Termination Q&A
September 30, 2013
Karen L. Gabler

Photo: Karen L. GablerFor California employers, even a well-deserved employee termination may lead to difficult litigation if the employer has not properly documented its lawful reasons for termination, or fails to follow required termination processes. Following some basic but critical steps in the termination process can avoid some of the most common disputes, or provide a solid defense to a wrongful termination lawsuit.

Here are a few tips to handle some of the most common termination questions:

  1. My employee has resigned with two weeks’ notice. Can I terminate her now?
    If an employee resigns with advance notice, the employer is welcome to decline that notice and terminate the employee immediately. However, doing so turns the resignation into a termination, thereby rendering the employee eligible for unemployment benefits (for at least a short time period). An alternative is to put the employee on paid administrative leave through the employee’s official resignation date, to remove the employee from the office without terminating her prior to her intended last day.
  2. My employee is leaving. When do I have to pay him and what do I pay him?
    An employer who plans to terminate an employee must have the final paycheck, including all wages through the termination date and all accrued but unused vacation time, ready on the day of termination. If the final paycheck is not provided to the employee at that time, the employee is due another day of pay for each day that it is late, up to a cap of 30 days. If the employee resigns without advance notice, the employer must have the final paycheck ready on the employee’s last day, or within 72 hours of the employee’s notice if not provided more than 72 hours prior to resignation.
  3. My employee earns commissions. Do I have to pay them on the last day as well?
    If the commissions can reasonably be calculated as of the last day of employment, they must be paid in the final paycheck. However, if commissions are calculated on a monthly or quarterly basis, and cannot reasonably be calculated by the last day of employment, they can be paid to the departed employee the following month or quarter (or as soon as reasonably calculable, whichever is earlier).
  4. Can I terminate on employee while she is on a leave of absence?
    If the termination is for legitimate business reasons, the employee can be terminated even during a protected leave of absence. Although employees are entitled to a variety of protected leaves, some of which provide for reinstatement at the conclusion of the leave, that protection does not guarantee that underperforming employees will keep their jobs, nor does it protect them from layoff if the position is truly subject to elimination. However, the employer’s burden of proof is high, and effectively supporting and documenting those legitimate business reasons for the termination is absolutely critical, as even innocent mistakes can lead to costly litigation. It is highly advisable to obtain the advice of an employment attorney prior to finalizing the termination of any employee on a leave of absence.
  5. Can I terminate an employee “at will” if he just isn’t working out?
    In the absence of an employment agreement for a specified term, California employers may terminate employees at will, which generally means “for any reason, as long as it is not an unlawful reason.” Naturally, the ability to prove that the termination was for valid business reasons is crucial. If an employee has been given no specific reason for the termination, the employee can make up any story to fill in the blanks [i.e., “you terminated me because I am [pregnant, disabled, over 40, etc.”]. Documenting the legitimate performance issues that led to the decision to terminate, in advance of providing the employee with notice of termination, can provide the necessary defense to establish that the reasons for termination were not unlawful.
  6. Do I have to give my employee something in writing when I terminate her?
    As noted above, documentation of the basis for termination provides significant protection against a wrongful termination lawsuit. Apart from that (optional but highly recommended) protective measure, employers must provide employees with written notice of termination in some form (i.e., a letter, memo or personnel action form) and information regarding the employee’s right to file for unemployment benefits. Employees participating in company benefit plans should also be given documentation of their rights to convert or roll over those benefits.
  7. What do I tell the rest of my staff after I’ve terminated an employee?
    It is natural for remaining staff to wonder what happened to a departed employee. For employee privacy reasons and workplace morale, however, it is important to avoid discussion of the reasons for termination in any adverse situation. Inform remaining employees that the terminated employee “is no longer with us, and we wish him well going forward.” Move quickly into a discussion of how remaining staff will cover existing customer obligations. If asked to provide the specific reasons why an employee is gone, remind staff that company management does not discuss individual employee issues to protect every employee’s right of privacy. Remind managers and supervisors to refrain from making comments about or discussing a former employee.

For questions regarding employee terminations, or any other employment law issues, contact Karen L. Gabler, Esq..