Early in the closing process, you should tell your employees your plans to close and dissolve your business. Federal and state laws specify when and how you should navigate this process. Here are some of the key guidelines:
- Owners with 100 or more employees are required by federal law to provide up to 60 days of written notice of an impending closure.
- Owners with fewer employees that conduct business in certain jurisdictions may also be required to provide up to 60 days of written notice of an impending closure.
Certain states and territories have additional laws you’ll need to follow when closing a business that has employees on staff. Here is a short sample of those laws:
- Owners must be prepared to pay their employees the full amount of wages they’ve earned up to the close of the business.
- Owners must pay their employees for the full allotment of vacation days they’ve accrued at the time of the business’s closure.
- Companies must provide final paychecks within the precise amount of time that’s specified by their state, which may be immediately after providing the news or within a specific number of days after announcing a closure (generally by the date of the next occurring paycheck).
- Owners must continue paying payroll taxes through the final day their employees report to work.
What are the laws in my state?
Every state has a government labor office that can explain your legal obligations. Call the office in every state in which you have employees to learn how to proceed:
What else should I do to support my employees?
After meeting the legal requirements, shift your focus to supporting your team through their exit. Here’s what you could do:
- Consider offering certain employees additional pay or a bonus to help you complete the tasks required to close your business.
- Provide final paychecks as quickly as possible.
- Share a course of action that employees can follow to request outstanding reimbursements.
- Communicate that your business’s healthcare options will no longer be available to employees and direct them to external options for medical, vision, and dental care.
- Provide information about the status of their retirement funds, including vesting determinations, when any contributions the business owes will post, and how participants can access and transfer their accounts to another firm.
- Offer recommendation letters or reviews on sites like LinkedIn that will help them in their job search.
There are other steps you should take, too. These include:
- Telling independent contractors your plans to close operations
- Beginning the process of canceling your business’s retirement plan, benefits, and healthcare plan offerings
- Reclaiming property offered to employees, including mobile devices, computers, keys, and vehicles
- Changing the building’s locks and security access
- Resetting network and security codes
State labor offices should be able to walk you through all the steps you need to take to navigate employee-related closure issues. Still, you may want to speak with an attorney to discuss issues that are specific to your business.
It’s important to tell your employees that your business is closing, but others will need to hear your news, too. Shift your focus to informing your vendors, contractors, freelancers, suppliers, and, importantly, your business’s creditors. Here are some resources that can help with these steps:
We can help you with every part of this process. Log into your owner’s portal for the steps you need to take to close your business.