When an employee leaves—whether they quit, get fired, or are laid off—the offboarding process is more than just a goodbye. In New York, employers have a legal duty to complete certain exit steps to stay in compliance and avoid post-employment claims. From issuing final pay to delivering mandatory notices and documenting the handoff, each step matters.
Exit procedures aren't just about policy—they're about protection. Mistakes at this stage can lead to wage claims, unemployment insurance disputes, and even wrongful termination lawsuits. That’s why every step you take must be deliberate, documented, and defensible.
Let’s walk through the final steps every NY employer must take to protect their business and exit with confidence.
1. Confirm the Termination Date (And Document It)
The clock starts ticking the moment employment ends. That single date—the employee’s final day—is the marker that drives every legal obligation that follows, from final pay deadlines to unemployment insurance forms. The sooner it's recorded, the sooner your compliance clock starts—and that’s not a moment to leave fuzzy or undocumented.
Before anything else, document clearly and completely:
The employee’s last day of work
The reason for separation (resignation, termination, layoff)
Whether they gave notice or were terminated immediately
Who approved the separation and who communicated it
Even if the separation is informal, internal documentation matters. If there's ever a dispute about unemployment eligibility, timing of pay, or benefits, your internal notes could become your best defense.
Also make note of:
Whether the employee was offered a severance
Whether the termination was part of a reduction in force or related to performance or conduct
The cleaner the file, the stronger your legal footing.
2. Deliver Final Pay by the Deadline
Under New York Labor Law, all final wages must be paid no later than the next regular payday following the employee’s last day. You don’t have to process it the same day they leave—but you must plan ahead and act quickly to ensure payment is delivered on time. This includes:
Base wages through the last day worked
Accrued PTO or vacation if your policy allows payout
Any vested commissions or bonuses that have been earned
Importantly, the rules differ slightly for exempt versus non-exempt employees:
Non-exempt employees must be paid for all hours actually worked through their last day.
Exempt employees (typically salaried) must be paid for the entire workweek if they worked any portion of that week, unless the separation was for gross misconduct or another legally permissible deduction.
Failure to meet the deadline can trigger penalties including 100% liquidated damages and additional statutory fines.
To ensure compliance:
Schedule the final paycheck promptly—don’t wait until payroll naturally catches up
Flag separations to payroll with at least 1–2 business days of lead time
Confirm variable pay (e.g., commissions) with accounting in advance
Keep proof of payment and a copy of the final wage statement in the personnel file
Need a deeper dive? Check out: Too Late, Too Litigious: Final Paycheck Mistakes That Cost Big in New York
3. Issue the UI Termination Notice (Form IA 12.3)
In New York, you're legally required to give separating employees a Notice of Termination and Eligibility for Unemployment Insurance Benefits (Form IA 12.3) at the time of separation. This requirement applies whether the employee quits, is laid off, or is terminated for cause—and must be completed promptly to ensure the employee has the proper information to apply for unemployment benefits without delay.
The form isn’t just a courtesy; it’s a mandatory notice that confirms key details about the separation and formally informs the employee of their eligibility to file a claim. Without it, the employee could experience delays in receiving benefits—or worse, your company could receive follow-up inquiries from the Department of Labor about the oversight.
Making this form part of your standardized offboarding process reduces risk and saves time in the long run. Include it in your exit packet alongside the final paycheck and wage statement to create a clean, compliant handoff.
This simple one-page form includes:
The employee’s termination date
Your company’s name, address, and contact info
A statement advising the employee of their right to apply for UI benefits
Missing this step may delay the employee’s UI benefits and draw the attention of the Department of Labor. It’s a low-effort, high-impact compliance win.
📌 Task added to Running To-Do List: Add Form IA 12.3 to your offboarding packet and HRIS templates.
4. Conduct an Exit Interview (When Appropriate)
Exit interviews are optional—but extremely useful, especially when they’re conducted thoughtfully and consistently. This step may seem like a formality, but it’s often the only chance an employer has to gather candid feedback from a departing employee before the relationship ends. Done right, it opens the door to learning what’s working, what’s broken, and what could explode into a future legal issue.
When handled professionally, they allow you to:
Learn why employees are really leaving
Discover potential workplace issues before they turn into lawsuits
Confirm that the employee isn’t departing due to harassment, retaliation, or unresolved conflict
Use open-ended questions like:
"What prompted your decision to leave?"
"Is there anything we could have done to change your mind?"
"Were there any unresolved concerns during your employment?"
Document the conversation and keep it in the personnel file. It’s not just insight—it’s risk management.
5. Retrieve Company Property and Revoke Access
Every employer has a story about a forgotten laptop, a lost access badge, or a former employee still popping up in calendar invites months after they left. While these things may seem minor, they’re often the first cracks in your compliance armor—and they can escalate quickly into security concerns, data loss, or even reputational damage.
Think about it: If someone still has access to confidential information after separation—client lists, HR files, vendor contracts—they could unintentionally (or intentionally) compromise your business. Even a simple oversight, like failing to collect a uniform or branded gear, can send the wrong message to customers and clients.
Avoid those headaches by:
Using an equipment return checklist to recover all physical property
Coordinating with IT to immediately disable digital access
Revoking access to cloud storage, CRM systems, Slack, and calendars
Confirming that intellectual property and sensitive data have not been downloaded or retained
Set the expectation early, ideally in the employee handbook or offer letter. At exit, provide clear instructions and follow-up in writing if needed.
6. Provide Final Documents and Point of Contact
Your offboarding packet should include everything the employee needs to transition legally and confidently that they’ve received everything they’re entitled to. Think of it as the final handshake—not just a logistical step, but your last opportunity to show professionalism and preserve goodwill and protect your business from misunderstandings or future claims. This packet should be well-organized, consistent across all exits, and tailored based on employee classification, benefits eligibility, and length of service, as these factors may determine notice requirements, pay owed, or benefits access.
Include all legally required materials, but don’t stop there. Be proactive and anticipate questions by clearly communicating what comes next—because if employees are left without answers, they’re far more likely to seek them from the Department of Labor or a plaintiff’s attorney.
Here’s what your packet should include:
Their final wage statement (required by NYLL)
COBRA notices or continuation of health insurance rights
401(k) rollover instructions or retirement benefit details
Contact information for someone in HR or benefits administration who can answer questions after separation
You should also clarify:
When and how the final paycheck was issued
What will happen to unused PTO, commissions, or bonuses
Who to contact regarding any future pay or benefits issues
Employees may not remember the details later, so give it to them clearly in writing.
Why This Matters: Every Exit Is a Legal Moment
Keep fighting the good fight.
Terminations can be emotional, but they’re also the moment when legal exposure is highest. Employees exiting your company have nothing to lose—and everything to gain—by asserting their rights. If they weren’t treated fairly or if a key step was missed, they may not call you. They may call the Department of Labor.
By creating a standardized exit checklist and training your managers to follow it every time, you reduce the risk of costly oversights and demonstrate that compliance doesn’t stop when the employee walks out the door.
Because the best way to avoid problems later… is to exit right, today.
