Termination of employment is the end of the working relationship, whether the employee quits, is let go or is laid off. Each type sets off its own deadlines for final pay, benefits and records.
In shortTermination of employment means the employment relationship ends. It can be voluntary (the employee resigns or retires) or involuntary (discharge for cause, a position elimination or a layoff). In most US states employment is at will, but the end of employment still carries rules: state final-paycheck deadlines, health coverage continuation notices under COBRA for employers it covers, advance notice for large layoffs under the WARN Act, and accurate final time records.
Types of termination
How employment ends
Type
Who decides
Watch for
Resignation
Employee
State final-pay timing can depend on how much notice was given.
Discharge for cause
Employer
Documentation of the reason and consistent treatment.
Position elimination or layoff
Employer
Selection criteria, and WARN Act notice if the size thresholds are met.
End of a fixed term or season
Agreed in advance
Whether the person is eligible for rehire next season.
Under at-will employment, an employer can usually end employment for any lawful reason or none, but not for an illegal one such as discrimination or retaliation. See at-will employment exceptions.
Final pay comes first. The COBRA notice chain runs for weeks after the last day for employers it covers.
The deadlines that start on the last day
Final paycheck. Set by state law, and it varies widely. In California, an employee who is discharged must be paid all wages, including accrued vacation, immediately at the time of termination. An employee who quits without giving 72 hours notice must be paid within 72 hours. See final paycheck laws by state.
COBRA. Federal COBRA applies to group health plans of employers with at least 20 employees on more than half of their typical business days in the previous year. After a termination, the employer must notify the plan within 30 days. The plan then has 14 days to send the election notice, and each qualified beneficiary gets at least 60 days to decide. Many states have similar rules for smaller employers.
WARN Act. Employers with 100 or more employees (not counting part-time employees) must give 60 days written notice before a covered plant closing or mass layoff.
Final hours. The last timesheet has to be complete and approved before the final check is calculated.
Worked example: a discharge on a Thursday in California
Final pay due the same day
A Sacramento retail store decides on Thursday at 3 p.m. to discharge a shift lead. Before the meeting, the manager approves the week’s time so far (27.5 hours) and checks the employee’s accrued, unused vacation (14 hours). At $22 an hour, the final check is 41.5 hours times $22, or $913 before deductions, and it has to be ready at the meeting, not on the next regular payday.
The employee’s clock-in access is removed after the meeting, not before, so the last punch-out is recorded. Because the store’s parent company has 60 employees and a group health plan, HR notifies the plan administrator of the termination the next day, well inside the 30-day window.
Mistakes that are specific to terminations
Running the final check on the next regular payday in a state that requires faster payment.
Shutting off the employee’s app or badge before the last shift is clocked out, leaving a missing punch you then have to estimate.
Forgetting accrued vacation in states that treat it as wages.
Giving a reason in the meeting that differs from the reason in the file.
Not telling the rest of the team who now covers the person’s shifts.
An offboarding checklist
Approve the final time records and include every hour worked up to the last minute.
Calculate final pay, including any accrued vacation that state law or your policy requires you to pay.
Check the final paycheck deadline for the state and the type of separation.
Send COBRA or state continuation information where the law applies.
Remove access to systems, schedules and team groups on the last day.
Collect company property and record what was returned.
Remove clock-in access only after the final punch is recorded and approved. Removing it too early can leave the last hours unrecorded and the final check short.
Second example: a resignation with two weeks’ notice
A receptionist in Texas resigns with two weeks’ notice. The clinic’s written policy pays out accrued, unused vacation at separation, and she has 16 hours.
Her last day is a Friday. The manager approves her final week’s time that afternoon, payroll adds 16 hours of vacation at $19, $304, and the final check is paid in time under the state’s deadline for employees who quit. Her access to the schedule and team groups is removed after her final clock-out.
Order of operations that saves a correctionApprove time, then calculate the final check, then hold the meeting, then remove system access. Doing those four steps in that order avoids the most common final-pay fix: an estimated last punch.
Questions people ask
What is the difference between termination and resignation?
Resignation is a termination the employee chooses. In everyday HR language, termination often means the employer ended the job, but legally both end employment and both trigger final pay rules.
When is a final paycheck due?
It depends on the state and on whether the employee quit or was let go. Some states require payment immediately or within a day or two; others allow the next regular payday.
Do I have to give a reason for terminating an at-will employee?
Generally not, but the real reason must be lawful, and a documented, consistent reason helps if the decision is challenged.
Does a terminated employee get COBRA?
If the employer has 20 or more employees and a group health plan, terminated employees and covered family members are generally offered COBRA continuation, except in cases of gross misconduct. Many states have similar rules for smaller employers.
Disclaimer: What you read here about termination of employment is general information, not legal, payroll or tax advice, so confirm the current rule where you operate; the examples are fictional.
