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Insurance offered through OnPay Insurance Agency, LLC (CA License #0L29422)
Updated: September 20, 2022
As a small business owner, there will likely come a time when you have to handle offboarding to smoothly transition an employee out of the workplace. Having a system in place to handle the employee exit process is just as important as a strong onboarding process and can make the transition much more manageable for you and your employees.
Remember, offboarding may be the last time you interact with a departing employee, and how the process is handled can remain top of mind when they are asked about their experience working with you. It’s also something your current employees will likely hear about and remember. Since employee referrals bring in about 30% of candidates — the top source of hires — it’s worth taking a few steps to ensure transitions are smooth.
To help, we’ve created this checklist for offboarding employees, including some important questions to keep in mind for your small business. These tips will help ensure you’re staying compliant and professional as your employee moves on.
Although there can be a lot of emotion involved, it can be helpful to think of offboarding as just another part of the employee life cycle. Going into it with a step-by-step process will help you avoid any missteps and make sure everything is taken care of before the employee’s departure.
Here is a checklist to work through once you know your worker is leaving:
Please note that some states have strict deadlines around when final pay must be delivered. In some states it may even be on the last day of work. In the event you’re running an off cycle pay run and need help calculating withholding, our free final pay calculator can help.
Take time to research your state and city requirements. Many states, such as California and New York, require certain documentation to be provided to employees separated from the business. These typically include information on COBRA, unemployment benefits, separation paperwork, and offboarding checklists. Most states have these available on their Department of Labor website for quick download.
If the departing employee is leaving involuntarily, it’s a best practice to have separation paperwork drafted and ready for the employee to sign at during their termination conversation — even if your state doesn’t require it. It’s helpful to provide written documentation that explains the reason for termination, and what they can expect next. And may help them access unemployment benefits if applicable. Keeping a copy of this paperwork on file also benefits you if there are any disputes in the future about why the employee was terminated.
If the employee is departing due to a sensitive reason (layoff, poor performance, or even outcome of an investigation), that information should stay private. The best way to communicate a departure is to let the team know that this employee has left the organization and that you wish them the best in their future successes. Keep it as brief as possible without disclosing any sensitive information regarding why they left.
Either way, treat departing employees with compassion and keep any conversations regarding their departure confidential.
The COVID-19 pandemic has led many business owners to have to make the tough decision to layoff or furlough employees. If you’ve been struggling with this decision — you’re not alone. But, there are a few ways to make it a little easier. In determining whether you need to reduce your workforce, ensure that you are documenting your process in determining who to layoff or furlough. There should be a sound, non-discriminatory business decision as to why certain employees were selected over others. And if you’re laying off a larger team, it’s also a good idea to make sure the WARN Act doesn’t apply.
And as you put the finishing touches on your offboarding checklist, also remember to refer back to your employee handbook. Did you include any policies or procedures regarding resignations of employees or terminations? If so, follow these procedures and stay consistent in enforcing them with all your employees. If you’re not sure, we recommend talking to an employment law expert to make sure everything is handled in a compliant manner.
A little time to develop these steps can go a long way in helping smooth the transition when an employee leaves — and help both your company and your employee move forward gracefully.