.jpeg)
Navigating employee termination in California requires a thorough understanding of both state and local employment laws. Employers should be aware of the necessary steps and legal considerations to ensure compliance and protect their rights.
Key Steps for Employee Termination in California
- Provide Required Documentation: Employers must provide several documents on the last day, including a final paycheck, Notice to Employee as to Change in Relationship (DE 2808), COBRA notice if applicable, and EDD pamphlet. These documents should be prepared in advance to ensure a smooth termination process.
- Issue Final Pay: California has strict final pay requirements. For involuntary termination, all wages (including accrued vacation/PTO) must be paid immediately on the day of termination. For voluntary resignation with 72+ hours notice, payment is due on the last day; if less notice was given, within 72 hours. Failure to comply can result in waiting time penalties of up to 30 days of wages.
- Address Accrued Vacation Pay: Unlike many states, California requires payment of all accrued but unused vacation/PTO upon termination, as these are considered earned wages. This applies regardless of employer policy. However, properly structured unlimited PTO policies may be exempt from this requirement.
At-Will Employment in California
California is an "at-will" employment state, meaning employers can terminate employees at any time, for any reason, provided the reason is not illegal. However, there are significant exceptions to this doctrine:
Discrimination: Termination based on protected characteristics including race, color, national origin, sex, religion, age, disability, sexual orientation, gender identity, medical condition, marital status, military status, or political beliefs is illegal under FEHA.
Retaliation: Employees cannot be terminated for engaging in protected activities, such as filing complaints, reporting violations, participating in investigations, or discussing wages.
Public Policy Violations: Terminating an employee for reasons that violate public policy, such as taking protected leave or refusing to sign rights waivers, is prohibited.
Implied Contracts: Employee handbooks, verbal promises, or long-term employment patterns may create implied contracts limiting at-will rights. Employers should clearly communicate the at-will nature of employment.
Severance Pay: Is It Required?
California law does not require severance pay unless specified in an employment contract or agreement. However, offering severance in exchange for a release of claims can benefit both parties. For separation agreements to be enforceable in California, they must contain specific technical elements:
For All Separation Agreements: The agreement must include an explicit FEHA claims release referencing California Government Code Section 12940 et seq. A California Civil Code Section 1542 waiver must be included with specific statutory language to release unknown claims. The agreement cannot require employees to release claims for wages already earned or unemployment insurance rights.
For Employees Over 40: The agreement must comply with the federal Older Workers Benefit Protection Act (OWBA), including a 21-day consideration period for individual terminations or 45-day period for group terminations, plus a 7-day revocation period. The agreement must specifically reference the Age Discrimination in Employment Act (ADEA).
The agreement must be written in clear language, provide valid consideration, and expressly exclude claims that cannot be waived under state law, such as workers' compensation claims and the right to file administrative charges.
Protect Your Rights: Consult a California Employment Attorney
Given California's complex employment laws and employee-friendly courts, consulting with an experienced employment attorney before terminations is crucial. Proper legal guidance ensures compliance with state requirements while protecting your company's interests and minimizing litigation risk.
.png)
