In today’s highly regulated employment landscape, businesses must be vigilant in following legal requirements when an employee relationship ends. In New York State, where employment is generally “at-will,” employers may assume they have flexibility in terminating employees. However, New York mandates specific steps for all separations—whether voluntary or involuntary. For businesses and high-net-worth professionals managing complex employment relationships, understanding these requirements can be crucial for avoiding potential employment litigation.
Key Requirements for Employee Termination in New York
To support compliance, here are essential requirements for employee terminations in New York (always confirm currency of this information, as New York employment law tends to change often):
- Provide Written Notice of Termination Date and Benefits Cessation
- Under N.Y. Labor Law § 195(6), businesses must issue a written notice to the employee, detailing the effective date of his or her termination and the exact date their benefits, such as health and life insurance, will end. This notice must be provided within five working days of the separation.
- Ensuring that these notices are accurate and timely helps prevent any misunderstandings that could lead to disputes, particularly regarding benefits continuation.
- Notify Employees of His or Her Right to Unemployment Insurance
- According to 12 N.Y.C.R.R. § 472.8, as of November 11, 2023, all employers must inform departing employees of their eligibility to file for unemployment insurance, regardless of whether they qualify. This is done through Form IA 12.3, which can be obtained from the New York Department of Labor’s website.
- Providing this form, even for employees who are not eligible, demonstrates adherence to state laws and reflects fair treatment in the separation process. Failure to comply could lead to claims of negligence or improper termination.
- Issue Final Paychecks on Time
- Under N.Y. Labor Law § 191, final paychecks must be issued on or before the next scheduled payday. For commission-based employees, any earned commissions must also be paid promptly. Clear documentation in employment agreements can clarify when commissions are considered earned and outline post-termination payout terms.
- By paying all earned wages promptly, companies protect themselves from potential wage-and-hour claims, which can result in costly litigation.
- Address Vacation Pay Properly
- While New York doesn’t require companies to provide paid vacation, if such benefits exist, employers must pay out accrued vacation upon termination unless a policy explicitly states otherwise. Employers are advised to review their vacation policies and clearly communicate any forfeiture provisions to prevent claims of withheld compensation.
Why Compliance Matters for Litigation Prevention
Compliance with these requirements not only fulfills legal obligations but also builds a strong defense against future employment disputes. In situations where large assets, income, or equity are involved, such as in cases of executive or high-level employment, improper termination procedures can lead to complex litigation and severe financial repercussions.
Implementing these practices shows respect for the employment relationship, which courts may view favorably should a dispute arise. In our experience representing business owners, executives, and professionals in employment litigation, we’ve seen how proactive compliance often prevents claims of unfair treatment and breach of contract.
Final Thoughts
Understanding New York’s employment termination requirements is essential for any business, particularly those with complex employment needs.
If you’re facing a separation or termination situation and want to ensure compliance with state law while safeguarding your assets and reputation, our team at The Glennon Law Firm P.C. can help. We have great experience focusing our practice on business litigation, employment litigation, matrimonial and divorce matters, and trust and estate litigation, bringing deep knowledge of the complexities involved when large assets are at stake.
Contact us at (585) 294-0303 or visit our website to schedule a consultation. We are ready to help you preserve what you have earned and obtain a resolution while maintaining your principles so you can secure your future.
You can also learn more about us and how we operate by visiting these pages: About Us, What Sets Us Apart.
This post is not intended as legal advice, but rather for education.