Completing the Termination Checklist

When an employee terminates – whether voluntarily or involuntarily – there are a number of activities you need to complete to facilitate the transition for both the employee and the company, and to ensure that all legal requirements have been met.  These activities fall into four general categories: wage and salary; benefits; other forms; and company property to be collected. It’s a good idea to have a standard checklist that you use with every terminating employee to make sure you don’t forget anything.

As I mentioned last month, if you are terminating an employee for performance issues, be sure that you have written documentation that describes the issue(s), the steps taken to resolve the issue(s) and the results. Even though California is an “at-will” state, detailed documentation is your best defense if a legal action transpires.  When in doubt, please speak with a California employment attorney when you are terminating an employee for performance issues.

Here are the items that need to be completed for all terminating employees:

Final payments:

• Final paycheck/stub. If you fire an employee you must pay them immediately. If an employee quits without notice you have 72 hours to issue their final check. If they give at least 72 hours notice you must pay them immediately on termination.
• Any outstanding expense reports must be paid on termination.

Benefits –related notices to provide (if applicable):

• COBRA benefits coverage information should be sent to the departing employee’s home address.
• COBRA Notice to Plan Administrator or Cal-COBRA Notice to Carrier
• HIPPA Notice
• Health Insurance Premium (HIPP)Notice (California only)
• Stock Option Closing Statement
• 401(k) plan information should be sent to departing employee’s home address

Other Items/Forms to provide:

• Copy of the Non-Disclosure/Confidentiality Agreement or Policy (Best Practice)
• Notice of Employment as to Change in Relationship (California only)
• Form 2320 For Your Benefit (California only)

Examples of property to be collected:

• Building and desk keys
• ID/security badge
• Laptop, software, hardware, etc.
• Cell phones
• Company tools and equipment
• User ID/passwords (voicemail, computer)
• Files and other miscellaneous items

Be sure to remove the departing employee’s access to email, the network, the company intranet and any other programs or proprietary information meant solely for the use of employees.  Also, ensure that you have their most recent address and contact information (phone, email) for W-2s and any other follow up communications. Ask them to contact you in the event they move prior to year end.

As a best practice, if the employee voluntarily quits, you may want to conduct an exit interview to learn more about their experience at your company.