Before firing, offer a legit chance to improve.

Smart employers make it a standard practice to establish performance improvement plans before firing workers who can't do their jobs properly.

PIPs can help turn around an underperforming worker. They also demonstrate your good faith in case of a lawsuit, assuring a court that a subsequent firing was because of a performance problem, not discrimination. Make sure the PIP includes measurable goals and expectations.

Recent case: William was hired at age 54 by a pharma company and received positive reviews for years. He applied for a promotion but wasn't picked. A VP allegedly said he wanted "fresh blood" in the company. The job went to an outside hire, who became William's boss.

The new boss grew unhappy with William's work and placed him on...