While there are some federal laws governing employment and termination throughout the country, each state may also have its own additional laws implemented for its residents. California in particular has some of the strictest rules and procedures meant to protect employees when their employment comes to an end. These laws may be added to or amended as needed but because California is an at will state, both the employer and the employee can end the employment relationship at any time for almost any reason. There are many benefits and drawbacks to this as well as specific rules regulating employer responsibility and employee rights when it comes to termination.
California is an At Will State
Unless it is outlined otherwise as part of an employment contract or collective bargaining agreement, employment in California is at will. An employer does not have to provide a valid reason for terminating an employee, and an employee does not have to give notice before resigning. This can offer more flexibility but also open the door to unfair situations. Either party is able to end the relationship at any time for any reason. However, there are still a few things that employers are not allowed to terminate employees for. Wrongful termination can occur when certain factors are involved.
What Standards Must Be Met to Qualify as Wrongful Termination Under California Law?
Federal law protects employees from wrongful termination based on things like discrimination against a protected class or retaliation against engaging in a protected activity. California also has its own regulations in place to specify the responsibilities of employers and the rights of employees. As an at will employment state, there are certain factors that must be present in order for someone to have a valid wrongful termination claim.
You Must Be an Employee
Wrongful termination only applies to termination of an employment relationship and therefore, only workers classified as employees can claim wrongful termination. Independent contractors are considered to be self employed, which means they are not protected by wrongful termination laws. Because of this, some employers may misclassify their employees as independent contractors. In the state of California, with some limited exceptions, a worker is considered an employee unless they:
- Have full freedom and control over how and when they perform their work
- Perform tasks that are outside normal business for the company
- Are independently engaged in the work as their own business
You Must Be Fired for Unlawful Reasons
Both federal and state law forbids employers from discriminating against employees on the basis of certain protected characteristics. This means that it is illegal to terminate an employee because of things like their race or gender. It is also illegal to terminate an employee as retaliation for engaging in a protected activity such as:
- Attending jury duty
- Going on FMLA leave
- Filing for worker’s compensation
- Making a complaint
- Requesting accommodations
- Whistle blowing
Federal laws that prohibit discrimination:
- 1963 – Equal Pay Act
- 1964 – Civil Rights Act Title VII
- 1967 – Age and Discrimination in Employment Act
State laws that prohibit discrimination:
- 1949 – California Equal Pay Act
- 1959 – California Fair Employment and Housing Act
- 1993 – California Family Rights Act
Agencies responsible for enforcing anti-discrimination laws:
- Federal Equal Employment Opportunity Commission
- California Department of Fair Employment and Housing
It is illegal to terminate an employee on the basis of any protected classes which include:
- Age (40+)
- Disability (mental or physical)
- Gender (including gender identity & expression)
- Genetic information
- Medical status
- Marital status
- Military or veteran status
- Race (ethnicity & national origin)
- Sex (including pregnancy)
- Sexual orientation
This also applies to situations where an employer terminates someone because they believe them to be part of a protected class, even if they are not.
Contract Violation Could Also Result in Wrongful Termination
Sometimes, a company will offer or negotiate an employment contract in which they agree that they will only terminate the employee “for cause”. This means that they can only be fired for a good reason, such as if they do something illegal, against company policy, or seriously negligent. These contracts may outline and specify the exact situations wherein they reserve the right to end the employment relationship. If the employer then terminates the employee for no reason, or for reasons outside of what was agreed on, the employee may be able to file a claim for wrongful termination.
Collective bargaining agreements are negotiated through a union. Violations of those agreements would then be handled through a union representative.
Unique Types of Wrongful Termination
While it is sometimes obvious that a wrongful termination has occurred, there are many occasions where it is not so clear. In some instances, an employer may terminate someone for discriminatory or retaliatory reasons, but also has valid and lawful grounds to terminate them as well. In other cases, an employee may be forced to resign because the work environment is so intolerable that the employee has no other choice.
