Resignation Laws Every Employer Should Understand

According to the US Bureau of Labor Statistics, around 3.3 million people quit their jobs in June 2024.

This recent wave of resignations is a clear sign of ongoing workforce shifts, with some experts even dubbing it “The Great Resignation 2.0.”

For employers, this trend not only brings the challenge of retaining talent and filling vacancies but also the need to navigate resignation laws effectively.

How you deal with resignations can impact your company’s reputation, compliance, and even future hiring prospects. You need to do it right. And this article is here to guide you through the process.

This Article Covers

• Key Resignation Laws in the US
• The Resignation Process (Notices, Resignation Letters, and Quiet Quitting)
• Accepting Resignations
• Dos and Don’t When Dealing with Resignations

Photo by Karolina Kaboompics

Key Resignation Laws in the US

• At-Will Employment: 49 out of 50 states in the US practice at-will employment. This essentially means that either the employer or employee can terminate the employment at any time without facing repercussions. This is provided that termination of employment is not done for illegal reasons such as discrimination or retaliation.
• Resignation Notice Period: The US doesn’t have a federal law that sets a mandatory resignation notice period for employees. The notice period will often have to depend on state laws or what is agreed upon in the employment contract between the employer and the employee.
• Final Pay: There’s no federal law that requires employers to give former employees their final paychecks immediately. However some states can have regulations that require immediate payment. This includes states like Oregon and California, provided that the employee has given ample notice.
• Unused PTO: After quitting, workers may be entitled to receive unused PTO payouts. This can vary from state to state. In some states, workers lose their unused paid time off (PTO) when they quit or are terminated. However, in states like California, employers are required to pay out any unused vacation time immediately when employment ends.
• Forced Resignation: Forced resignations can happen if an employer creates a hostile work environment or pressures the employee to quit. This is also known as constructive discharge. Constructive discharge rules can vary state by state but it can be deemed illegal if it is done because of discrimination or retaliation.

Learn more about US Labor Laws through our detailed guide.

Photo by Nick Fewings on Unsplash

The Resignation Process (Notices, Resignation Letters, and Quiet Quitting)

Unlike what the photo above suggests, resigning isn’t as quick and easy as writing “I Quit!” on a sticky note and putting it on the manager’s desk.

The resignation process can vary from case to case. However, it often starts when the employee gives a notice of resignation in the form of either a verbal discussion or a formal resignation letter.

What should a resignation letter contain?

While not required by federal law, resignation letters are considered a professional courtesy. It provides a formal record of an employee’s decision to leave the company and helps maintain positive relationships with their employer.

A well-written resignation letter should include:

• Clear Statement of Resignation – State that you are resigning and include the date of your last working day.
• Reason (Optional) – You may briefly mention the reason for leaving, but this is optional.
• Offer to Help – Mention your willingness to help during the transition period, such as training a replacement.
• Contact Information – Ensure the employer knows how to reach you if needed after your departure.

A simple and respectful resignation letter can go a long way in helping leave a positive final impression.

How much notice should employees give before resigning?

A resignation notice lets the employer know that an employee is planning to leave, giving them time to prepare for their departure.

Employees aren’t required by federal law to give a resignation notice but this condition can be stipulated in their employment contract.

Some jobs may require more or less notice depending on company policies. But typically, most companies require employees to give a notice at least two weeks before their resignation.

What is Quiet Quitting?

Quiet quitting is a growing trend in the workplace where employees gradually disengage from their jobs, instead of actively resigning. 

Employees might reduce their efforts, limit communication with colleagues and supervisors, and lose enthusiasm for their roles. This is often a response to burnout, dissatisfaction, or poor work-life balance. 

Quiet quitting isn’t illegal, but it can raise legal issues if employers fail to address the underlying causes, such as workplace discrimination, harassment, or unfair treatment.

Photo by Christina on Unsplash

Accepting Resignations

Once a resignation notice has been issued, either through a verbal discussion or a resignation letter, the employer has the responsibility to acknowledge and accept it in a timely manner. 

It’s important for the employer to confirm the employee’s final working day and initiate the transition process and offboarding. This includes planning for the handover of responsibilities, ensuring all pending tasks are completed, and preparing for an exit interview if applicable.

Is it legal to not accept resignations?

In some cases, it may be legal for employers to not accept employee resignations, depending on the nature of the employment.

One key factor to consider is whether the employee is working under a contract. If they are, the contract may outline a set period of time they are required to fulfill their duties.

