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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 Dismiss Employee in the lower right corner of the screen.
    • 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 if you want to run a special termination payroll:
    • Yes, I want to run a special termination payroll in order to pay the employee their last check on the spot: Your employee will be paid with a check. Reminder, Gusto does not issue checks, you must give the check to your employee.
    • No, the employee agrees to be paid the rest of his wages on the company's normal pay schedule: 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.
    • If you need to pay an employee their final paycheck by direct deposit before the company's normal pay schedule: You can process their final paycheck using an off-cycle payroll.
  7. Click Dismiss Employee.
  8. Pay the dismissed employee's last payment:
    • Run a special termination payroll if you selected to do so.
    • If you did not select to run a termination payroll, your employee's last payment will be included in the next regular payroll.
  9. 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.

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 terminated 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.