Termination Process Refresher

1. Termination Process Refresher

2. Termination Process Refresher • When an employee terminates from the University, we must provide the employee with a final paycheck and terminate the employee’s job record. • The final paycheck must include all remaining pay due to the employee. This will include: • Salary/hours worked/leave taken during the last pay period of work. • Accumulated unused leave hours (sick leave is not paid out). • Any other payments due in conjunction with the termination. • The employee’s job record must be terminated in PeopleSoft to ensure that: • The employee does not continue to receive pay following the termination date. • The employee receives appropriate notifications regarding Benefits. • Employee headcount is accurately reported for the University.

3. Termination Process Refresher • Notification of a termination is generally provided to an administrator in the employee’s work unit. • The administrator is responsible for: • Confirming the details of the termination. • Determining the final payments due, including leave payouts. • Requesting the final paycheck and job record termination, by submitting a Termination Webform to Payroll. • Payroll is responsible for: • Verifying the calculations provided on the Termination Webform and producing the final check. • Terminating the employee job record. • Additional communications/arrangements regarding the employee’s termination are generally handled by the employee’s manager and/or HRM.

4. Termination Process: Getting Started • When you receive notification of a termination, determine the following prior to starting the Termination Webform: • Employee’s last day of work • Last day of work must be a University work day (not a holiday) • Appropriate action/reason code for the termination • Consult with HRM/E&MS/HRG, as appropriate • Planned leave hours for the employee, if any, prior to the termination • Instruct the employee to update his/her timecard in Axess • Partial month vacation accruals due to the employee • Delivery method and date for the final paycheck • Final check can be mailed or held at Tresidder for will call • Final check can be produced prior to the employee’s last day of work

5. Calculating Partial Month Accruals • Vacation is granted once monthly, following the payroll run for the second pay period of the month. • Any vacation that the employee has earned, but has not yet been granted, must be calculated and included on the final check. • Vacation calculations differ by employee type: • Non-Exempt & Bargaining Unit • Receive vacation based upon regular hours worked and leave hours taken • Exempt • Receive a flat amount monthly, which is prorated by work day if the employee does not work the entire month

6. Calculating Vacation: NX & BU • Review Axess Timecard to determine the regular hours worked and leave hours taken by the employee for the period during which they have not yet received their vacation grant. • Determine the employee’s accrual rate based upon the STF Service Date in PeopleSoft. * Prorated by FTE

7. Calculating Vacation: NX & BU • Example: A non-exempt employee with 5 years of service is terminating on May 3rd. You found the following in his timecard: • 160 regular work hours during April • 8 vacation hours taken during April • 16 regular work hours during May • Vacation calculation: 184 hours * .06539 = 12.03 hours

8. Calculating Vacation: EX • Determine the employee’s accrual rate based upon the STF Service Date in PeopleSoft. • Verify the employee’s FTE in PeopleSoft and prorate the number of monthly hours to be granted accordingly. * Prorated by FTE

9. Calculating Vacation: EX • Example: An exempt employee with 5 years of service is terminating on May 3rd. She is 100% FTE. • Vacation Calculation: • April: 13.33 hours • May: (13.33 hours divided by 22 work days) * 2 days worked = 1.21 hours • Total = 14.54 hours Note: If the employee were 75% FTE, she would receive 10.90 hours (14.54 hours *.75%)

10. Vacation Caps • The University is currently in the process of reducing the maximum vacation that an employee can accumulate. • If a terminating employee is above the applicable cap: • Do not calculate a partial month vacation accrual for the employee as s/he is not eligible for vacation accruals while over the cap. • Pay out all of the accumulated vacation balance, including the amount over the current cap.

11. Termination Payments: Salaried Employees (EX & NX) • On the Termination Webform, enter a payment row for each of following, as appropriate: • SAL: Semi-monthly salary, if the employee was active for the entire pay period • SAL : Work hours and hourly rate for work hours if the employee was active for only a portion of a pay period (Use STP if SAL has already been used to pay the semi-monthly salary) • VCS, SKS, PST and/or BDS: Leave time taken prior to the employee’s last day of work • VPO, PTO, BDO: Unused accumulated leave time to be paid out • SEV: Severance, if the employee has been laid off • STP: Pay in lieu of notice, if the employee has been involuntarily terminated with no notice period (Pay semi-monthly salary)

12. Termination Payments: Salaried Employees (EX & NX) • Example: A salaried employee is terminating on May 3rd. • SAL $2,100.00 (for April 16 – 30) • STP 16 hours @ $24.230769/hour (for May 2 – 3) • VCS 8 hours @ $24.230769/hour (Vacation day taken April 22) • VPO 154.3 hours @ $24.230769/hour • BDO 8 hours @ $24.230769/hour

