Let's review a report to resolve the error, lmatch.

You run the Uninvoiced Charges or Unbilled Charges report to check if the employee is used in one of the transactions. Here's how:

1. Go to the Reports menu.
2. Look for Uninvoiced Charges or Unbilled Charges report. 
3. Check if the employee that you're trying to delete is used in one of the transactions.
4. Click the transaction to open it.
5. Uncheck the Billable box.
6. Click Save and Close.  

Once done, delete the employee to check if that works. You can also reply to this thread if you have follow-up questions.