He was "fired" because he was stealing money. I know that's not shocking because he's been a scumbag for his entire life, but Palumbo took that very personally.
Dave thought he was doing John a big favor by letting him move in with him and making him "Boss 2".
Anyway, on top of the stealing he also happened to get caught up in the whirlwind of Dave's collapsing relationship with his beard, and his new relationship with Jeff the producer.
Old Dave cleared the decks for his mid-life crisis, and John was rightly ejected out of Dave's inner circle. You can bet Dave doesn't miss John's freeloading, and his joking in public about Dave being a submissive bottom.