How to Fire an Employee in California

California has a high number of wrongful termination lawsuits, so it is understandable that employers are wary of firing employees. However, when you prepare a termination properly, you minimize the risk of a lawsuit. This page provide steps for firing an employee in California.

Before firing an employee, consult with an attorney to ensure you do not put your company at risk for legal action. Every situation for firing an employee is unique. This article is for general information. We invite you to read our Disclaimer page.

Should I Terminate an Employee?

Unless you have an employment contract with an employee, employment is on an “at-will” basis in California. This means you can terminate an employee without reason at any time, and without notice. Even though this makes it easier for you to fire employees, there are still some reasons you may not use to fire an employee:

  • Taking family leave
  • Taking sick leave
  • Serving jury duty
  • Serving in the military
  • Taking breaks
  • Filing for workers’ comp
  • Whistleblowing
  • Reporting a health and safety violation or concern
  • Refusing to engage in illegal activity
  • Discrimination due to their gender, sexual orientation, race, religion, political affiliation, and disability.

If a former employee has been wrongfully terminated, they may collect damages. Protect yourself by ensuring you terminate employees for legal reasons and document the process.

Ensure There Are Written Records to Show The Employee Was Disciplined

Because employment is “at-will” in California, many employers are confused about why they need written discipline records. In theory, if you don’t need a reason to fire an employee, you don’t need documentation to prove a reason for the termination.

However, if the employee files a wrongful termination lawsuit, the best defense is to have proof they were fired for under performing or misconduct. The burden of proof is on the employee to prove that they were discriminated against or the firing was due to retaliation. However, having proof of why you terminated them will help an early resolution. It is perfectly legal to terminate an employee because their employment was “at-will”, but proof of discipline will help your case.

When an employee commits misconduct or under performs, you must give them a warning that their behavior or results are lacking. Written warnings are preferable as evidence, as oral warnings are difficult to prove in court. Generally, if the behavior is minor, like under performing or tardiness, then several warnings are standard. If the behavior is moderate, then two or three warnings may be sufficient. Serious misconduct like workplace violence, sexual assault, stealing, or failing a drug test does not require prior warnings.

It is vital that your employee handbooks and policies back up the discipline structure too. If you have a discipline policy for tardiness, then you can argue that the employee knew their behavior could lead to termination. An employee handbook and written evidence of warnings and discipline will create a strong defense. It will show you legally terminated an employee for a valid motive, not for the alleged unlawful motive.

Review the Employee’s Personnel File

No matter the reason for firing an employee, always review their personnel file first. Check that their recent performance reviews reflect the misconduct or performance issues causing their termination. If the employee’s most recent performance review was positive, or they recently received an award or recognition, it may complicate the termination. You still may terminate them, but it is important to show or explain why you are firing them despite these positive reviews. For example, the employee may have received a sales award last month, but they have already received five warnings for their tardiness.

Document the Termination Decision in Writing

It may take a while for a termination decision to be reached, especially in big companies. HR may need to sign off on the decision as well as upper management. Sometimes, the decision may need to be signed off by the legal team. New facts and situations could develop that make the termination more complicated. The employee could announce they are pregnant, complain about discrimination or harassment, or be injured at work.

Even if you cannot terminate them immediately, it is important to document the fact that a termination decision has been made. Email HR and upper management to notify them you have decided to fire the employee. Also, start the recruitment process for their job position if you plan to replace them. This documentation shows that the decision had already been made to terminate the employee before the other circumstances arose. If this evidence is present, there will be a much more positive outcome for your case.

Have the Termination Reason in Writing

Never give a false reason for the termination or make up a reason for firing an employee. If the employee’s lawyer can show you gave a false reason for firing an employee, the jury is allowed to find discrimination. Give the employee a termination letter which states the real reason they are being fired.

If you put a vague reason or neglect to put a reason in writing, it can seriously hurt your case. Even if the reason for termination is unpleasant, you need to put it in writing. Otherwise, an employee’s lawyer can twist your actions and show wrongful termination.

