If the employees are connected to any other records, like job costs, or T&M billing rates then the system will not allow you to remove them until those jobs are also archived or the references are detached from the employee.  

You can go to the employee in the current year and hit delete, it will tell you it has referenced items and then you can look at the list of those referenced items and drill down to edit if needed.  

I will do that....thank you!

If the terminated employees do have references preventing their removal, in v20.6 and higher, you can designate records Inactive that you no longer want to use.   See Help topic - Type "Inactive employees" in the Search window or click this link  http://help-sage100contractor.na.sage.com/Sage100Contractor/US/20_6/Sage100Contractor.htm#Appendices/A-Sage_100_Contractor_Features/About_Inactive_Records.htm?Highlight=inactive employees. 

I will look into this as well.  Thank you!