Liz Sheffield

Use an Offboarding Checklist to Reduce Risk

When an employee leaves your company, it’s more than a matter of cutting the cord. Successfully offboarding an employee requires the same amount of effort as onboarding, if not more.

In fact, the level of detail required to do it right warrants the creation of an offboarding checklist, which will help you ensure that everything is in place — especially regarding what departing employees need to know about their health care options.

Process and Prepare Necessary Documents

To avoid issues after an employee leaves your organization, certain procedures must be in place and certain documentation must be provided. One crucial aspect of offboarding is to provide the departing employee with information about continuation of health care benefits.

According to the Society for Human Resource Management (SHRM), businesses with 20 or more employees must provide a Consolidated Omnibus Budget Reconciliation Act (COBRA) notice and election form to any exiting employee enrolled in the group health plan. This gives the employee the option of up to 18 months of continued coverage. A notice and election form must also be provided to any dependents who might be on the exiting employee’s plan.

In addition to this information about the continuation of health insurance benefits, you’ll want to provide relevant information on continuing any life, supplemental or other insurance programs your employees participate in.

While you always want to be ready before offboarding any employee, in the case of involuntary exits or termination it’s especially important to prepare in advance. This allows you to deliver the necessary documents — including the final paycheck, in some states — at the time when employment is terminated.

Prevent Opportunities for Error

Whether someone leaves an organization through voluntary or involuntary termination, it’s important to make sure all the relevant departments have processes in place to facilitate a smooth transition.

“All parties that are relevant to this whole process must be in sync,” one chief information officer told SHRM. “Managers, HR and IT need to clearly communicate procedures and expectations so nothing falls through the cracks.”

Not having streamlined systems and processes for efficiently offboarding employees can create serious risks. The University of Wisconsin experienced this firsthand. As noted in the state of Wisconsin’s legislative bureau’s investigation and report, the UW System didn’t have an effective way to manage reconciliation of employee benefits, including offboarding employees from health care benefits once they’d been terminated. The estimated loss due to these system issues were projected to total between $10.6 million and $12.7 million.

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Use an Offboarding Checklist

If you don’t already have an offboarding checklist, start by ensuring that you’re covering these basics:

  • Benefits: Provide the employee with necessary information about COBRA benefits, life insurance plans, retirement benefits and so on. Confirm that they’re aware of their benefits upon separation.
  • Compensation: Notify payroll of the employee’s end date. If applicable, ensure that unused paid time off will be paid out. Have final pay details ready. Determine whether the employee has any outstanding loan balances with the organization that need to be repaid — education or retirement investment loans, for example.
  • Equipment: Collect all ID cards, computers, mobile phones, uniforms and other property that belongs to the organization.
  • Network access: Inform IT, security and other necessary departments of the employee’s departure to ensure that access to confidential systems and records is removed.
  • Organizational culture: Determine a plan for information and knowledge share prior to employee’s departure. Conduct an exit interview with the employee and document the reasons for their separation. Use a standard communication process to alert colleagues and team members of staffing changes.

Taking care to offboard employees the right way may reduce the potential of legal risks and costly errors. It also boosts the chance of an amicable parting, meaning that they’ll be more likely to recommend you to other potential recruits in the future.

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