Navigating the process of employee separation in Utah can be complex, but it’s essential for protecting your organization and ensuring you meet all legal requirements. In this guide, we’ll walk you through the key aspects of Utah's employee separation process, including final paycheck regulations, separation notices, severance agreements, termination reporting, and how to withdraw your business registration if needed.
By understanding the specific steps involved, you can minimize legal risks and make sure you’re fulfilling all your employer obligations.
Utah Employee Separation Checklist:
Provide final paycheck
Issue separation notice
Execute severance agreement
Report termination
Withdraw registration to do business
1. Final Paycheck Requirements in Utah
Utah law provides clear guidelines for issuing final paychecks. If an employee is terminated, the final payment must be provided within 24 hours. For employees who resign, their final paycheck is due by the next scheduled payday. All earned wages, including regular pay, overtime, and commissions, must be included.
Although employers aren’t required to pay out unused vacation time unless specified in the employee's contract or company policy, failure to meet final paycheck obligations can lead to serious consequences. Penalties for non-compliance can include up to 60 days’ worth of wages at the employee’s regular rate, plus fines of up to $500 per offense.
2. Terminating Employees in Utah
As an at-will employment state, Utah allows employers and employees to terminate the working relationship at any time for any lawful reason. However, there’s an important notice requirement for employers providing group health insurance.
If you have fewer than 20 employees, you must inform separated employees of their right to continue coverage under Utah’s state-level COBRA law. The notice must be sent to the employee’s home address via first-class mail within 30 days, including details on payment amounts and instructions for continuing coverage.
3. Severance Agreements in Utah
When offering a severance agreement in Utah, it’s essential to be aware of what rights the employee may be waiving. If you want the employee to waive claims under state or federal law, you must list those claims explicitly.
In Utah, the state law claims they may waive include those under the Utah Antidiscrimination Act, Employment Relations and Collective Bargaining Act, Utah Right to Work Law, Utah Drug and Alcohol Testing Act, Utah Minimum Wage Act, Utah Protection of Activities in Private Vehicles Act, Utah Employment Selection Procedures Act, Utah Occupational Safety and Health Act and other relevant laws. Additionally, any claims released should be tied to incidents that occurred before the agreement’s effective date.
It’s also important to stay up to date with federal rulings, such as the NLRB’s McLaren decision from 2023, which limits the inclusion of non-disparagement and confidentiality clauses in severance agreements.
4. Reporting Employee Termination in Utah
If the employee had an Income Withholding for Support Order (IWO), employers are required to notify the issuing agency of the termination. This can be done online through the Federal Office of Child Support Enforcement or by completing the Notification of Employment Termination section of the IWO and sending it to the appropriate agency. You’ll need to provide details such as the employee’s name, case identifier, last known address, and the date of separation.
5. Withdrawing Registration to do Business in Utah
If your company is no longer operating in Utah, and you’ve separated from your last employee in the state, you may want to withdraw your registration to do business there. The required forms will depend on your company’s legal structure. Corporations (for-profit and non-profit) should submit an Application for Withdrawal, while LLCs need to file a Withdrawal of Registration with the Utah Secretary of State.
Stay Compliant with Utah's Employee Separation Requirements
Ensuring compliance with Utah’s employee separation laws is essential to avoid potential legal issues and protect your company’s reputation. From providing the final paycheck to managing severance agreements, each step plays a crucial role in safeguarding your business.
If you need personalized guidance to navigate these processes smoothly, schedule an advising meeting with ModHR today. Our team of experts is here to help you stay compliant and manage employee separations with confidence.
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