States That Require an Employment Termination Letter

Employment termination letters, also known as service letters, are documents provided by employers to workers who are leaving the company because they were laid off or fired. Not all states require these letters, although many employers issue them as a matter of policy. Typically, an employment termination letter includes a brief explanation of the circumstances about the termination, and may also provide details such as continued access to company-provided healthcare.

Employment Termination Letters

An employment termination letter serves multiple functions, including providing proof of unemployment, as well as essential information for the employee, as she makes her transition away from the company. Putting transitional information into writing is often helpful, as many employees are upset when they learn that they are being laid-off or fired, and they may not remember what they were told by a supervisor or a human resources manager about benefits and offboarding. The employment termination letter accomplishes the following:

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• Documents the termination: The service letter states that the employee has been, or will be, terminated from the company. It also provides the reasons for termination. The document provides proof of unemployment to unemployment agencies, social service providers, school financial aid offices and any other person or organization that has an interest in whether or not the named individual is employed.
• Provides benefit continuance information: Typically, an employment termination letter includes information about the status of employee benefits after termination. This is particularly important if the worker and his family are covered by employer-provided health insurance.
• Outlines offboarding details: Offboarding processes may include returning electronics, such as laptops and smartphones; deactivating accounts; and returning electronic key cards and company ID cards.

One function that a termination letter should not have is to inform an employee that she is losing her job. A supervisor or HR representative should make every effort to speak to the employee face-to-face or, if that is not possible, via phone about the termination.

State Laws

Some states, including Arizona, California, Illinois and New Jersey, require employers to provide termination letters. In some cases, the content must follow a specific template. Some states may even provide a form that employers must complete and present to the terminated employee.

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Considerations for HR Professionals

Termination letters should be written in a professional tone, and in a way that minimizes the risk of it being used in a wrongful termination suit against your company. When writing these letters, stick to the facts, and avoid emotional language. At the same time, don't hesitate to carefully document the employee's behavior that contributed to his termination. For example, if an employee was terminated because of abusive behavior in the workplace, cite the dates and times, as well as any warnings that were given, to help to make your case that the termination was justified.

Considerations for Employees

Not all states require employers to provide a termination letter. If you live in a state that has no such requirement, but you feel you that need a letter, you can request one. Keep in mind, however, that the document may detail the reasons for your termination in ways that are less than flattering. If you do receive a service letter from your company, read it carefully: It may contain crucial information that could affect your ability to keep your health insurance or information that may qualify you for unemployment benefits.

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