The process of separating an employee from a company must be clearly set out and planned in advance.  I recommend developing a separation checklist so that all of the company’s policies are followed, as well as any applicable laws that pertain to the employer and their industry.  This article is the fourth article in my series of articles of employment audits.  Prior articles covered the hiring process, records retention practices, and wage and hour considerations.  This article provides five issues employers should consider in developing a separation checklist for their company:

1. Documenting reason for termination

Employers should establish a protocol for documenting the reason for termination.  Some considerations for documenting could include the following:

  • Is there a company policy that was violated? This is policy in writing?  Has it been distributed to the employee, and has the employee signed an acknowledgment of the policy?
  • Who was involved in the termination decision?
  • Review reasons for termination, and have clear guidelines for seeking legal counsel to avoid any potential wrongful termination or discrimination claims.

 2. Final paycheck amounts

An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.  Ensure that the final paycheck will be available to the employee on a timely basis (see below for timing requirements).  If an employee had direct deposit, an employee must re-authorize direct deposit for a final paycheck, and this should be documented.  In Canales v. Wells Fargo, N.A., (2018) the court held that employers are not required to provide final wage statements (pay stubs) at the same time as the final check, but instead have until the semimonthly deadline set forth in Labor Code section 226(a).

3. Timing of final paycheck

California law requires the employer comply with the following deadlines for providing final paychecks:

  • An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. This does not mean that the company cuts the check and mails it to the employee, the check must be provided to the employee at the time of termination.
  • An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting.
  • An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
  • An employee who quits without giving 72-hours’ notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.

Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, the location is at the office of the employer within the county in which the work was performed.

4. List of all required documents to separating employees

California law requires employers to provide certain documents to employees.  Here is a list of some of the routine forms required:

Employers should take time to review their obligations and forms that are required for their particular industry or situation.

5. Have established protocol for references and disclosing why the employee left the company within the company itself.

Employers often establish that it will only confirm the title and dates of employment for former employees, and, if authorized by the former employee, the former employee’s final pay rate. Employers do this to avoid potential claims for misrepresentation, violation of privacy, and defamation. Also, employers need to be careful about disclosing the reason for an employee departure within the company, as that may violate the former employee’s privacy rights. Employers should remind employees and management not to disclose this information to people in the company that do not have a reason to know, and remind employees about who any requests for references should be directed to within the company.