Prior to discussing the actual legal requirements related to employee deaths, it is worth mentioning the practical benefit of collecting information from your employees as part of the hiring process. This can include their emergency contacts or having them name beneficiaries as part of enrolling in any benefits. Thereafter, employees should be reminded annually to keep their beneficiary and emergency contact information up to date.
Other considerations prior to an employee’s death can include a range of safety and reporting requirements from the federal Occupational Safety and Health Administration (OSHA) to state workers’ compensation laws. These various requirements can change depending on the industry or the number of employees that work for the company.
Legal obligations may arise when the death was the result of a workplace injury or illness. OSHA requires a work-related death be reported within 8 hours of learning of the death. Some state workers’ compensation laws also have certain requirements for workplace deaths. For example, in Georgia, if an employee is found dead in a place where the employee is expected to be in the performance of their work duties, a presumption arises that the employee’s death arose out of and in the course of employment. There are some exceptions, and this presumption is rebuttable. Nonetheless, it is something an employer should be aware of, particularly when an employee dies while working their shift. These situations can be further complicated with employees that work remotely and die during their shift. In these instances, the employer should contact knowledgeable legal counsel to discuss potential reporting requirements.
Outside of legal requirements, an employer must also navigate how to lead through the grief. First, contact the family, if known, and offer your condolences. Ask about any memorial services and whether you can share the information with employees who wish to attend. The most important thing is to be mindful of grieving relatives and acquaintances. This might mean you give them a little time before following up about the burdensome paperwork required for the next steps. You might also leave contact information of a designated company representative with the family so they can contact the employer when they are ready.
Next, communicate with your other employees. It’s always a good idea to designate an internal contact, generally someone within Human Resources, for employees to reach if they have any questions or concerns about the situation. If possible, consider giving employees time off for bereavement leave and encourage them to attend any memorial service, if acceptable to the deceased employee’s family. Consider also providing resources, such as an Employee Assistance Program, to help employees work through the grief and shock of the loss. Be mindful that you might not always be able to share the details of the death with current employees. Conversely, depending on the circumstances surrounding the death, the details might already be widely known within the organization.
In addition to employees, communicate the loss with any necessary customers or clients, especially those who had direct contact with the employee. Redistribute the employee’s workload and clients, as appropriate. To help manage communication channels, arrange for redirection of phone, voicemail, email, and mail to a designated internal contact.
After the death of an employee, there will also be other legal obligations, such as return of company property, paying out final wages, withholding taxes, and providing information on maintaining any benefit plans.
This should be coordinated with the family but be mindful and make requests for return of property at an appropriate time. This can be discussed once the family reaches out after memorial services. Of course, the urgency of returning company property might also depend on what information it contains and whether it is critical to the ongoing operations of the business. In such unique situations, it might be necessary to contact the deceased employee’s family sooner. If possible, the employer should offer to take care of all the arrangements and costs related to returning the property.
Death does not end entitlement to wages that were previously earned. All unpaid wages, and any other fringe benefits, such as payout of accrued PTO, arising out of contractual agreements or state law, likely become part of the deceased employee’s estate. Generally, it is a good idea to wait before making the final payment of wages until you have had an opportunity to meet with the representative of the deceased employee’s estate. The representative might be appointed by the court or the executor of the employee’s will. To avoid a potential claim for improper distribution of estate assets, do not make any payments for wages without the authorization of an estate representative.
Generally speaking, any compensation paid for wages during the calendar year of the death are subject to employment tax withholding, but not federal income tax withholding. Compensation or amounts paid after the year of death is not usually subject to any tax withholding. Tax laws can change quickly. Always contact a qualified tax professional to discuss the best way to handle tax obligations and avoid liability, especially for state-specific tax liability.
For health benefits and other welfare bonuses provided, follow the same processes and procedures for employment termination. Similarly, follow the standard procedure for notifying dependents for eligibility for COBRA. Gather all the documents needed for the process, such as a copy of the death certificate.
Inform all insurers and plan administrators of the death. For qualified retirement plans and life insurance, the administrator will handle the distribution of the account balance in accordance with the policy terms to the beneficiaries or to the estate of the deceased employee. If there is a SERP (Supplemental Executive Retirement Plan) or another non-qualified deferred compensation plan, follow the policy terms and distribute accordingly. If no beneficiaries are listed, consult with the estate representative.
During this process it is important to be mindful of those grieving the loss, while also fulfilling your legal obligations. As always, seek legal counsel when challenging situations arise to make sure you are setting yourself up for success. We are always here to help.