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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 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 run a special dismissal 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.
  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.