California Employment Termination Checklist

May 19, 2022

Being prepared for employee termination is one of the best practices for a business. This post will help enable employers to be in compliance with different laws pertaining to termination procedures. Employee terminations can be incredibly challenging without proper guidelines. Improperly executing any part of the termination process, from the termination letter to severance pay, with can be met with legal action. Having an accurate and consistent termination process can help employers avoid legal consequences.

The decision to terminate an employee can raise many legal issues. While there is no guarantee an employee will not bring legal action against an employer, using this checklist can enable the employer to avoid potential legal challenges. As appropriate, identified problems and discuss them with legal counsel before a termination decision.

Pre-Termination Checklist

Before you meet with your employee for the termination, take a look at the employee’s previous performance reviews to see if performance issues have been documented. There should be documentation that the employee has been spoken to about the concerns the manager or employer has, so the employee is not taken by surprise that they are getting terminated. If the employer has decided that they have exhausted all options and they want to continue with the termination, then they will want to contact payroll to prepare the employee’s final paycheck to hand them at the time of termination. You want to take steps to protect your business before terminating an employee's employment.

Create and Implement Clear Company Policies - Make it clear in job announcements, interviews, and the employee handbook that you are an at-will employer, and the relationship may be terminated without notice and with or without cause.

Exhaust All Other Options - Have you tried to coach the employee and provide them with feedback? Have you set the employee upon a performance improvement plan to help them succeed? Have you provided the employees with the necessary tools and training to perform their job?

Do NOT Discriminate - Be consistent across the board. If you are terminating an employee for one thing, then that should be the standard for all employees. Document the reason for the termination and provide previous examples that were addressed with the employee prior to reaching the decision to terminate.

Terminations are complicated in California. Employers must have a detailed process to limit litigation.

Federal Law Requirements

Consolidated Omnibus Budget Reconciliation Act (COBRA) Election Notice

COBRA election notices provide a way for workers and their families to temporarily maintain their employer-provided health insurance during situations such as job loss or a reduction in hours worked. For employers with 20 or more employees, the day before an employee's termination date, a COBRA notice needs to be provided to employees who are participating in the employer’s group health plan and to any of the terminating employee’s dependents on the plan.

The Worker Adjustment and Retraining Notification (WARN) Notices

The WARN Act applies to employers that have over 100 full-time employees or 100 full-time and part-time employees working a total of 4,000 hours a week. The purpose of the WARN Act is to provide workers with sufficient time to prepare for the transition between the jobs they currently hold and new jobs. If a covered employer is planning a mass layoff or closing a plant, the WARN Act requires the employer to give affected employees at least 60-days' advance written notice. An employer may use any reasonable method of delivery designed to ensure receipt of the written notice at least 60 days before separation. However, preprinted notices included in each employee’s paycheck or pay envelope and verbal notices do not meet WARN Act requirements.

Notice of Retirement Benefits

For employers that have retirement benefit plans for their employees, the IRS requires such employers to provide a notice to former employees that advise of rights to retirement benefits within 90–180 days after the employment relationship ends. Plan administrators must give employees certain written information about their retirement plan. The notice must explain a participant’s right to defer receiving their account balance and the consequences of taking money out of a retirement plan immediately rather than later. The documents provided to participants who are no longer working should contain enough information for the participant to understand their benefits and how to obtain them.

California Law Requirements

Notice to Employee as to Change in Relationship 

When an employee is terminated or laid off, employers are required to provide a Notice to Employee as to Change in Relationship in accordance with California Unemployment Insurance Code Section 1089 or prepare their own document that includes the same information. This notice is not required when an employee quits, voluntarily resigns, or changes jobs within the company. Here is a sample notice:

Final Paychecks 

When an employee is terminated, the employer must pay all wages owed at the time of termination. Make sure final wages include accrued vacation pay, earned bonuses, and earned commissions.

If an employee quits and provides less than 72 hours’ notice, the employer has up to 72 hours (or 3 days) from the time the employee resigns to pay the final wages.  When employers fail to timely provide the final paycheck, they may be hit with “waiting time” penalties, which are the employee’s usual wages for each day (up to thirty days) after the final paycheck should have been provided.