Mixed Motive Termination
When an employee is terminated for both lawful and unlawful reasons, this is known as a mixed motive termination. It is considered wrongful termination if the unlawful reason was a primary or substantial motivating factor in the decision. If the employer proves that they had a valid legal motivation and that the employee would have been terminated regardless of any other factors, then the employee cannot recover anything for wrongful termination. However, the court may still award a declaratory judgment, injunction, or attorney fees to the employee for any discrimination or retaliation that occurred.
Usually, when an employee resigns, they automatically waive their right to sue their employer. However, when an employer wants to get rid of an employee but knows that their motivations are illegal, they will sometimes force the employee to resign by creating an intolerable hostile work environment in order to avoid a wrongful termination lawsuit. In these cases, the employer is considered to have effectively terminated the employee by forcing them to quit and so it is considered a constructive discharge or constructive termination rather than a resignation. Therefore, if the actions of the employer were motivated by illegal discrimination or retaliation, the employee still has grounds for a wrongful constructive termination claim.
While employers are not legally required to provide a happy nurturing environment for their employees, there are situations where a hostile work environment is part of a larger issue. If an employee is being treated much worse than their coworkers in an extreme or consistent way that prevents them from being able to do their job, it may qualify as intolerable work conditions. Constructive discharge is when:
- The employer intentionally created or knowingly allowed the conditions to exist.
- Any reasonable employee would have felt the conditions were intolerable and that they had no choice but to but to resign.
If the employee can prove both of these factors, then they can claim constructive discharge, and if the intolerable conditions were created due to unlawful discrimination or retaliation, the employee may have a valid claim for wrongful termination.
What Are Guidelines on Employment Termination Communications?
There are many types of notices and informational literature that must be given to employees in the event of a termination. This is generally handled by human resources or an equivalent department and must done in compliance with the Labor Code and any other legal regulations.
COBRA – California has its own Cal-COBRA program that is similar to the federal program but covers a wider range and timeframe. The purpose of COBRA is to provide health and disability insurance to employees who lose company provided insurance at the end of the employment relationship. Employers must provide COBRA and Cal-COBRA information to eligible exiting employees.
EDD – The California Employment Development Department has an informational pamphlet titled For Your Benefit: California’s Programs for the Unemployed which must be provided to employees on or before the effective date of termination. This pamphlet outlines the state run programs for unemployment and disability insurance.
HIPP – The Health Insurance Premium Payment notice explains the availability of possible state sponsored health insurance. Employers who offer health insurance and have at least 20 employees may be required to give this notice to terminated employees.
Change of Status – Under Unemployment Insurance Code C.C.R section 1089-1(d), when an employee is terminated, they must immediately be provided with a written Change of Status notice including their name, social security number, the name of the employer, the change being made, and the date of action.
What Are Final Pay Laws in California?
Under California Labor Code section 201, when an employee is let go, they must be given all earned wages. Labor Code section 227.3 specifies that unused accrued vacation time is considered earned wages. This final paycheck must be given to the employee at the time and place they are let go. Bonuses or commissions owed to the employee should be paid along with the final check, however, extra time may be allowed for reasonable calculations. The law does not specify unused sick time as earned wages and reimbursements may be paid according to their normal schedule. Labor Code section 202 mandates that if an employee voluntarily resigns and gives at least 72 hours prior notice, they must be given their final paycheck on their last day at their place of employment. If they do not give at least 72 hours prior notice, the employer has 72 hours to provide them with the check and the employee can have it mailed to them. Employers who do not provide the final check on time may have to pay the value of the employee’s daily wages for every day late up to 30 days. An employer may be able to successfully argue that the waiting time penalty should be waived, but they will still be responsible for whatever unpaid wages are due.
Assembly Bill 1003 was signed in 2021, making intentional wage theft punishable as grand theft if the amount lost within a consecutive 12 month period exceeded $950 from a single employee or $2,350 total from multiple employees. The bill included gratuities and benefits as recoverable lost wages. Furthermore, unlike many employment related laws in California, independent contractors are defined and protected as employees under AB 1003.
Is Severance Pay Required in California?
Employers are not legally required to provide employees with any kind of additional severance package. However, if they choose to do so, there are laws and regulations that they must adhere to such as tax rates and anti-discrimination protections. This includes federal laws such as the Employee Retirement Income Security Act as well as state regulations pertaining to conditions in a severance agreement.