13. Termination Payments: Hourly Employees (BU & Contingent) • On the Termination Webform, enter a payment row for each of following, as appropriate: • 101 : Work hours and hourly rate for work hours (Pay with premium earnings codes if Swing or Owl shift) • VAC, SCK, PTO and/or BTH: Leave time taken prior to the employee’s last day of work • VPO, BTH: Unused accumulated leave time to be paid out (PTO is not paid out for BU employees) • SEV: Severance, if the employee has been laid off • STP: Pay in lieu of notice, if the employee has been involuntarily terminated with no notice period (Pay 80 hours)

14. Termination Payments: Hourly Employees (BU & Contingent) • Example: A Bargaining Unit employee is terminating on May 3rd. • 101 88 hours @ $26.04/hour (for April 17 – May 3) • VAC 8 hours @ $26.04/hour (Vacation day taken April 16) • VPO 120.8 hours @ $26.04/hour • BTH 8 hours @ $26.04/hour

15. Requesting the Final Check • A final paycheck, including all remaining pay due, must be furnished to an employee: • By the last day of work if the employee resigns with at least 72 hours notice or if the termination is involuntary. • Within 72 hours if the employee resigns without notice. • The Termination Webform must be fully approved by 9am on the day the final check is required. • Termination checks may be requested earlier than the employee’s last day of work. Please wait to submit the Webform until all details of the termination have been confirmed. • If the employee’s last day is between the last day of the pay period and payday, Payroll must stop the employee’s regular paycheck so all earnings can be included on the final check. • Submit the Termination Webform by the PeopleSoft deadline for the pay period to ensure that the regular paycheck can be stopped.

16. Requesting the Final Check • Payroll reviews the final check calculations and makes adjustments as necessary to comply with University policy and to ensure correct payment to the employee. • Use the Remarks field on the Webform to note the details of the termination, especially any unusual items. • This is an additional point of verification to ensure that the final check calculations are correct. • If an involuntary termination requires special handling, please submit a HelpSU ticket to Payroll for assistance. • The check can be ordered prior to the termination date. Upon request, Payroll can ‘hide’ the check from the employee view in Axess.

17. Understanding the Final Paycheck: Benefit Deductions • Employees are covered on benefits through the end of the month containing their last day of work. • Employee benefit deductions are taken from the final check to cover any remaining premiums due for the month. • Benefit premiums for a given month are taken from the paychecks on the 7th and 22nd of that month. • If the employee has not received a paycheck during the month of termination, twice their normal benefit deductions are taken from the termination check. • If the employee has received a paycheck on the 7th, their normal benefit deductions are taken. • If the employee has received both the 7th and 22nd paychecks, no benefit deductions are taken.

18. Understanding the Final Paycheck: Benefit Deductions • Employees may elect to complete their healthcare spending account commitment for the year by having the remaining balance deducted from their final check. • This option is not available for Dependent Care Spending Accounts. • To elect this option, the employee must complete the Health Care FSA Continuation Form, which is available from the Benefits website. • Payroll must receive the Continuation Form prior to processing the employee’s final check.

19. Understanding the Final Paycheck: Retirement Contributions • Employee retirement contributions and employer match are applied to the final check at the rate currently on file for the employee. • Retirement eligible earnings on the termination check include: • Salary/Hours/Leave Taken • Leave Payouts • Severance Pay is not retirement eligible.

20. Understanding the Final Paycheck: Taxation • Salary/hours payments are taxed at the employee’s W-4/DE-4 rate on file at the time of termination. • Leave payouts and severance are taxed separately from salary/hours. Payments are controlled for taxes with the following guidelines: • Payments less than $5,000: Taxed at W-4/DE-4 rate • Payments of $5,000 or greater: Taxed at Supplemental Tax Rate (25% federal, 6.6% state)

21. Contingent to Regular Transitions • If an employee is converting from a contingent position to a regular position, a final check should not be requested. • Submit a Termination Spreadsheet to request the termination of the contingent position. • Note in the email that the employee will be rehired as regular staff, so the termination is expedited. • Record hours for the contingent position in Axess Timecard for payment with the next regular pay cycle. • View timecard by ‘Range of Dates’ to see appropriate timecard fields for each job.

22. Termination Resources • HRdata(https://www.stanford.edu/dept/dms/hrdata/jobaids.html) • Termination Job Aids & Process Overview • Termination Spreadsheet • Fingate(http://fingate.stanford.edu/staff/payadmin/res_jobaid.html) • Axess Timecard Leave Accrual Rates • Payroll Earnings Codes • Payroll Schedules and Deadlines • HelpSU (http://helpsu.stanford.edu)