FAQs About Terminations in Zenefits

The last paycheck includes all wages for hours worked through the end of the termination date. In some cases, this paycheck will include accrued but unused vacation, severance, and other payments.

  • If the employer's PTO plan accrues in advance, the employer may not be obligated to pay out the portion of PTO for the coming accrual period.
  • However, negative PTO balances (i.e., time "borrowed" against future accrual) cannot be deducted from a final paycheck amount.

Employers should work with their payroll provider to calculate the correct amount for the number of days worked in the final pay period before termination, plus any PTO amounts that must be paid out, and minus any deductions.

Administrators should contact their payroll provider for assistance in calculating the amount of an employee's last paycheck. Those with Zenefits Payroll should refer to these instructions.

Each state has specific laws governing final/last paychecks, but in general, this paycheck should include all wages for time worked up until the termination date.

Severance pay is additional payment (and potentially benefits) paid to the terminated worker upon termination. Severance packages may be predefined through agreements between the employer and the individual, or defined solely by the employer.

Terminated workers are not always entitled to severance pay upon termination, and employers are (in most cases) not legally obligated to provide severance. However, in certain circumstances (such as mass layoffs), terminated workers may be entitled to severance. Employers should always consult with their legal counsel regarding severance pay.

Zenefits currently does not support severance packages or any other payment at termination for companies who use third-party payroll provider. Those who have Zenefits Payroll, however, can add severance pay in both regular and off-cycle runs.

Yes, Administrators can cancel a scheduled termination up until one (1) day before the termination date. If it is less than one day before the scheduled termination, Admins should contact Zenefits Support.   

To cancel a scheduled termination, go to the employee's profile and select "Cancel Termination" in the top notification bar. 

Administrators can terminate workers even if they are still setting up benefits. If someone is terminated before benefits are set up in Zenefits, the administrator will need to provide additional information about the following items:

  • The types of coverage (medical, dental, and vision) that the worker is currently enrolled in
  • Whether or not the company will have COBRA Complete administer COBRA benefits (if eligible)

If the worker is enrolled in medical, dental, or vision coverage, the administrator will need to specify when they want the benefits to end. Administrators who choose to manage COBRA coverage will also need to provide some additional information to complete the termination process.

Zenefits does not administer unemployment benefits and is not involved in the unemployment benefits application process.

  • Unemployment insurance premiums are paid to the state as payroll taxes. Employers should register for unemployment account numbers with the appropriate agency in each state where employees live, and provide these numbers to payroll providers.
  • Upon termination, workers can contact their state's Department of Labor (or equivalent state organization) for more information on their eligibility and to apply for UI benefits.

Workers who quit are not eligible for unemployment.

Contact Support to determine which administrator or manager terminated a particular worker.

Workers who have been terminated in Zenefits can still access the Personal Information app in their dashboard. The Personal Information app will include any signed employment documents, agreements with the company, bank info, tax forms, benefits agreements, and basic contact information. If the company had payroll with Zenefits, then the worker can view paystubs and W2's

If a worker has logged work hours, but has not completed the onboarding process, regardless of the hire date, you will have the option to Terminate them from the Actions drop down menu on their profile.

In Zenefits, you should terminate a worker if they have worked at least one day with the company. You will also have the option to revoke the offer up until 30 days after the start date.

After a worker is terminated in Zenefits, in most cases, the worker's benefits coverage will extend to the end of the month in which they were terminated. Some companies may have same-day or mid-month termination policies.

Upon termination, two types of insurance become available to terminated workers.

  • COBRA (Continuation of Health Coverage), which continues to provide health insurance to the terminated worker.
  • Unemployment Insurance (UI), which provides temporary financial assistance to the worker while they look for work. UI benefits are based on the worker's previous wages/salary and the duration of previous employment.

COBRA and Unemployment Insurance (UI) are not the same. COBRA is a continuation of employer health coverage while unemployment insurance are benefits paid by the state to eligible unemployed individuals. Zenefits does not administer UI.

When a worker who was enrolled in coverage is terminated, they may be eligible for Federal or State COBRA, which is an extension of their current benefits for a certain amount of time. Federal COBRA lasts up to 18 months, while State Continuation varies from state to state. A worker can elect to enroll in and pay the whole cost for medical, dental, and vision policies that they were enrolled in at the time of termination. State COBRA, however, may allow continuation for only medical insurance policies. 

