One of your employees is leaving your company. Aside from posting a job description, scheduling an exit interview, and managing a smooth transition, it’s likely you’ll need to provide them with some essential paperwork when they move on: a separation notice.
It’s a helpful tool to make sure everything is spelled out as your employee departs — including why they are leaving — and, in some states, this is required.
Even if the separation is voluntary and with no hard feelings, it’s a good idea for employers to have a paper trail to address any future questions about unemployment claims or even prevent lawsuits down the road. In 2022, the US Equal Employment Opportunity Commission reported 73,485 job discrimination charges. Furthermore, according to Coverwallet, the average settlement for a wrongful termination lawsuit is between $40,000 and $45,000, depending on whether the case reaches trial or is settled out of court.
In this employer’s guide, we’ll take a look at the requirements in your state, plus what you’ll want to include in a separation notice — and why separation documentation is a best practice for small business HR even if your state doesn’t require it.
Simply put, a separation notice is documentation provided to employees when the employment relationship ends. It’s issued by the employer when:
Now that we have summed up what a separation notice is, let’s talk about what’s typically included in one.
Depending on the state, requirements for what’s included in separation paperwork can vary. Generally, it includes:
Employers may also include information about severance pay or benefits continuation in the separation information for an employee, but take time to consult an employment law expert to be certain you’ve got everything covered.
In Georgia, for example, employers are required to provide departing employees with a notice that includes the reason for separation, dates of employment, and wage information when they leave the company. Some states also require employers to provide terminated employees with information about unemployment benefits in their state.
Now that we better understand what a separation notice is and what they include, let’s find out which states require employers to provide departing employees with this paperwork.
There are currently 21 states that require some type of documentation or paperwork when an employee separates from a company. These include:
| State | What’s should employers know? | Is there a form? |
| Alabama | Employers are required to notify employees about the availability of unemployment benefits upon separation. | More information from the state of Alabma |
| Alaska | Employers must provide notice about unemployment benefits availability to each separated employee as soon as practical within seven days from the last day the employee performed work for compensation. | Alaska separation form |
| Arkansas | Employers must send notice of the potential availability of unemployment benefits to employees upon separation from employment and choose how they deliver the notice. | Employer forms |
| Arizona | Employers must provide pamphlet, UIB-1015A. | Form UIB-1015A |
| California | For Your Benefit pamphlet must be given to employees no later than the effective date of termination, along with immediate written notice to employees of a change in the employment relationship. | For Your Benefit pamphlet |
While not all states require employers to provide separation paperwork, many choose to do so because there are some benefits for both the employer and employee.
First, it’s a good source of documentation to refer to if there are any disputes in the future about the reasons for separation or termination. Second, using a standard method or template for separation notices keeps the process of termination consistent and ensures that they are handled uniformly. There are several templates available online to find one that works for your business. Handling terminations or employee turnover can be disruptive among your other employees, so anything to assure them that everyone is being dealt with fairly can help maintain their morale.
With a formal separation notification, employees also have a paper trail for their files. In some states, a separation notice is required for employees to apply for and qualify for unemployment benefits. Because these forms typically include length of employment and reasons for job separation, they can help state agencies when determining an individual’s eligibility for unemployment insurance.
Once you finish getting familiar with each state’s final paycheck laws, we have another resource you might find useful. Our article on the minimum wage per state includes a simple chart so you can quickly see the rate where you do business.
Whether your state requires it or not, many HR experts consider it a best practice to have employee separations in writing, as it benefits both parties involved. With all the challenges that can come with terminations, layoffs, or employee turnover, this step can help ease the transition for you, the employee, and the rest of your team.
In addition, this creates a paper trail in the event you need to reference documentation down the road. As your businesses grows, best of luck navigating the rules surrounding separation notices and structuring your company’s policy to stay compliant.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.