Posted on June 5th, 2018
Do you need to let an employee go? Its never a fun thing for employers but you need to be sure you follow all California employee termination laws.
Here’s some tips on how to fire an employee legally.
If you’re a manager, an HR professional, or a business owner, you know that one of the least pleasant things you’ll ever have to do is terminate an employee.
Lets face it. It’s hard to fire someone. But its a part of being the boss. Although it can hurt on a personal level firing someone can also put your business at risk.
That is why it’s so important you’re prepared and you follow a few necessary steps, so you can best protect yourself and your company.
If you’re not quite sure how to fire an employee legally in California, we’re here to help.
Should You Terminate?
There are many reasons you might want to terminate an employee. For the most part, California employees operate on an “at will” basis.
This means that an employee doesn’t have a contract for a length of time. You, the employer, can terminate an employee for any reason or no reason, with or without notice.
There are still instances of wrongful termination, however.
Here are a few reasons for which an employee may not be terminated:
- Filing a workers’ comp claim
- Taking family leave
- Using sick time
- Taking breaks
- Reporting a health or safety concern or violation
- Serving jury duty
- Serving in the military
- Whistleblowing
- Refusing to engage in illegal activity
- Discrimination based on their race, gender, religion, age, disability, sexual orientation, or political affiliation
In cases of wrongful termination, an ex-employee may collect damages. Make sure you’re firing for the right reasons and that you document everything to protect yourself.
Before the Termination Meeting
Before you even consider notifying an employee of a termination, you’ll want to make certain preparations to ensure that it goes smoothly.
You need to contact payroll, eliminate their access to important information, and create a plan to give their work to your other employees.
If you get these things together the process will go more smoothly and you will avoid the errors that tend to lead to legal problems.
Prepare the Final Payment
California requires employers to pay their employees their entire owed paycheck when they’re terminated.
This final payment has to include their vacation time as well.
You should get this ready in advance so you can give it to them at the meeting. If you wait, you can be hit with penalties. These penalties are equal to the sum of the employee’s wages for every day the check is late.
If your company has a policy for business expenses, you’ll have to pay that out too. Make sure this check is ready to deliver at the termination meeting as well.
Close Company Accounts
If the employee has credit cards, phone cards, or any other business account, cancel them on the day of the termination meeting.
Prepare to deactivate all the employee’s passwords and their access to company email directly after the meeting.
Plan the Transition
When you have finished letting the employee go, their work still has to be done. Get together with other managers to create a plan for the tasks to be transferred to other people.
While doing this, take special care not to let coworkers know about the termination.
COBRA Notice
Employers with 20 or more employees that offer group health insurance have to allow their terminated employees access to their coverage for a certain period of time.
However, California has its own COBRA law. Employers with two to 19 employees must allow their terminated employees to use their health coverage for up to 36 months after their termination.
You have to give the employee a written notice that explains their rights under COBRA no later than 30 days after their termination. You also have to let the health insurance provider know about the termination.
At the Meeting
Before the meeting, decide who is going to let the employee know that they are being terminated. Make sure they understand how this message is going to be conveyed.
Often, it’s a good idea to do this at a meeting. If that’s not possible, you might want to do this in writing.
Generally, it’s important that your notice is respectful and professional. This is a good rule in all parts of owning and operating a business, but it is especially important in delicate matters like this one.
After you let your employee know that they have been terminated, there are a few things that need to happen immediately.
First, give the employee their final paycheck and expense reimbursement check. While doing this, have a conversation about any outstanding business expenses that might not be covered in the check. Cover all your bases.
Then, ask for any of your company property back. Get your company cell phone, keys, laptop, confidential files, records, and any company manuals they might have.
After that, if they have had access to confidential or proprietary information, prepare a confidentiality agreement for them to sign.
In California, employees aren’t allowed to reveal a company’s trade secrets. But your agreement might cover a wider set of standards or restrictions.
If you want the employee to sign these agreements, you’ll have to give them additional consideration, like severance pay, in order to validate the contract.
If your employee signed a confidentiality agreement when they were hired, give them a copy of that agreement and let them know that they are still obligated to keep all information confidential.
Most employers hate giving a severance agreement but there are many reasons why you should think of this as an investment or insurance policy against future claims.
After the Termination Meeting
Once you’ve finished terminating your employee, there are a few other things you have to do.
Let the terminated employee’s coworkers know that the employee has been let go. Prepare an announcement that agrees with how you decided to characterize their departure.
It’s a good idea to give as few details as possible unless certain employees need to know exactly what happened.
Appoint someone to take calls about the terminated employee. Prospective employers might call for a reference.
If you and your terminated employee agreed on a reference, prepare a statement that agrees with that reference Otherwise, limit your reference to confirming the dates of employment, their title, and their salary.
Don’t forget to remove the terminated employees information from websites, mailing lists, and other documents that your company uses.
How to Fire an Employee Legally
It can be difficult to figure out how to fire an employee legally, especially in California.
All too often a small slip up on your part can lead to a lawsuit.
But as long as you’re careful and follow those simple rules, terminating an employee doesn’t have to be a scary process.
If you have an employee you want to terminate, contact us today. We can give you some FREE adivce on the best way to handle it given your specific circumstances.
2021/2022 Update on Terminating an Employee Legally
We have lots of visits to this article but it was written a few years ago. Almost all suggestions are the same but we do have an updated video on what to look out for in 2021/2022 when it comes to firing an employee legally.
