California Labor Law: Can Employers Reverse Terminations?

California labor laws are some of the strictest in the country, with rules and procedures designed to protect employees when their employment ends. While California is an at-will employment state, meaning employers can generally terminate employees without providing a reason, there are important exceptions and limitations to this principle. For instance, employers cannot terminate employees for reasons that violate public policy, such as refusing to engage in illegal activities or exercising voting rights. Additionally, federal and state anti-discrimination laws prohibit employers from terminating employees based on protected characteristics such as race, gender, age, disability, sexual orientation, religion, national origin, or pregnancy. In this context, it is essential to understand the circumstances under which an employer can retract termination to ensure compliance with California labor laws and avoid potential claims of wrongful termination.

At-will employment

However, this does not mean that an employer can fire an employee for no reason or for an illegal reason. While employers have flexibility in firing employees, they may not discriminate against an employee's protected personal qualities or base their decisions on other illegal motives. For example, employers cannot terminate employees for refusing to engage in illegal activities.

There are several exceptions to at-will employment in California. One key exception is the existence of implied or explicit contracts, which can arise from statements in employee handbooks, company policies, or verbal assurances that suggest job security. If such a contract is found, it can limit the ability to terminate an employee without just cause. Another important exception is public policy, which prohibits terminating employees for reasons that violate fundamental public policies.

In addition to these exceptions, there are other regulations surrounding termination in California. For example, employers with 75 or more employees must provide at least 60 days' notice before a mass relocation, layoff, or termination of 50 or more employees within a 30-day period. Employers are also required to provide a final paycheck immediately upon termination and to provide certain notices and informational literature to employees at the time of termination.

Notice requirements

WARN Act:

The Worker Adjustment and Retraining Notification (WARN) Act applies to California employers with 75 or more employees. In the event of a mass layoff, plant closure, or major relocation, employers must provide at least 60 days' advance notice to affected employees. This notice should include detailed information about the company, job titles, the number of employees affected, and any relevant union representation. Failure to comply with the WARN Act may result in a penalty of $500 per day, per employee, for each day of violation.

Change of Status Notice:

According to Unemployment Insurance Code C.C.R. section 1089-1(d), employers must immediately provide terminated employees with a written Change of Status notice. This notice should include the employee's name, social security number, employer's name, the specific change being made, and the date of action.

Final Paycheck and Earned Wages:

California Labor Code Section 201 mandates that employers provide the final paycheck immediately upon termination. This paycheck must include all earned wages, including unused accrued vacation time, bonuses, and commissions.

COBRA and Cal-COBRA:

California employers must provide information about health and disability insurance options to eligible exiting employees through the Cal-COBRA program, which is similar to the federal COBRA program but offers broader coverage and an extended timeframe.

EDD Pamphlet:

The California Employment Development Department (EDD) requires employers to provide the informational pamphlet, "For Your Benefit: California's Programs for the Unemployed," to employees on or before the effective date of their termination.

It is essential for employers to stay updated with California's labor laws and regulations, regularly reviewing policies to ensure compliance and minimize the risk of legal challenges related to wrongful termination claims.

Final pay laws

California has some of the strictest rules and procedures to protect employees when their employment ends. Final pay laws are a crucial part of this.

According to California Labor Code Section 201, if an employee is terminated, they must receive their final paycheck immediately. This includes all earned wages, and bonuses or commissions owed to the employee. Unused accrued vacation time is also considered earned wages, according to Labor Code section 227.3. If an employee resigns, their final pay must be issued within 72 hours. If the employee gives a minimum of 72 hours' notice of their resignation, the final paycheck is due on their last working day. If an employee quits without notice, the employer has 72 hours to pay from the day they realize the employee has quit.

Penalties for Non-Compliance

Employers who do not provide final pay on time may be subject to waiting time penalties, which are equivalent to the employee's daily wage for each day the payment is late, up to a maximum of 30 days.

Other Notices and Information

There are several other notices and types of information that must be given to employees upon termination. This includes a Change of Status notice, which must be in writing and include the employee's name, social security number, the name of the employer, the change being made, and the date of action. Employers must also provide information about health and disability insurance, and the California Employment Development Department has an informational pamphlet that must be provided to employees on or before the effective date of termination.

Wrongful termination

California is an “at-will” employment state, meaning that both the employer and the employee can end the employment relationship at any time, with or without "just cause" or notice. However, there are exceptions to at-will employment, and employers can be held accountable for wrongful termination.

To pursue a wrongful termination claim, employees must demonstrate that their employer terminated them in violation of California labor laws or public policy. This can be challenging, and the burden of proof rests on the employee. It is important for employees to gather as much evidence as possible, including emails, text messages, written complaints, and other documents that can prove discrimination, retaliation, or other unlawful reasons for termination.

To protect against potential wrongful termination claims, employers should ensure they are complying with all laws and have well-articulated personnel policies and procedures that are consistent with California and federal labor laws. Proper handling of terminations, effective communication, and conducting exit interviews can also help reduce the risk of wrongful termination claims.

Public policy exceptions

California is an at-will state, meaning that both the employer and the employee can end the employment relationship at any time, for almost any reason. However, there are exceptions to at-will employment. One of these is the public policy exception.

The public policy exception to at-will employment states that even at-will employees have the right to sue their employers if they are wrongfully terminated for reasons that violate fundamental public policies. This means that an employer may not fire an employee for performing a statutory obligation (a legal duty) or exercising a legal right. For example, an employer may not terminate an employee for taking time off to serve as a witness in court in compliance with a subpoena or other court order.

Public policy wrongful termination also includes situations where an employee is terminated for reporting a violation of the law by their employer to the government, law enforcement, or another department in the company ("whistleblowing"). There is an extensive list of activities that employers cannot use as grounds for terminating an employee, some of which involve employee privacy, performing public service, or private activities deemed worthy of protection by the legislature and/or the courts.

In addition, California labor law says that employers may not terminate employees for exercising a right or privilege granted to them by law, such as engaging in political activities or speech. Disability discrimination may also serve as the basis of a wrongful termination claim in violation of public policy.

Frequently asked questions