For example, if seven days ago I gave my employer notice that I was quitting on Friday, and I did not receive my final paycheck on that day, then on the following Monday my former employer informed me that my final paycheck was available and that I could come in and pick it up, but I purposely did not pick up my check until 10 days later, which was 13 days after I quit, I am only entitled to the waiting time penalty in the number of three days' wages. In this situation, since I gave my employer at least 72 hours prior notice that I was quitting and quitting on the date I said I would, the employer's obligation is to pay all of my unpaid wages at the time of quitting.

Note: The waiting time penalty is not wages, thus, no deductions are taken from the penalty payment.

Notification of Coverage Options 

It is the responsibility of all employers, whether public or private, to provide to all eligible employees an outline of coverage or a similar explanation of all benefits provided under employer-sponsored health coverage, including, but not limited to, providing information for health maintenance organizations and preferred provider organizations. All employers must “provide to employees, upon termination, notification of all continuation, disability extension and conversion coverage options under any employer-sponsored coverage for which the employee may remain eligible after employment terminates.” (California Labor Code § 2808).

Pamphlet on California’s Programs for the Unemployed 

Employers must provide departing employees with a copy of the following pamphlet containing information about unemployment benefits no later than the date of separation: For Your Benefit: California’s Programs for the Unemployed

Notice of Cal-COBRA Continuation Rights. 

Cal-COBRA is a California law that lets you keep your group health insurance provider when your job ends or your hours are cut. It may also be available to people who have exhausted their Federal COBRA. Employers must notify departing employees who have healthcare coverage through the employer of their Cal-COBRA continuation rights. Cal-COBRA must be offered to both terminated employees of small employers (2 to 19 employees) and large employers (20 or more employees).

Health Insurance Premium Payment (HIPP) Notice 

The California Department of Health Care Services administers the HIPP program, which is an optional premium reimbursement program under Medi-Cal. If you have recently lost your job and qualify for Medi-Cal benefits, or you are the parent or guardian of someone who qualifies for Medi-Cal benefits, you may be eligible to receive compensation for your existing private insurance premium and cost-sharing. Employers with 20 or more employees must provide a copy of the following form to eligible employees covered under the HIPP program.

California Worker Adjustment and Retraining Notification (WARN) Notice

The California WARN Act applies to businesses that have employed 75 or more full and part-time employees within the preceding twelve months (including those employees who have been employed for at least six of the preceding twelve months).  Employers in California must deliver notices to affected employees, email the WARN notice to [email protected] and give notice to other specified state agencies and officials.

Sample Termination Checklist

Final Steps in the Employment Process

Employers should also generally follow these practices for departing employees:

  • Make sure the employee turns in company property such as keys, keycards, employee IDs, etc. If an employee has access to company credit or debit cards, make sure to cancel or close those accounts when the employee is separated.
  • Restrict a former employee’s access to company email accounts, including from mobile devices. Take measures to ensure the employee cannot remove confidential company information, whether stored in physical or electronic format.
  • Briefly discuss the termination with employees who need to know.
    • You may disclose the reasons for termination to Human Resources and managers who need to know. However, the reasons should not be shared with the whole company and should be handled with compassion and discretion. Oversharing the details can cause more significant problems for your company.
  • Once you separate with the employee, notify IT of the exact date and time when the employee’s access should be withdrawn. Block all access to the system and building, including disabling passwords and keycards.
  • Update payroll, records, Human Resources software, or any required documents relevant to the termination. Keep taxes and payroll records, along with any records that offer justification for termination for at least four years.
  • Consider completing an exit interview and/or termination meeting.
  • Generally, these are the components that should be included in the termination letter:
    • Employee name
    • Employee position
    • Company name
    • The manager overseeing the termination
    • Date of termination
    • Reason for the termination
    • List of warnings that were given
    • List of items to be returned before leaving
    • Details about final pay and additional benefits

Terminations are never fun for a manager or employer to handle, but having a consistent and compliant process can help with a smoother transition.

If you would like to create a termination procedure for a departing employee, or any general counsel regarding Federal and California termination procedures, please contact the attorneys at Freeburg & Granieri, APC to discuss how we can help you protect your business.


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