If an employee signed a contract agreeing to work for a specific duration, the employer could deny the resignation on the grounds that the employee has not yet fulfilled their contractual obligations.

However, for at-will employees, who make up the majority of the workforce, the situation is different. At-will employees are free to resign at any time, and employers generally cannot refuse their resignation.

How do you offboard employees who resigned?

Employee offboarding, also known as exit management, is a process that helps manage the transition of employees out of the company. It’s typically done regardless of the reason for employment separation, whether it’s due to a termination, retirement, or resignation.

The process of employee offboarding is just as important as onboarding. It ensures a smooth and professional transition that protects both the company and the departing employee.

Key steps to include in an offboarding process include:

• Formal Notice Acknowledgement – Officially acknowledge the employee’s resignation or departure, either through a verbal discussion or written letter.
• Knowledge Transfer and Handover – Hand over critical tasks, responsibilities, and knowledge to a designated team member or successor.
• Revoke Access to Systems – Protect company data by revoking the employee’s access to emails, internal systems, and any sensitive information.
• Collect Company Assets – Retrieve company-issued equipment such as laptops, phones, ID badges, or any other devices.
• Exit Interview: Conduct an exit interview to gather valuable feedback on the employee’s experience.
• Settle Final Pay and Benefits: Ensure all outstanding payments, including salary, unused vacation, and bonuses, are processed in compliance with labor laws.
• Maintain Professional Closure: Finish the process by offering a formal farewell, which can include a final team meeting or a written message.

What should employers ask in an exit interview?

Exit interviews are a great opportunity to gather honest feedback from departing employees. They can offer valuable insights into areas where your company is succeeding and where it might need improvement.

When you’re conducting an exit interview, try skipping the yes or no questions and asking open-ended ones. These can help you learn more from employee experiences. You could ask “Why did you decide to leave the company?”, “What have you liked about working in the company?”, or “What do you hate about your job?”.

Other good exit interview questions you can ask include:

• What advice would you give to your replacement?
• Would you consider working here again in the future?
• How would you describe your manager’s communication style?
• Did you feel valued in your team?
• What do you think the company can improve on?
• How would you describe the perfect candidate to replace you?

It’s also important to approach the exit interview as a conversation rather than a formal interrogation. Employees may feel initially uncomfortable, so giving them space to speak freely and without judgment helps create an environment of trust. 

When should the final paycheck be issued?

Final paycheck laws vary from state by state. In some states, employers are required to issue the final paycheck immediately upon resignation, while others allow for the paycheck to be issued on the next scheduled payday.

Dos and Don’ts When Dealing with Resignations

Dealing with resignations doesn’t have to be all that complicated. It’s essential that you know how to handle the situation professionally so you can ensure a smooth transition for both the departing employee and the rest of the team.

To help guide you in the right direction, here are some do’s and don’t for dealing with employee resignations.

Dos when dealing with resignations

• Do acknowledge the resignation promptly. Respond to the resignation in writing to confirm receipt and the next steps.
• Do conduct an exit interview. Use this opportunity to gather feedback on the employee’s experience.
• Do ensure a smooth handover. Make sure all tasks, responsibilities, and projects are properly handed over.
• Do revoke access to company systems. Protect company data by removing the employee’s access to systems and accounts.
• Do retrieve company property. Collect company-issued items like laptops, keys, and phones before the last day.
•  Do handle the situation professionally. Maintain a respectful tone throughout the process to leave on good terms.
• Do settle final pay and benefits. Make sure the employee receives their final paycheck and any owed benefits in line with state regulations to avoid legal issues.
• Do communicate the departure to the team. Inform the remaining team members of the resignation so they can be prepared and adjust their workflow accordingly.

Don’ts when dealing with resignations

• Don’t take it personally. Employees resign for many reasons, so try to keep your emotions out of the situation.
• Don’t delay processing the resignation. Address the resignation promptly to avoid confusion or any misunderstandings.
• Don’t skip the exit interview. Skipping this step means losing valuable feedback that could improve your workplace.
• Don’t badmouth the resigning employee. Speak respectfully about the employee, both to their colleagues and externally.
• Don’t ignore legal obligations. Ensure compliance with state labor laws regarding final pay and any contractual obligations.
• Don’t leave the workload unattended. Plan ahead to manage the workload after the employee leaves to prevent disruption.
• Don’t make the departure awkward. Handle the resignation with professionalism, avoiding unnecessary drama or tension.
• Don’t withhold benefits or pay without reason. Ensure all entitled payments and benefits are given, as withholding them can lead to legal issues.

Important Cautionary Note

When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.