Do Not Give Too Many Reasons For Termination

Resist the temptation to pile on the employee. The employee may have conducted many trivial misconducts, but there will be one main reason you are firing them, stick with that reason. All of your employees will commit trivial misconduct such as missing targets one month or surging the internet at work. This can open you up to a discrimination claim if you have not fired employees for that reason. The primary reason for firing the employee will be strong enough if backed by written warnings and employee handbooks and policies.

Before the Termination Meeting

To ensure the termination goes smoothly, you will need to prepare before the termination meeting. You need to:

  • Contact payroll to prepare their final paycheck and ensure their records are up to date.
  • Eliminate their access to sensitive information.
  • Create a plan for delegating their work until their position is filled.

Having these preparations in place will help you to avoid common legal errors.

Prepare the Final Payment

When an employee is terminated, they must be paid their entire owed paycheck. This must include their unused accrued vacation time. Where possible, prepare this in advance so you can give it to them in the termination meeting. Delaying the final paycheck can cause penalties of the employee’s wages for every day it is late.

You must repay the employee for all unpaid expenses as well. This should be presented at the termination meeting too.

Close Company Accounts

If the employee has a company phone card, a business account, or credit card, close these on the day of the termination meeting. Organize with IT that the employee’s passwords and system access be deactivated while they are in the meeting.

Plan the Transition

The employee’s duties must still be performed even if the employee no longer works for you. They may have been working on tasks or projects, or have an important role in the business. Before terminating an employee, have a meeting with other managers and plan how the tasks should be delegated. Make it clear to the managers that the termination decision must remain confidential.

COBRA Notice

If you offer a group health insurance plan and have 20 employees or more, then COBRA law requires the employee to have access to their coverage for a certain time.

California has its own COBRA law which requires employers of 2-19 employees to give fired employees health coverage for up to 36 months.

The employee must receive written notice of their COBRA rights within 30 days of their termination. However, it is best to give them this in the termination meeting if you can. You also need to notify your health insurance provider of the termination.

In the Termination Meeting

Select two people who will represent the company in a termination meeting. One will be doing the firing, and the other is to act as a witness. Often the witness is an HR representative, a member of management, or a business lawyer.

Ensure the person doing the firing is aware of the company message and how it is to be conveyed. The termination meeting should be carried out with as much compassion and professionalism as possible. The company representatives are not there to offer sympathy, they are there to provide the employee with information on the next steps.

There are a few steps that need to happen in a termination meeting:

  1. Let the employee know that they are terminated. Do this in a brief manner without apologizing or assuming blame.

  2. Ask if they have any questions about the next steps. Answer questions about the process only; do not answer additional questions about the reason for termination. Make it clear the decision is final.

  3. Discuss referencing, if the employee wants you to give a reference, get them to sign a form giving you permission to give a reference.

  4. Give the employee their final paycheck and reimbursement for any unpaid expenses. If there are any expenses which are not covered in the check, discuss those.

  5. Ask the employee to return any company property. Get all keys, access cards, cell phones, and laptops back before they leave the building. If the employee has company property at home, organize how they will return it.

  6. Remind the employee of the confidentiality agreement they signed when they were hired and give them a copy of the agreement. Tell them they must keep all information confidential.

  7. If the employee has access to sensitive information, you might ask them to sign an additional confidentiality agreement specifying company or trade secrets. The agreement can also waive any legal claims they have against your company. You will need to offer a severance package in exchange for this agreement.

After the Termination Meeting

After the termination meeting, there are some more things to do. You may want to escort the employee to their office or desk to pack up their belongings. This prevents them from causing any drama or problems and ensures they leave the building. Set a standard of doing this, so all your terminations are consistent.

Prepare an announcement to tell the employee’s coworkers about the termination. Keep the message brief; there is no need to go into reasons. Appoint someone to take reference calls about the employee. Prepare a set statement for a reference you have agreed with the employee. Keep it consistent. If the employee was not a great employee, only confirm the dates of employment, their salary, and job title.

Remove the employee’s information from any company documents, the website, and mailing lists.