Ask an Expert: Death of an Employee

What should we do when an employee dies?

By John Dooney, SHRM-SCP November 28, 2022
LIKE SAVE
Ask an Expert: Death of an Employee

​When HR professionals learn of an employee’s death, they should inform company executives and reach out to the employee’s emergency contact for confirmation.

Find out how much information the family wants the employer to share about their loved one’s passing. Some family members might not want to release the cause of death but may be comfortable with the employer letting staff know that the employee died “after a long illness,” for example. 

Before sending a companywide e-mail, ask the deceased employee’s manager or department head to first inform those who worked closely with the deceased about the situation. Ideally, this would be done in person or by phone.

Provide time and space for employees to process the loss. Understand that colleagues will react differently. Some co-workers might need time off, for example, while others may want to talk out their feelings. Employers often invite a grief counselor in to help employees explore their emotions. Individual counseling sessions may be available via an employee assistance program. 

Other possible employer actions include matching workers’ contributions to a charity in honor of the deceased employee, planting a tree, giving time off to attend the employee’s funeral or having a virtual memorial so remote employees can participate.

In addition, HR must administer the final paycheck and benefits for the deceased employee. Typically, an uncashed paycheck issued prior to the employee’s death should be canceled, and a new check should be issued for the same amount in the name of the employee’s estate or beneficiary. Final wages paid in the year of an employee’s death aren’t subject to federal income tax withholding (FITW), but they are subject to taxes under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA). However, wages paid in the year after an employee’s death are not subject to FITW, FICA or FUTA taxes.

Follow state law to determine how to treat the deceased employee’s unused vacation days, paid time off or other accrued leave. The estate or beneficiary should be issued a Form 1099-MISC with “other income” listed in Box 3 for the gross amount paid for unused leave.

Employers should also meet with the employee’s beneficiaries to explain what benefits they are eligible to receive and the process for administering claims. 

Terminate the employee’s health insurance as of the date of death, and inform any dependents enrolled in the employer’s health plan that they can continue coverage under COBRA. Also, notify them of any remaining flexible spending account funds that are available to them.

Finally, follow standard termination procedures to collect company equipment and end network access.  

John Dooney, SHRM-SCP, is an HR Knowledge Advisor for SHRM.

Photograph by SeventyFour / ISTOCK

LIKE SAVE

SHRM HR JOBS

Hire the best HR talent or advance your own career.

SHRM’s SMALL-BUSINESS LEGAL RESOURCE

SHRM LegalNetwork members can quickly connect with attorneys on an unlimited number of topics for a low monthly fee.

SHRM LegalNetwork members can quickly connect with attorneys on an unlimited number of topics for a low monthly fee.

LEARN MORE

SPONSOR OFFERS

HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.