Employee terminations and resignations must be planned for in advance to avoid common pitfalls for California employers. Last week I wrote about hiring considerations for California employers in 2023, so I thought it would be appropriate to follow that post up with this list of termination considerations. This Friday’s Five focuses on critical management and legal considerations during the separation process:
1. Documenting the reason for termination
What is the reason for termination? Is there a company policy that was violated? [Note: Is the company policy in writing? Has it been distributed to the employee? Is there a signed acknowledgement of the policy in the employee’s file?] Who was involved in termination decision? Review documentation for termination if “for cause” and ensure this documentation is maintained in personnel file.
2. Final pay and accounting
Employers need to prepare the employee’s final paycheck and ensure that any unused accrued vacation time is also included.
Final wages must be paid within certain time limits, including the following:
- An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately 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, is at the office of the employer within the county in which the work was performed.
Employers should also review if commissions, bonuses, or expense reimbursement owed to employee? Obtain all expense reimbursement forms form employee.
Employers with multiple locations need to ensure that the final wages are made available. The place of the final wage payment for employees who are terminated (or laid off) is the place of termination. The place of final wage payment for employees who quit without giving 72 hours prior notice and who do not request that their final wages be mailed to them at a designated address, is at the office of the employer within the county in which the work was performed. Labor Code Section 208.
3. Company property and passwords
Obtain all company property from employee and reset passwords. Also, has employee returned all company provided uniforms? Have all company keys been returned? The company should also develop a list of all passwords employee had access to and ensure the passwords are reset.
4. Final notices
Employers need to ensure that all required notices are provided to the employee. For example, common notices include:
- Notice to Employee as to Change in Relationship
- For your Benefit (Form 2320)
- COBRA and Cal-COBRA Notices from insurance provider
- Notify insurance provider
- Health Insurance Premium (HIPP) Notice
5. Retention of employee files
Employers need to take measures to secure and save employee’s file, wage, and time records. In this regard, employers need to develop policies for the following issues:
- What is kept in a personnel file?
- Where is the personnel file maintained? Is it physical or electronic? Who has access to personnel files? If stored electronically, are the safety protocols that prevent deletion? Are the files backed up?
- How are time records kept? Physical or electronic? Who has access to them? How long are they stored for?
- Retention of pay records: How long are pay records maintained? How easily can this data be pulled for California’s pay data reporting requirements? As a reminder, SB 1162 modified these requirements for 2023, and the pay data reports are due by May 10, 2023 for large employers.