Can a small business demand an employee go to counseling or be fired?

Absent a contract of some sort (individual, union, binding employee handbook, etc.) limiting an employer's right to terminate an employee, that employee can be fired for any reason not prohibited by statute (e.g. race, religion, sex, nationality, and some types of whistleblowing, etc.)  Assuming no such contractual limitation, and no improper discrimination (for example, if another employee of a different religion had the same type of conflict and the boss treated that employee differently because of his religion) your significant other certainly could have been fired for a conflict with his boss, but instead the boss will apparently not fire him if he seeks counseling.  I see nothing legally improper about this.