California Termination Checklist

What Should an Employer Do Before Terminating an Employee?

Prior to meeting with an employee for their termination, an employer should examine the individual’s past work reviews to check whether there are documented issues with performance. Ideally, there will be a written record that proves the employee is aware of managerial and supervisory concerns so that he or she is not surprised by the decision. If the company decides to proceed with the firing, having exhausted all other options, then he or she should let payroll know to issue the worker’s last paycheck. This the employer will hand to the employee at the very end. But an employer should also be careful to protect the business prior to firing the employee in question.

Create Clear Policies

Through job announcements, employee handbooks, and interviews, it should be clear that the employer is at-will. This means that employment can be ended at any time and for any reason.

Review All Options First

Before terminating an employee, an employer should try to improve the worker’s performance through feedback. Perhaps place the employee on an improvement course to assist them. Ensure that workers have the training and tools necessary to complete their duties.

Avoid Discrimination

If an employer terminates an employee for a certain reason, then this should apply to all workers. The employer should record the rationale behind the decision and offer past instances that were negotiated with the worker before deciding to fire them.

Federal Law Requirements

Consolidated Omnibus Budget Reconciliation Act (COBRA) Election Notice

Election notices under COBRA offer a method by which employees and their loved ones can keep their work health insurance in the event of reduced working hours or job loss. When it comes to companies with twenty or more workers, the day prior to an employee’s termination, a COBRA notice must be given to workers who participate in the company’s health insurance and to dependents covered on the employees’ plan.

The Worker Adjustment and Retraining Notification (WARN) Notices

The WARN Act concerns companies that have more than one hundred full-time workers or one hundred part-time and full-time workers who work four thousand hours per week in total. The act is meant to offer workers enough time to change between their old and new jobs. Should a covered company plan to perform a large-scale layoff or to close a location, the WARN Act mandates that they give the affected employees 60 days advanced written notice at a minimum. While an employer is free to deliver the notice in writing in the manner they please, they may not include preprinted notices in the employees’ pay envelope or paycheck. Also, the act does not allow verbal notices.

Retirement Benefits Notice

When it comes to employers that provide their workers with retirement plans, the IRS mandates that these companies notify former workers that they maintain these benefits within 90-180 days after the end of employment. Administrators of the plan need to give employees particular written details about the plan. This notice has to explain an employee’s right to postpone getting their account balance, as well as the negative effects of withdrawing money from a retirement plan too soon. The forms that are given to former employees need to inform the individual of their benefits, as well as how to get them.

California Law Requirements

Notice to Employee as to Change in Relationship

When terminating an employee, employers must give them a Notice as to Change in Relationship, which is required by California Unemployment Insurance Code Section 1089. Alternatively, an employer may create their own form that says the same thing. The notice does not have to be provided when the worker quits, leaves voluntarily, or takes a different job at the same organization.

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Final Paycheck

An employer is required to pay an employee all compensation owed upon termination. It is important to ensure that final compensation includes earned bonuses, vacation pay, and commissions.

If a worker quits with less than seventy-two hours’ notice, the company has seventy-two hours (three days) from the employees’ resignation to supply the last paycheck. When an employer does not produce the last paycheck in a timely manner, they may incur a waiting time penalty. This is the employee’s normal wages for every day (up to 30 days) after the last paycheck ought to have been issued.

It should be noted that the above penalty does not count as wages, so no deductions are taken from the fine.

Coverage Options Notification

All public and private employers have the responsibility to provide a review of employer-sponsored health coverage or an explanation of benefits to all eligible employees. This duty includes offering information for preferred provider groups and health maintenance organizations. According to the California Labor Code Section 2808, all employers are required to “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’s Programs for the Unemployed Pamphlet

Companies are required to provide terminated workers with a pamphlet entitled “For Your Benefit: California’s Programs for the Unemployed.” This pamphlet describes various unemployment benefits. It should be provided at the time of termination.

Cal-COBRA Continuation Rights Notice

Cal-COBRA is a law that permits an individual to keep their group health insurance provider at the end of their employment or if their hours are reduced. It may also be relevant to individuals who have used up their Federal COBRA. Companies are required to inform departing workers who may have employer-sponsored healthcare of their continuation rights under COBRA. Under the law, Cal-COBRA should be given to both terminated workers of small companies (two to nineteen workers), as well as big companies (twenty or more workers).

Notice of Health Insurance Premium Payment (HIPP)

The HIPP program is an optional premium reimbursement program that falls under Medi-Cal. It is administered by the California Department of Health Care Services. If an individual has recently lost their job and thus qualifies for benefits via Medi-Cal, or an individual is the parent of someone who is eligible for these benefits, then he or she may be able to get compensation for their current cost-sharing and private insurance premium. Companies with twenty or more workers are required to provide information to qualifying employees with coverage under this program.

California Worker Adjustment and Retraining Notification (WARN) Notice

The WARN Act is applicable for California companies that have has seventy-five or more part-time and full-time employees over the past 12 months (including workers who have been employed for a minimum of half of the previous year). California employers are required to give notices to impacted workers, as well as email the notice to eddwarnnotice@edd.ca.gov and notify other indicated state officials and agencies.

What Are the Final Steps in the Termination Process?

In general, employers should take these steps when dealing with departing employees:

• Retrieve Company’s Property. Ensure the employee returns company property, including keys, employee IDs, keycards, and so on. If a worker can access company debit or credit cards, be sure to close or cancel these accounts once the employee has left.
  
  
• Stop Access to Company’s Electronics, Software, Apps. End a terminated worker’s access to business email accounts, which includes those accessible on phones and laptops. Take steps to make sure the individual cannot access or remove private information in either electronic or physical format. After separating with the worker, let IT know of the precise time and date when the worker’s access should be blocked. All access to the building and computer systems should be blocked, including disabling keycards and passwords.
  
  
• Briefly talk about the decision with workers who should know. You may talk to HR and other managers about the rationale. That said, the rationale should otherwise be kept private and must be managed with discretion and compassion. Going into details could cause big problems for the company.
• Update records, payroll, HR software, and any records pertaining to the end of employment. Maintain payroll records and taxes, in addition to any records that provide the rationale for termination. These should be kept for four years minimum.
• Termination meeting or exit interview. In general, this is the information that should be in the letter of termination:
  • Employee name
  • Employee position
  • Company name
  • The manager supervising the termination
  • Termination date
  • Decision rationale
  • Previous warnings
  • What items should be returned
  • Information about final paycheck and benefits