Terminate an employee

This guide covers: Set termination date, Final paycheck, PTO payout, COBRA / state notices.

Terminations don't go through the employee detail page's edit form on purpose — setting termination_date directly would skip the state-specific final-paycheck deadline calc, PTO payout snapshot, and reason capture. Use the dedicated Terminations workflow instead. For a full conceptual explanation of how the deadline clock works, see Logging a termination and tracking the final paycheck.

Set termination date

What it does: Records the separation, computes the state final-paycheck deadline, snapshots accrued PTO, and stamps termination_date on the employee record.

Where: Client sidebar → People → Terminations (/clients/{clientId}/terminations).

Steps:

1. From the client sidebar, expand People and click Terminations.
2. Click Log termination in the top right.
3. Pick the employee from the dropdown (active employees only).
4. Pick the Reason: Discharge / Termination · Layoff / RIF · Voluntary quit · Mutual separation · End of contract · Death · Other.
5. Enter the Last day worked.
6. If the reason is Voluntary quit, optionally check Employee gave 72+ hours' notice — this changes the deadline in CA and OR.
7. Click Log termination.

Who: Accountant or SMB admin.

Notes: The new row appears immediately with: Employee · State · Reason · Effective · Deadline · Status · PTO payout · Actions. Deadline includes the statutory basis (e.g. "CA Labor Code §201 — immediate"). Status starts at Pending and turns red OVERDUE by Nd once the deadline passes without a paid record.

Final paycheck

What it does: Pays the terminated employee's final wages on a payroll run; the termination row auto-flips to Paid (or Late) once that run completes.

Where: Two paths:

• Run a regular or off-cycle payroll that INCLUDES the terminated employee — see Run a regular payroll and Off-cycle, bonus & correction payrolls.
• Or, if paid outside Payrollix (paper check, wire), click Mark paid on the termination row.

Steps:

1. Start a payroll run at /clients/{clientId}/payroll/new — for off-cycle or termination runs, pass ?type=termination so the engine includes terminated employees (regular runs exclude them automatically).
2. Approve and process the run as usual.
3. Re-open Terminations — the row's status is now Paid (green) or Paid late (orange) with a link to the paying run.

Who: Accountant or SMB admin.

Notes: Regular runs filter out employees whose termination_date is on or before the period end — you MUST use Termination Payroll or Off-Cycle Payroll for the final check after the termination date is in the past. The system stamps which run paid which termination; you can click through from the termination row to that run.

PTO payout

What it does: Snapshots accrued PTO hours and dollar value at the moment of termination, and flags whether the state mandates payout.

Where: The PTO payout column on the Terminations row.

Steps:

1. The row is read-only — the snapshot is computed when you log the termination.
2. The column shows: hours · dollar value · a red Mandatory flag if the state requires it (CA, MA, ND, others).
3. Pay out via the same final-paycheck run by setting hours_pto on the employee's payroll item — see Run a regular payroll.

Who: Accountant or SMB admin.

Notes: Dollar value = hourly rate × hours, or annual salary × hours ÷ 2080 for salaried. PTO payout is tracked separately from the final-paycheck status — some states require the payout on a different timeline than the final paycheck itself, so the column doesn't flip green automatically when the run completes.

COBRA / state notices

What it does: Tracks whether you've sent the required separation notices (COBRA federal continuation, state little-COBRA notices, state-specific separation forms).

Where: Termination row actions and the employee documents pane (/clients/{clientId}/employees/{employeeId} → Documents).

Steps:

1. From the Terminations table, identify rows where notices are still pending.
2. Send the relevant notice outside Payrollix (we don't generate the COBRA election notice text — that's the plan administrator or insurance carrier).
3. Record the send date manually on the termination if you want it logged for audit.

Who: Accountant or SMB admin. Some plans have the carrier or third-party COBRA administrator handling the notice — coordinate with them.

Notes: Payrollix does NOT auto-send COBRA notices and does NOT determine COBRA eligibility — that's the plan administrator's job. The termination row exists so you can track which notices went out and when. New-hire reporting goes the other direction — see New hire reporting for the corresponding kickoff workflow.

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Related: Logging a termination and tracking the final paycheck · Run a regular payroll · Off-cycle, bonus & correction payrolls · How ACH timing works.