Because no policy is still a policy… and it might cost you more than you think.
When startups scale, speed often becomes a double-edged sword. You boarded fast. Filled in gaps. Trust your gut. Hope for the best. But now the honeymoon phase is over. A recent hire isn’t performing. There’s tension. Productivity is dropping. Your team is frustrated. And you’re ready to let them go. But wait—do you have:
- Documentation of their performance issues?
- A signed employee handbook?
- Proof of consistent treatment across all employees?
- A compliant termination process?
If not, you’re not just firing wrong—you’re firing dangerously.
The Compliance Cost of “Wing It” Off boarding
Terminating an employee without proper HR processes opens the door to claims of:
- Wrongful termination
- Discrimination
- Retaliation
- Hostile work environment
In fact, wrongful termination lawsuits have been increasing steadily. Most small businesses don’t think this could happen to them—until it does.
What You Thought Firing Would Look Like:
- Quick meeting
- Professional goodbye
- Moving forward
What It Can Actually Look Like Without HR Support:
- A formal demand letter
- Legal consultations
- Public reviews and damage contro
- Burned out internal teams
- Massive payouts
Enter the PEO: Your HR Safety Net
A Professional Employer Organization (PEO) doesn’t just help with hiring. It gives you the legal and structural backbone to exit an employee legally, fairly, and with minimal risk. Here’s what that looks like:
Documented Performance Reviews
PEOs help establish performance management systems that track:
- Goals set and missed
- Feedback delivered
- Actions taken
- Warnings issued
No guesswork. Just clear records.
Termination Protocols
From verbal warnings to final separation, PEOs create standardized procedures aligned with labor law and state-specific compliance rules.
Legal Support On-Call
If a situation gets tricky, PEOs provide:
- Immediate HR guidance
- Legal review of documentation
- Support during difficult exit
Think of it as your HR pit crew—handling the friction, so your business keeps moving.
The Real Cost of Getting It Wrong
According to SHRM, the cost of one wrongful termination lawsuit—even if you win—can range from $75,000 to $125,000 in legal fees and productivity loss. Worse, it’s not just about one employee. The morale hit, reputational damage, and internal tension can ripple across your team
PEOs Prevent These Scenarios by Design
Instead of reactive HR, you get proactive protection:
- Pre-written policies
- Documented performance systems
- Legal compliance checkpoints
- Strategic workforce planning
- Conflict de-escalation mechanisms
You’re no longer just “firing” someone—you’re managing risk the right way.
Firing Isn’t the Problem. Unstructured Offboarding Is.
Letting go of someone who doesn’t fit is sometimes the right move. But how matters as much as the why. And if you’re growing, the stakes are too high to keep guessing your way through terminations. So, before your next hire becomes your next HR nightmare, ask:
“Are we protected if this doesn’t work out?” If the answer is no, it’s time to bring in a PEO.
References:
- EEOC Enforcement Statistics:
https://www.eeoc.gov/statistics/charge-statistics-eeoc-fy-1997-through-fy-2022
SHRM: Managing the Risks of Termination:
https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/managing-the-risks-of-termination.aspx
NAPEO: PEO Industry Impact Research:
https://napeo.org/what-is-a-peo/peo-industry-statistics
Harvard Business Review: HR Mistakes in Businesses:
https://hbr.org/2020/09/the-right-way-to-scale-your-team