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Termination Process Checklist

Updated: Jan 18

Employee termination is one of the most sensitive and complex processes in HR. Whether it’s due to performance issues, misconduct, or organizational changes, it’s essential to handle terminations with care to protect your company from legal risks and maintain your reputation. This checklist will guide you through the termination process, including important state-specific guidelines to keep in mind.


1. Review Company Policies and Employment Agreements

Before initiating a termination, review the following:

  • Employment Agreement: Check for notice requirements, severance clauses, or non-compete agreements.

  • Company Policies: Ensure the termination aligns with your employee handbook and any disciplinary policies.

  • At-Will Employment: Confirm if the employee is at-will (common in most states), meaning they can be terminated without cause as long as it doesn’t violate anti-discrimination laws.


2. Document the Reason for Termination

Proper documentation is critical to support your decision and protect your company from potential legal action. Include:

  • Performance Reviews: Records of underperformance or feedback.

  • Warnings and Disciplinary Actions: Written warnings, improvement plans, or prior meetings.

  • Incident Reports: Details of misconduct or policy violations.

  • State-Specific Requirements: Some states, like California, have stricter rules on at-will employment. Ensure the termination reason doesn’t conflict with local regulations.


3. Comply with State-Specific Termination Laws

Each state has unique laws governing terminations. Key areas to consider:

  • Final Paychecks:

    • California: Final paychecks must be provided on the last day of work for involuntary terminations.

    • Texas: Employers must provide final paychecks within six calendar days of termination.

    • New York: Final paychecks are due by the next regularly scheduled payday.

  • Accrued Paid Time Off (PTO):

    • Some states, like Illinois and California, require unused PTO to be paid out upon termination.

    • Others, like Florida, allow companies to set their own policies.

  • Severance Pay:

    • While not required in most states, severance agreements may be regulated. For example, states like Massachusetts require certain notifications if severance is tied to a layoff.


4. Prepare the Termination Letter

The termination letter should be clear and concise. Include:

  • The reason for termination (optional in some states, but clarity can avoid confusion).

  • The employee’s last day.

  • Details about final paychecks, benefits, and COBRA (if applicable).

  • Information about returning company property.


5. Plan and Conduct the Termination Meeting

  • Who Should Attend: Include the employee’s manager and an HR representative to witness and document the meeting.

  • Timing and Location: Choose a private, respectful setting and schedule the meeting at the start or end of the day to minimize workplace disruption.

  • What to Say:

    • Be direct and professional: “This meeting is to inform you that your employment with [Company Name] will end, effective [date].”

    • Provide a brief explanation of the decision without getting into unnecessary detail.


6. Address Final Pay and Benefits

  • Final Paycheck: Confirm when and how the employee will receive it, including any unused PTO if required by state law.

  • Benefits: Explain options for continuing health insurance under COBRA or state continuation laws.

    • Example: California COBRA provides extended coverage beyond federal COBRA.

  • Retirement Plans: Provide details on accessing or rolling over 401(k) accounts.


7. Recover Company Property

Ensure all company-owned items are returned, such as:

  • Laptops, phones, and other equipment.

  • ID badges, keys, or access cards.

  • Company credit cards or documents.

If applicable, disable access to company systems, including email and software accounts.


8. Provide Post-Termination Resources

Offering resources can leave a positive impression and reduce the risk of conflict. Consider:

  • Severance Packages: If provided, include a clear agreement outlining terms. Ensure compliance with local laws.

  • Outplacement Services: Help terminated employees transition by providing resume support or career counseling.

  • Contact Information: Let the employee know who to contact with questions about benefits or final pay.


9. Document the Termination

Maintain a detailed record of the termination process, including:

  • Meeting notes.

  • Signed termination letters.

  • Evidence of compliance with state and federal laws.

These records can protect your company in case of disputes or audits.



10. Notify Relevant Parties

  • Internal Teams: Inform payroll, IT, and benefits administrators of the termination to ensure a smooth offboarding process.

  • State Unemployment Agencies: Some states require employers to provide written notification to terminated employees about unemployment benefits.


Tips for Finding Legal Support When Needed

If you’re unsure about the legalities of a termination, consult an employment lawyer or HR consultant. They can help:

  • Ensure compliance with federal laws like the Fair Labor Standards Act (FLSA) and anti-discrimination laws.

  • Navigate state-specific regulations, which vary widely.


Final Thoughts

A structured and compliant termination process is essential for protecting your business and treating employees fairly. By following this checklist and staying informed about state-specific laws, you can navigate terminations with confidence and professionalism.

Need help creating termination policies or navigating local regulations?


Savvy HR Partner is here to guide you through every step. Reach out today!


 

Visit us at SavvyHRPartner.com and follow us on social media @SavvyHRPartner for expert tips, resources, and solutions to support your business and your people. Let’s build something great together! 🌟




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