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Dismiss an employee

  1. Click the People tab.
  2. Click your employee’s name.
  3. Navigate to the Job & Pay tab.
  4. Click Start employee dismissal in the Actions section on the right hand side of the page.
    • This list describes what happens when you dismiss an employee, including the timeline of notifications and important compliance implications to consider.
  5. Enter your employee's last day.
  6. Select whether the dismissal is voluntary or not and then choose the most appropriate reason from the drop down menu.
    • This information is important for state-specific forms and unemployment insurance
  7. Select if you want to run a special dismissal payroll:
    • Yes– I want to pay them on their last day: Your employee will have a specific "Dismissal Payroll" generated for them.
      • Keep in mind: this payroll will default to a "Check" payment and Gusto does not issue checks, you must give the check to your employee.
        • If you'd like to pay by direct deposit, change the "Pay by" option by clicking the caret next to "Check" and selecting "Direct deposit".
    • No—They have agreed to receive the rest of their wages on the company’s normal pay schedule: Some states require employees to be paid on their last day—review your state’s rules to ensure paying your employee on the normal schedule will be compliant.
      • Your employee can be paid with either a check or through direct deposit. Reminder, Gusto does not issue checks, you must give the check to your employee.
    • No—I've already paid them.
  8. If applicable, select who will manage the dismissed employee's direct reports.
  9. Enter any dismissal notes for you or other admins at your company.
  10. Click Save & continue.
  11. Review the timeline.
  12. If everything looks good, click Submit dismissal.
  13. Pay the dismissed employee's last payment:
    • Run a special dismissal payroll if you selected to do so - click the sticky on the Dashboard or begin the process from the Run Payroll tab.
      • The special dismissal payroll will appear in the Run Payroll tab after the final day of employment.
    • If you did not select to run a dismissal payroll, your employee's last payment will be included in the next regular payroll.

We understand that this can be a sensitive matter. Once you have entered the dismissal details, no notifications will be sent to employees regarding their status change. If you need to change an employee's dismissal date, follow these steps.

To view a list of all dismissed employees: 

  1. Click the People tab.
  2. Click Show dismissed people, which is located on the right side of the page.

Note: If your health insurance benefits are managed by Gusto, we’ll automatically notify your insurance carriers when you dismiss your employee. Their coverage will end per the policy on file with your carrier. This is usually the end of the month, but could vary depending on your contract. We'll also send a COBRA Election notice to the dismissed employee three days after they're dismissed to let them know about their continuation options. If this is your last active employee enrolled in an insurance policy, your carrier(s) will likely cancel the policy, including any continuation (COBRA) enrollments, and no employees will be able to enroll in continuation (COBRA). Dismissing employees will remove them from future payrolls. We will still retain their past payroll information for tax purposes and for generating their W-2 form at year end.

Payroll, benefits, HR and more.