Offboarding's Compliance Reckoning: Why HR's Hardest Job Deserves Better Tools

Investments in the employee life cycle are heavily skewed toward the front end. You've got recruitment dashboards, onboarding portals, engagement platforms, and, increasingly, AI-powered development tools to add to a tech stack heavily weighted at the beginning. The end of the employee life cycle, by contrast, remains largely paper-driven and manual, reliant on spreadsheets, chain emails, and hand-verified compliance checks. In other words, this problem has never been bigger and is now coming back to bite.

U.S. companies announced 1,206,374 layoffs in 2025, a 58% increase from 2024, and the highest number since 2020, according to job firm Challenger, Gray & Christmas. January 2026 added another 108,435 layoffs, the worst January since the 2009 global financial crisis, with artificial intelligence-related changes, tariffs, and a shrinking federal government workforce contributing to elevated figures. For all the discussion around why businesses have been eliminating staff, not much has been said about how the process plays out.

That gap is where Onwards HR, a 2026 SHRM Labs WorkplaceTech Accelerator cohort company, wants to step in. Sarah Rodehorst, Onwards HR's CEO and co-founder, calls offboarding the part of the life cycle most ripe for costly missteps (legal, financial, and reputational) and the most underserved.

The Compliance Complexity Most HR Leaders Inherit

Ask an HR executive how their company handles a separation, and the answer often points to a human resource information system (HRIS). "Oh, Workday handles that." Ask the HR professionals actually managing offboarding, and the answer gets more complicated.

Most companies arrive at this realization the hard way. Rodehorst says most buyers of Onwards HR handle offboarding with email threads, spreadsheet mail merges, and homegrown software that becomes outdated soon after its launch. The wake-up call often occurs after a layoff goes awry, or when someone in HR who is already juggling a lot of daily responsibilities is tasked with handling a difficult separation process that requires an inordinate amount of time — something that could be the person’s full-time job. The result, particularly in today's economic climate, is a workload that's both operationally and emotionally taxing.

But just look at the legal minefield. The federal Worker Adjustment and Retraining Notification Act (WARN Act) mandates that an employer with 100 or more employees must provide 60 days' advance notice to a worker before closing a site or executing a mass layoff, and if it fails to do so, according to the U.S. Department of Labor, it could owe as much as 60 days of back pay and benefits, along with fines of $500 a day for a violation. At least 15 states have mini-WARN laws, each with unique triggers and remedies for violations. In qualifying situations, New Jersey, for example, requires a week of severance pay for every year an employee worked, regardless of whether the state’s mandated 90-day notice was given, plus an additional four weeks if it wasn't. On top of this are other requirements for separations: state-specific notices, Age Discrimination in Employment Act (ADEA)/Older Workers Benefit Protection Act (OWBPA) rules for group releases, various deadlines for issuing final paychecks, and COBRA benefit notification. A single midsize layoff may trigger dozens of regulatory requirements.

The potential fallout of noncompliance isn't abstract. Last November, for example, a class-action lawsuit under the federal WARN Act targeted Jefferson Health in relation to two waves of layoffs that impacted some 650 workers. The suit alleges the health system didn't provide the necessary 60-day notice required under the act.

"Offboarding generally doesn't get the attention it deserves," Rodehorst said. "HR leaders assume it's taken care of until they're facing legal consequences."

Employees Are Affected When Systems Don’t Talk

Even if all compliance requirements are met, offboarding typically fails at the handoffs between HR, payroll, IT, legal, and finance.

As TechCrunch first reported, when Better.com, a digital mortgage lender, laid off 3,000 employees in 2022, those affected learned of their termination when they received their severance checks in their Workday account. Employees should have been notified of their termination before receiving severance pay, but the timing wasn’t properly orchestrated. 

This isn’t happening only at tech companies in crisis. One of Onwards HR's telecom clients arrived with a 4% error rate in the offboarding process, overpayments of severance totaling $105,000, and even employees who were mistakenly let go. In this case, the mishaps didn’t happen because the HR staff didn’t know what they were doing. They happened because the process was managed manually.

"When systems are disconnected, the room for error increases exponentially," Rodehorst said.

Why Compliance Is Compassion

Here’s the reframe that Onwards HR leans into, and what makes this perspective distinctive from typical offboarding coverage: There’s no conflict between compliance and caring for your people — it’s the same issue.

There is a reason these employment laws exist: They protect the workers. Providing advance notice gives employees time to search for their next job prior to their last paycheck. Mandatory severance pay, as required in certain workforce reductions in New Jersey and Maine, provides a safety net for employees. State separation notices inform departing employees of how to file for unemployment. Failure to abide by these mandates means that departing employees don't get the protections the law says they are owed. Compliance, then, is essentially the foundation upon which employee dignity is built, rather than a distinct entity from it.

There's a very real cost to that, too. If you have people sitting around recalculating severance pay for 200 people and checking 17 different state rules on termination notice, that's taking time away from things that actually require a human: having difficult conversations, making follow-up phone calls, working with outplacement partners.

"If HR teams are too busy manually calculating severance pay and double-checking state separation notice rules, little time remains for compassion," Rodehorst said.

This argument extends to the HR staff themselves, who are commonly required to conduct layoffs in addition to their everyday workload. Most layoffs are determined at a leadership level; HR personnel are tasked with managing the process and delivering the news. Providing resources that take care of the mechanical aspects of the process is how you demonstrate to your HR staff that you treat them with the same level of respect you are asking them to show exiting employees.

The Shift from Reactive to Proactive

What's shifting isn't the presence of layoffs; it's their frequency. Ten years ago, most companies would consider a mass separation an occasional occurrence, something that would happen perhaps once or twice every few years. In the last eighteen months, the odds on this assumption have shifted dramatically. In fact, Q4 2025 saw the highest quarterly number of layoffs since 2008, according to Challenger data, and artificial intelligence as a specific reason for job cuts accounted for 15,341 workers in March 2026 alone, or a quarter of that month's total.

Organizations that have adapted are beginning to approach offboarding like onboarding: as a program scaled to HR, with standardized processes, ownership, and systems ready to go.  The alternative is improvising under pressure when the next reduction arrives, which is how avoidable mistakes turn into public ones.

What HR Leaders Actually Need

Offboarding, like recruitment, isn’t a standalone solution that can be managed in isolation with any one system. It is a coordinated process spanning multiple teams, multiple systems, and multiple sets of laws, and the cost of getting it wrong has risen as cuts have accelerated and mini-WARN laws have proliferated. The companies handling it well are bringing that work together in a dedicated layer that integrates with the HR systems they already run, rather than stitching it across spreadsheets and email threads. That's the category Onwards HR specializes in.

The distinction worth drawing is between organizations that treat offboarding as an afterthought and those that treat it the way they treat the rest of the employee experience: deliberately, with governance, and with the understanding that how people leave says as much about an organization as how it hires.

But that investment isn't just a matter of risk management. At its best, it's how an employer shows what it cares about when it counts, right at the moment an employee walks out the door. 

To learn more about Onwards HR, join us at the SHRM 26 Annual Conference & Expo for the session: Investigations and Separations: Smarter Compliance for HR's Riskiest Moments.