For life and disability insurance, some carriers allow for group policies to be switched to individual policies. Contact your broker for more information.

Termination types are a commonly used tool for HR administrators to track the nature of historical terminations, e.g., in the event that a previously terminated employee reapplies to the same company.

There are two main termination types: Voluntary (Regretted or Non-Regretted) and Involuntary:

  • Involuntary: the company elects to end the employment relationship; fired or laid off
  • Voluntary (Regretted or Non-Regretted): employee elects to end employment; resignation 
  • If Voluntary is selected you will be asked, Would you hire this employee again?

There is no legal requirement for reporting termination types, but some states have specific requirements for furnishing a worker's final paycheck according to the type of termination.

At-will employment means that employers are able to terminate a worker at any time, with or without "just cause," as long as termination is not discriminatory.

Note:

  • Unless there is a prior contract established between the employer and an individual worker that defines the terms of employment, or the worker belongs to a union or certain types of civil service, most workers are considered at-will.
  • In general, employers may define the specific terms of at-will employment in an employee handbook that new hires must acknowledge when hired.

Zenefits does not provide legal guidance on the terms of employment or termination. Please seek legal counsel for any legal or compliance questions relating to at-will employment or termination.

Federal law states that terminated workers must be paid within their regular pay period, but states have their own individual laws for furnishing workers with their last paycheck. Employers should check with their legal counsel about compliance with the proper state law, especially for remote workers (governed by the worker's work state, not the employer's state).

For example:

  • CA Law: If the termination is involuntary, the last paycheck must be provided as a 'live" (paper, not direct deposit) check to the worker on their last day of work.
    • If the termination was voluntary and the worker gave more than 72 hours of notice, the paycheck must be provided on the last day of work.
    • If the worker gave fewer than 72 hours of notice before their last day, the employer is granted 72 hours from the time the worker resigned to produce their final paycheck.
  • NY Law - Same as Federal. If the worker asks that their check be mailed to them, the employer must abide by this request.

You should initiate the termination process in Zenefits after you've formally terminated the worker in person according to the company's termination policies. Termination in Zenefits simply updates the worker's status across all of Zenefits and with any third-party entities, such as insurance carriers and Flex Benefits providers.

  • Timely and accurate terminations are extremely important, since many of Zenefits' services and products end (e.g, insurance, FSA, Commuter, payroll) or start (e.g., COBRA) on the worker's last day of employment. Make sure to terminate a worker in Zenefits no later than their actual last day of employment (the effective termination date).
  • If the termination can't be entered on the their last day, above all, make sure to enter the termination in Zenefits within 30 days of the effective termination date. A termination reported later than 30 days can cause complications with the carrier and a worker's COBRA. If a termination is reported more than 30 days outside of the termination, please select a date within the 30 day limit and contact Support to process the termination with the correct date.

Zenefits does not provide advice or guidance on terminating workers (e.g., acceptable grounds for termination) except with regard to beginning or completing Zenefits-specific processes, such as COBRA enrollment. Please consult legal counsel for advice on best practices for compliance when terminating workers.

If a worker is terminated, their deductions or other payroll information will stop being pushed to payroll on their termination date.

In Zenefits, administrators can terminate any worker, including managers. Managers can submit a termination request for their direct reports, and subordinates of those reports. The request is sent to the appropriate approver for review and approval. Aside from this approval step, the termination process in Zenefits is essentially the same for both managers and administrators.

Administrators can edit termination classification and reason after the termination date has passed.

  1. Select the Directory app 
  2. Click on the terminated worker's name
  3. Select Termination Details
  4. Click on the edit icon and update the details
termination details
Please note that the Termination Date field cannot be edited from here, as it affects their final paycheck and health coverage. If you need to change the termination date recorded in Zenefits for any reason, please contact Customer Care.

Why wasn't this terminated worker removed from payroll?

You can check on the Terminations Details page to see whether or not you checked the box to have the worker removed from payroll in the termination flow.

If a termination for someone needs to be rescinded, or someone was terminated in error, the termination needs to be revoked. To revoke the termination and make someone active in Zenefits again, you will need to contact the Customer Care Support Team.

To update a termination date, you will also need to contact Customer Care Support to revoke the termination, and then re-submit the termination with the correct date.

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