A well-structured process for onboarding new employees is a common practice, but equally important—and often overlooked—is having a clear procedure for when employees leave the company. Ensuring that all company property is returned, providing any required documentation, and taking steps to mitigate potential legal risks are crucial when an employee departs. Here are five key steps California employers should include in their separation process:

1. Ensure All Necessary Documents Are Provided to the Departing Employee

Just as with new hires, there are several essential documents that need to be provided to employees at the time of separation. Employers should prepare a termination packet that includes mandatory documents such as:

  • Notice of Change in Relationship
  • COBRA and Cal-COBRA notices
  • Health Insurance Premium (HIPP) notice

In addition, employers should create their own forms to request the return of company property (e.g., laptops, keys, parking cards) to ensure everything is accounted for before the employee leaves.

2. Issue the Final Paycheck on Time

California law has strict requirements for when final paychecks must be issued:

  • If an employee is terminated, all wages, including accrued vacation, must be paid immediately at the time of termination.
  • If an employee gives at least 72 hours’ notice of their resignation, all wages must be paid on their last day of work.
  • If an employee quits without providing 72 hours’ notice, the employer has 72 hours to issue their final paycheck.
  • If the employee requests, the final paycheck can be mailed, and the date of mailing is considered the date of payment for compliance purposes.
  • Final pay must included all accrued but unused vacation.
  • Final wages for terminations must be provided at the location where the employee was dismissed. In the case of a resignation without notice, the final paycheck can be picked up at the employer’s office within the county where the employee worked.

3. Consider Whether to Conduct an Exit Interview

Exit interviews can provide valuable insights but aren’t always appropriate. If the departure is tense or the situation is highly emotional, an exit interview might escalate tensions. On the other hand, it could be an opportunity to leave things on a more positive note. Employers should assess each situation individually and not rely on a blanket policy.

4. Determine If a Severance Agreement Is Appropriate

While severance pay is not required in California, there are situations where offering it can be beneficial. Employers might offer severance during layoffs, to fulfill executive contracts, or to mitigate the risk of potential legal disputes. If severance is offered, it’s crucial to have the agreement reviewed by legal counsel to ensure it includes a broad release of claims, protecting the employer from future litigation. Learn more about severance agreements in our previous post here.

5. Establish a Clear Policy for References and Internal Disclosure

To protect against claims of defamation, privacy violations, or misrepresentation, many employers limit the information they provide about former employees to confirming job titles and employment dates. If a former employee authorizes it, their final pay rate may also be disclosed. When sharing any further information—whether with external contacts or internally within the company—employers should proceed cautiously and consult legal counsel to ensure compliance with privacy laws. Additionally, it’s important to remind managers and staff not to disclose the reasons behind an employee’s departure unless they have a legitimate need to know.

By following these five steps, employers can reduce legal risks and ensure a smoother transition when employees leave the company.