Explore the essential aspects of employment termination, including definitions, types of terminations, termination pay details, and the timing of final pay. Gain insights on termination processes and best practices to ensure compliance and fair treatment of employees.
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Ahola Payroll & HR Solutions Family-Owned Payroll & HR Services provider headquartered in Brecksville, Ohio Over 50 years of payroll, tax, and HR experience, having served over 10,000 small businesses nationwide. Full range of Payroll and HR services and software
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Agenda Define key terminology Timing of Pay Federal vs. State Guidelines Deductions Retention Review Best Practices
Defining Termination Also referred to as a separation from employment, a termination can be voluntary (the employee's decision) or involuntary (the employer's decision). When an employer discharges (fires) an employee, it will usually be for cause (unacceptable performance or behavior), or for economic or restructuring reasons called layoffs or a reduction in force (RIF).
Types of Terminations Involuntary For cause such as absenteeism and punctuality issues Layoff Misconduct, theft, dishonesty Drug or alcohol misuse Death Voluntary Resignation to employment elsewhere Retirement (by choice) Job Abandonment
Termination Pay Termination Meeting Termination Date Final pay which will be heavily influenced by state and local regulations Often the last day worked Event where the employee is informed about the discharge or when an Exit Interview is conducted Effective date of the separation
Timing of Final Pay Termination Pay will vary by state Other factors such as type of termination (voluntary vs. involuntary) Pay cycle and internal procedures
FLSA which establishes federal minimum wage and overtime laws, does not require that employers give departing employees their final wages immediately. In general, however, wages covered by the FLSA must be paid by the next regularly scheduled payday. Federal Law
Deductions An employer can lawfully withhold amounts from an employee's wages only: (1) when required or empowered to do so by state or federal law, or (2) when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee's wages, or (3) when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement.
Check state law(s) may be illegal to deduct from pay! Itemize all property or equipment issued to employees and the monetary value associated Recovering Company-Issued Property Have a form to document company property loaned to an employee with language authorizing wage deductions for unreturned items at termination. Retain the signed acknowledgment and inform terminating employees of their responsibility Have a plan for the worst-case scenario
Separation of employment documents should live in the terminated employee s personnel file Check statutory law for retention requirements Record Retention Have an internal requirement; usually six years is a sufficient goal for multi-state enterprises
Communicate policies related to terminations in your Employee Handbook Have a written process and stick to it! PTO/Vacation/Sick Time Seniority Benefits Exit Interviews Keys, credit cards, other property
Summarizing Understand the basics of terminations Familiarize yourself with timing and notification requirements Know to research your responsibilities based on the state(s) you operate in Notify employees of deductions and any housekeeping items required prior to their separation Decide on your Company s internal policies and procedures and document them to ensure good administrative habits. Communicate them to managers and employees!
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