Employers are experiencing higher turnover in the second half of 2021 as many companies ramp up hiring. When an employee resigns, employers can take steps to help ensure a smooth transition, which is especially important in a tight labor market. Here is a checklist to help when an employee quits:

Obtain a resignation letter.

Ask the employee to sign a resignation letter to document that the employee left voluntarily and the effective date. Keep the resignation letter in the employee's personnel file. If you can't obtain a resignation letter, document the date and the reasons for the separation and keep that record in the employee's personnel file.

Transfer responsibilities/knowledge.

Meet with the employee and their supervisor to determine the status of current projects. Create a plan to reassign the employee's duties, document critical work processes, and if time permits, train co-workers on key responsibilities.

Provide benefits information.

If the employee is enrolled in group health insurance sponsored by your company, separation may entitle the employee to health insurance continuation (or "COBRA"), which triggers certain notice requirements. Work with your health insurance provider to ensure compliance. If the employee is enrolled in a company retirement plan, you should also provide information on their options after leaving (such as cash out, roll over, or keeping the plan as-is).

Furnish state-required forms and notices.

Several states require employers to provide a separation notice detailing, among other things, the reason for, and date of, the separation. In some cases, these notices are given to the employee, but some states require employers to send the notices directly to the state unemployment agency. Some states also require employers to provide written information about unemployment insurance benefits or an unemployment insurance pamphlet to employees at the time of separation. Employers may also be required to provide notices about certain other benefits. Check your state requirements to ensure compliance.

Note: To be eligible for unemployment benefits, individuals who resign must generally show that they quit for "good cause," the definition of which may differ from state to state.

Comply with final pay laws.

Under federal law, final pay is due by the next regular payday, but many state laws have stricter deadlines. For example, in California, when an employee resigns, employers must provide final pay within 72 hours. However, if the employee who resigns provides at least 72 hours of notice, final pay is due on the employee's last day. Additionally, depending on your state, you may be required to include accrued, unused vacation and paid time off (PTO) in the employee's final pay. Check your state law to ensure compliance and keep a record of when you provided the employee with their final pay.

Ensure return of company property.

Before the employee's last day, have the employee return any company issued property, such as uniforms, ID badges, cell phones, laptops, and building keys. Use a Receipt of Company Property or similar form to track company-issued property that has been returned to you. Additionally, take the necessary steps to disable building codes and access to computers and confidential data.

Note: Employers are prohibited from withholding an employee's final paycheck because of unreturned property. Federal and state laws place restrictions on an employer's ability to make payroll deductions for unreturned property.

Notify key staff and contacts.

Prepare a list of the staff, key clients, and contacts that should be aware of the employee's impending departure. Explain who will be handling their work responsibilities and identify a contact who can address any questions.

Verify mailing address.

Make sure you have the correct address for sending the departing employee's Form W-2 and other pertinent information in the future. Ask the employee to verify their current address and to notify you if they have a change in address.

Conduct an exit interview.

Turnover can be costly, and exit interviews are one way to find out why employees are leaving. To encourage candor, consider asking a neutral party to conduct the interview rather than a direct supervisor. Based on feedback that you receive, consider what changes you can make to the work environment. On the employee's last day, wish them well and thank them for working for your company.

Avoid making promises.

While it may be difficult to see a good employee go, avoid statements like, “you will always have a job with us,” that could be interpreted as a promise of future employment. Business conditions may change, or the individual’s skills may not keep up with your needs, and you'll want flexibility to make employment decisions that are in the company's best interest.

Conclusion:

Seeing an employee leave can be difficult but being prepared can help make the transition easier.