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Employee Terminations in Justworks Payroll
Whenever an employee separates from their company, admins will need to ensure the termination is recorded accurately in Justworks Payroll, as well as be aware of any state-specific termination guidelines. Below, you’ll find the steps for entering terminations in Justworks Payroll and key compliance details to keep in mind when terminating an employee.
How To Enter an Employee Termination
To terminate an employee, an admin with ‘Manage employees’ permissions can click on People in the left-side menu. Next, the admin can click on the Employees tab followed by the specific employee’s profile page. From there, they can choose the Schedule termination button from the top menu.
Screenshot showing the Schedule termination button on an employee's profile page.
This will lead to the employee termination flow, where the admin can enter the following details:
- Last day of work: The effective date of an employee’s termination will be the day after their last day of work.
- Primary email: The employee will need to have access to the email address entered here, as this email address is where they will receive any post-termination notifications regarding year end forms, benefits, etc.
- Termination type: Here, the admin can record whether the termination was voluntary or involuntary.
- Last paycheck: Depending on the employee’s last day of work entered, they may receive a prorated amount for their final paycheck.
As a note, employees will not receive any notifications from Justworks Payroll regarding their termination until the date entered in the ‘Last day of work’ field has passed.
Screenshot showing the Termination details page that an admin will need to complete.
Once the termination has been entered, you will come to a confirmation screen to review the details of the termination. If everything is correct, you can click on ‘Schedule Termination’.
Screenshot showing the Schedule termination button an admin will click to finalize an employee's termination.
The employee will then be marked for termination and this can be reviewed in their employee profile. You will have the option to cancel the termination up until the specified last day you entered.
Screenshot showing the success banner that will appear on an admin's screen after they've submitted an employee's termination.
Once an employee has been terminated, their profile will be moved to the Terminated section of the Employees tab.
Screenshot showing the Terminated section that admins will see terminated employees listed under.
What to Know About Employee Terminations
Certain states have additional guidelines regarding terminations. In particular, these states have specific employee separation rules:
California
California law requires employers to pay exiting employees all owed wages at the time of termination, unless an employee resigns with less than 72 hours’ notice. If an employee resigns with less than 72 hours’ notice, the employer has 72 hours total, which includes weekend days, to pay the employee their final paycheck.
Aside from this exception, an employer is responsible for paying the employee all due wages at their time of termination either by paper check, or direct deposit if the employee has voluntarily authorized the deposit in writing.
Employers are also required to pay out any accrued, unused vacation that a terminated CA employee may have as wages at the final rate of pay.
In addition, the employer must provide the following forms to terminated CA employees, regardless of their termination reason:
- DE2320 Form: Unemployment Insurance
- Notice to Employee as to Change in Relationship
- Health Insurance Premium Payment (HIPP) Notice to Terminating Employees: Only applicable if health insurance was offered by the company
Colorado
Colorado law requires employers to pay exiting employees all owed wages at the time of termination if the termination is involuntary. If an employee voluntarily resigns, their final paycheck can be paid out with the next regular payroll, either via direct deposit or otherwise.
While vacation time is not required to be offered by CO law, employers who choose to offer this benefit must pay out all accrued, unused vacation time upon an employee’s termination. This state requirement supersedes any internal company policies or agreements.
In addition, employers must provide terminated CO employees with Form 22-234, informing them of unemployment insurance upon separation, regardless of whether the termination is voluntary or involuntary, on the employee’s final day of employment.
District of Columbia
District of Columbia (DC) law requires employers to pay an exiting employee all owed wages on the next working day after their termination if the termination is involuntary. If a DC employee resigns, their final payment must be paid out by either the next regular pay date, or seven days from the employee’s resignation date, whichever occurs first. The final payment can be made via direct deposit or otherwise.
Employers are also required to pay out any accrued, unused vacation time to a terminated DC employee, unless there was an existing agreement stating otherwise. All accrued, unused vacation time must be paid as wages at the employee’s final pay rate.
Massachusetts
Massachusetts law requires employers to pay exiting employees all owed wages at the time of termination if the termination is involuntary. If an MA employee resigns, their final payment can be paid out on the next regular pay date.
Employers are also required to pay terminated MA employees any accrued, unused vacation time they have as wages at the employee’s final rate of pay.
In addition, the employer must provide the state’s How to Apply for Unemployment Insurance Benefits (Form 0590-A) pamphlet to all terminated MA employees, regardless of the termination reason. Further assistance for setting up an online account for the terminated employee can also be accessed through the state’s site.
Employers that offer health insurance and have 2-19 employees must also offer COBRA to covered employees and qualified dependents upon their separation in accordance with this state guide.
New York
New York law requires employers to pay exiting employees all owed wages by the next regular pay date for the pay period worked. This applies to any terminated NY employee, regardless of whether the termination was voluntary or involuntary, and with or without notice.
Employers are also required to pay terminated NY employees any accrued, unused vacation time, unless the company has a forfeiture clause as part of their written PTO policy.
Employers must also provide a written termination letter to NY employees, regardless of whether the termination was voluntary or involuntary. The letter must be provided within five working days after the employee’s termination and include the following:
- Date of termination of employment
- Date of termination of benefits
In addition, employers are also required to provide terminated NY employees with the NY DOL Record of Employment upon termination, regardless of whether the termination was voluntary or involuntary.
Justworks Payroll Access for Terminated Employees
Terminated employees will retain access to their personal Justworks Payroll accounts so that they are still able to receive any applicable severance payments, as well as view their paystubs and year end forms. If a terminated member was an admin, their admin permissions will automatically be revoked once their termination goes into effect.
Disclaimer
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for accounting, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.