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Termination Checklist for California Employers
By VICKY BROWN
You know, we’ve chatted before about how to help someone improve their performance. What are the phases of the warning process, how do you prep and deliver that conversation. What’s the follow up.
Well, all that helps you get to either improved performance, or an opportunity for them to move on to another, more resonate environment. In English – they get terminated.
In today’s episode, we’re going to focus on the nuts and bolts. We’re going to run down the checklist of what you need to do, and the mechanics of, terminating an employee in California.
First off, like most states, we have required notices that you have to give every terminating employee.
It’s always best to have a cover letter in your term package, simply reiterating the fact that the employment is ending, and on what date. Then give a list of the other documents in the package.
You’ll need to note their final day of pay, and that a check or deposit stub is included with the package. And at this point, I’m going to insert a quick word about final pay. Anyone who is termed (and by that I mean resigns or is terminated) has to be paid out any and all unused, accrued vacation on the books. Now you don’t have to pay out sick leave, but if you’ve combined those two into PTO, then it’s all treated like vacation, and you’ll have to pay it out.
Now, the timing is governed by the form (term or resignation) and the timing of notice. So, if someone is discharged, they have to be paid all wages due at the time of term. But if they quit, you may have a bit more flexibility.
If they give at least 72 hours notice, then you have to pay them everything due on their last day – just like the payment for terminations. But, if they give you less than 72 hours notice, then you have to pay them no later than 72 hours after you receive the notice of termination (see, that works out to be the 3 days I referenced earlier).
And you need to hand them their check – you can’t just drop something in the mail and consider it delivered. And this is important, because if you’re late paying them, you will owe what is called ‘waiting time penalties’, and they can really add up. The penalty is a day’s wage, it’s a daily penalty, and the maximum is 30 days. So, unless you want to pay up to over a month’s extra pay – then don’t rack up waiting time penalties.
“… if you have something like a confidentiality agreement or inventions agreement, it’s a really good idea to include a copy in the term package, and remind them that those agreements are still in force”
Now, different states have different rules – for instance in New York, you can wait until the next regular pay date to pay final wages. So, it’s important to double check the rules for your state.
OK – onward. Oh, and before I miss it, I need to be sure to remind you that if you have something like a confidentiality agreement or inventions agreement, it’s a really good idea to include a copy in the term package, and remind them that those agreements are still in force – you can do that in the cover letter too. It’s just a gentle nudge of a reminder that they have to keep confidential information confidential. And anything they produced in the course of working for you, generally belongs to the company and they have no ownership rights.
A quick call out here – there are some circumstances where that may not be true, so work with your labor counsel in drafting up any inventions agreement.
Now don’t forget to include information about benefits in the cover letter too. What day the benefits will stop – for things like medical, dental and vision, it’s generally the last day of the month that they leave. But things like life insurance may end at midnight on their last day. So whichever applies – be sure to spell it out in the term cover letter.
OK, you have the cover letter, and the final check – now it’s time for all the other supporting documents. There’s something called a Change of Relationship Notice. Basically, it’s a form you complete as the employer, stating when and under what circumstances the employment ended. Then the former employee can take that to the unemployment office and use it as part of the claim process. And yes, before you ask – it is required that you provide this form. So as much as you might like to not give it, in hopes the person won’t try to claim unemployment, let it go – it’s a must do.
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Then there is the Department of CA Health Care Services Notice. Basically it notifies the person of the state’s Health Insurance Premium Payment Program. There are specific guidelines to qualify for the program – but that’s why you provide the notice, it goes through all that for the employee, and gives them additional contacts for more info.
You are also required to provide the CA Programs for the Unemployed booklet. Yes, it’s what it sounds like – it talks about applying for unemployment and the like. And yes, again it’s a must provide.
And don’t forget to include any notices, forms or other documents regarding continuing any of the benefit programs.
Oh, and your insurance company, or insurance agent, will probably take care of COBRA notices for you (depending on your size – and if you need more info about COBRA, I’ll put a link in the show notes to an earlier episode where we did a full COBRA primer.
But again, there may be other programs that aren’t COBRA eligible, but they may have portability – meaning the employee can take the plan with them. Life insurance often has portability, so you would have to include any forms they would need, in the term package as well.
And finally, include a checklist of returned equipment. It’s an easy way to make sure you remember to collect everything, and it will give you and the employee a written record of what made it back – and what didn’t.
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