Becoming familiar with the North Carolina employee separation process is a key employer obligation. Because employee termination laws and employee rights can vary from state to state, mitigating legal liability depends on understanding state-specific laws.
This employee separation checklist is your guide to North Carolina’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
North Carolina Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in North Carolina
North Carolina mandates that employees must be paid all owed wages promptly upon separation from their employer. Employees must receive their final paycheck on the next scheduled payday, with any bonus or commission payments due on the first payday after the amount is determined.
Accrued, unused vacation time must also be paid out, unless a written policy states otherwise. Final wages can be issued through regular pay channels, or sent by trackable mail, upon the employee’s written request.
Employers who fail to pay wages on time may face penalties, including interest on unpaid wages. They may also be liable for the employee’s legal fees, if court action is necessary to recover the wages.
2. Firing Employees in North Carolina
Because North Carolina is an at-will employment state, firing employees is permissible at any time, for any legal reason. Unlike some other states, North Carolina does not have any notice requirements upon separation or termination.
3. Severance Agreements in North Carolina
When executing claims releases in a severance agreement, you must specifically list the claims released under federal and state law. In North Carolina, employees may release claims under the North Carolina Equal Employment Practices Act, North Carolina People With Disabilities Protection Act, Retaliatory Employment Discrimination Act, Identity Theft Protection Act, North Carolina’s minimum wage and overtime laws, and North Carolina’s leave laws. The agreement should only waive claims that arose prior to the effective date of the agreement.
Employers must also remember to review applicable federal employee termination laws and guidelines. For example, the NLRB’s 2023 McLaren decision suggests a restriction in the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in North Carolina
When you have an employee with an Income Withholding for Support Order (“IWO”), report the employee’s termination to the child support agency, court, or attorney that issued the IWO as soon as possible. To expedite the process, your organization may register for online reporting with the Federal Office of Child Support Enforcement here.
You also may report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in North Carolina
If your organization ceases to do business in North Carolina, upon separating from your last employee, you may wish to withdraw your business registration in the state.
Businesses may file the appropriate forms with the North Carolina Secretary of State: For-Profit Corporations and Non-Profit Corporations must file this Application for Certificate of Withdrawal. Limited Liability Companies (LLCs) should file this Application for Certificate of Withdrawal.
Stay Compliant with North Carolina Employee Separation Requirements
Becoming familiar with the North Carolina Employee Separation Agreement process ensures legal compliance and mitigates legal risk.
Looking for instant access to a reliable database of federal, state, and local laws? Check out SixFifty’s employment law platform. With SixFifty, you can research state-specific laws, and generate multi-state handbooks, policies, addenda, agreements, and more in a matter of minutes.
Want to see how it works? Schedule a free demo today!
Looking for employee separation laws for a different state? Our interactive map makes it easy to find all employee termination requirements by state.
