investigation logs, witness statements and details on your verification process. Most state unemployment agencies and courts of law, if a wrongful termination suit is filed, will want documentation. Written warnings are a great way to show you attempted to work with the lying employee, to no avail. Make sure you have an HR policy stating how many warnings an employee receives before termination becomes an option.

For example, your HR policies may say any employee who receives three written warnings may be terminated.


Time for the Axe

If despite written warnings the employee continues to lie, it’s probably time to take the appropriate steps and terminate. Bright Hub offers a generic employee termination form. Prepare the form in advance of the termination session and attach all written warnings the employee has received.

The form allows for employee comments, which you should allow. The important part of the termination process, especially if you need to prove just cause, is to remain calm and allow the employee to write comments or speak his or her opinion. However, don’t allow the employee to ramble on too long.

In most states, following these steps for terminating a lying employee really isn’t necessary, especially if your state is an at-will state. The importance of investigating, verifying and providing written warnings serves you if the employee either attempts to file a wrongful termination lawsuit or collect unemployment; you will have the documentation you need to back up your claims. That is where most employers make their biggest mistakes.

Documentation of any problematic employee may sound like a lengthy process but failing to record and warn employees only means it’s your word against theirs if a lawsuit comes into play or if you want to appeal an unemployment claim.