Prior to 2022, the law prohibited non-disclosure clauses pertaining to sex based discrimination, sexual harassment, and sexual assault from being included in settlement agreements for workplace or housing claims. Senate Bill 331 expanded this law to include any kind of harassment or discrimination. SB 331 also applies to any employment contracts and severance agreements. Employers cannot ask employees to waive their right to disclose information pertaining to unlawful acts, and any agreement doing so is considered unenforceable.
Mass Layoffs and the WARN Act
California Labor Code 1400-1408 LC, also known as the Worker Adjustment and Retraining Notification Act or the WARN Act expands on a similar federal law regulating the notice that must be given to employees in the event of a mass layoff, plant closure, or major relocation. California employers with at least 75 employees must notify affected employees at least 60 days in advance of:
- Terminating 50 or more employees
- Moving most or all operations of a location 100 miles away or more
- Stopping most or all operations of a location
This notice must include detailed information pertaining to the company, the job titles and number of employees let go, and any applicable union representation. If the employer does not give this notice or gives it less than 60 days in advance, they may be subject to a penalty of $500 a day per employee for every day of the violation.
What Should You Do If Your Employer Violates California Termination Laws?
If you feel that you have been wrongfully terminated, it is important to gather as much evidence as possible. Any emails, text messages, written complaints, or other documents that can prove discrimination or retaliation, pay stubs for claims pertaining to wages, and witnesses who can confirm what happened can all help strengthen a case. Because California is an at will employment state, the employee must be able to prove that they were terminated for unlawful reasons. An employment attorney can help review your situation and guide you through the legal process including filing a lawsuit.
Contact Mesriani Law Group If You Have Had Your Termination Rights Violated
The state of California entitles employees certain rights and protections including employment termination laws. If someone is terminated for unlawful reasons or their employer does not give them their owed wages at the time of termination, then they have the right to hold their employer accountable and seek compensation. Our lawyers are experienced in wrongful termination cases and will fight for the best interests of our clients. If you have been terminated due to a protected status or action, call Mesriani Law Group today for a free consultation.
Employee Termination Law FAQs
Does an employer have to give reason for termination in California?
Because California is an at will employment state, unless there is a specific employment contract or collective bargaining agreement that states otherwise, an employer can fire an employee for any reason including no reason at all. The only other exceptions are that termination cannot be motivated by discrimination against a protected class or as retaliation against employees for participating in a protected activity. If an employer does not give any reason for termination and the employee files a claim for wrongful termination, the employer may need to prove that the termination was motivated by legal factors.
How to legally terminate an employee in California?
If an employer wishes to terminate an employee, they first must be certain that there are no discriminatory or retaliatory motivations behind the decision. At the time and place the employee is terminated, the employer must provide them with a final check for all of their remaining earned wages as well as a change of status notice and the required paperwork regarding unemployment and health insurance options. If the employer wishes to offer a severance package, they must be sure that the severance agreement is in compliance with legal regulations.
What qualifies as wrongful termination in California?
In order to claim wrongful termination in California, the employee must be terminated for unlawful reasons such as:
Discrimination against a protected class:
• Genetic Information
• Marital Status • Military or Veteran Status • National Origin • Pregnancy • Race • Religion • Sex • Sexual Orientation Retaliation against participating in a protected activity: • Attending Jury Duty • Complaining About Harassment/Discrimination • Filing a Worker’s Compensation Claim • Participating in an Investigation • Reporting Illegal Business Practices • Reporting Unsafe Working Conditions • Requesting Accommodations • Requesting Family and Medical Leave
How long does an employer have to pay you after termination in California?
If an employee is terminated, the employer must provide them with their final check containing the value of all remaining earned wages at the time and place of the termination. If the employee resigns and gives their employer at least 72 hours advance notice, they must be given their final check on their last day of employment. If an employee gives less than 72 hours advance notice, the employer must give them their final check within 72 hours. Employers who violate this law may be subject to waiting time penalties for each day they fail to provide the check for up to 30 days.