Bay Laurel Seedling Treatment

I have a question about my bay laurel. I planted seeds about a month ago and one of them has germinated. I have a heating pad underneath and plastic cover over on top. Yesterday I noticed that the seedling had reached the top and was touching the plastic cover. Because I was not prepared to transplant it yet I moved the plastic cover off. Later I noticed the seedling was beginning to wilt a bit, I replaced the cover and this morning it looked fine again. Did it wilt because it was too cold or because it did not have enough humidity? I would like to know before I transplant it and is there anything else I should be careful of when I do?

Most likely the seedling wilted, because the humidity was too low for the roots to keep up with transpiration, once the cover was off. You will have to take the cover off for increasing lengths of time to encourage the little tree to make roots before it makes any more top growth.
However, I think it would be best to transplant the seedling before it gets much bigger, so there is not too much root there yet to damage during the uprooting. Also the remaining ungerminated seeds can then be kept moister and warmer until they in turn sprout. Loosen the plantlet carefully with some stick and grabbing it only by the cotyledons, or alternatively by a true leaf but never by the stem, plant it gently in its own pot of sterile soil, water in, drain and cover with plastic for about a week. After that accustom it slowly to more and more time without a cover until it no longer wilts when uncovered.