California Termination Notices: “A Primer”
California’s general requirements for terminations and notices apply to all employers regardless of the size of their organization or number of employees. Cal. Civ. Code § 2922. Absent an express notice requirement in the employee handbook or other employment contract, the notice can be verbal. However, unless the employee requests a written notice, a written notice is not required. Under some circumstances, notice must be provided if the employer has entered into a contract that offers involuntary separation payments or owes a duty of good faith in payments to separated employees. Cal. Civ. Code §§ 2922-2 & 2924(g). In addition , if the employer enters into an involuntary separation payment contract, then the employee must be given a minimum of 5 days’ notice. See Cal. Code Regs. Tit. 22 §110100(2)(L). Notwithstanding the general rules, some particular statutes require specific advance notice (written or verbal) of certain terminations. For example, Cal. Lab. Code § 1400 requires 60 days’ notice for large group layoffs. It does not apply to employers with less than 75 employees. Other specific termination notice rules include: These rules demonstrate the importance of understanding the details associated with specific statute requirements.
Categories of Notices California Employers are Required to Provide
There are several different types of termination notices, each with different requirements and rules. Below we describe the most commonly used termination notices in California.
At-Will Notices
In California, absent a contract between the employer and the employee which requires a documented reason or cause for termination, the employee is presumably employed "at-will." That means the employment relationship can be terminated at any time by either the employer or the employee, with or without cause and with or without advance notice. In most circumstances, a general at-will notice is sufficient to notify the employee that his or her employment is "at will."
Just Cause Notices
Upon the occurrence of certain "just cause" events, the employer is required to give an employee specific written notice in a manner set forth in the California Labor Code. This category of notice includes:
Notices to discharged employees for employment-related criminal activity, dishonesty or violations of law where the employer has obtained a judgment against the employee and the employee’s involvement was identified in the judgment;
Notices to employees who have been disqualified from unemployment compensation benefits because the claims examiner determined that they had been discharged during their probationary period and that the discharge was for "good cause";
Notices to former employees or job applicants following a Department of Justice background check disclosing that he or she may challenge the accuracy of the information contained in the report and inviting the individual to submit additional information to support his or her position; and
Notices to discharged employees who were previously placed upon disciplinary "suspension" pending a discharge action. The employer should provide a discharge notice in such circumstances which compensates for the time that the employee was placed on suspension prior to discharge.
Layoff Notices
California employers who are subject to the federal Worker Adjustment and Retraining Notification Act ("WARN Act"), and the state equivalent WARN Act, must provide specified notices to affected employees. Federal WARN generally applies to employers with 100 or more employees who are required to give 60 days notice of a mass layoff, plant closing, or major relocation of operations. See 29 U.S.C. § 2101(a). The California WARN act applies to employers with 75 or more employees (with limited exceptions) and who are required to provide 60 days notice of a mass layoff, relocation of an affected workplace or termination of employment. See Cal. Lab. Code § 1400(a)(2) and § 1402.
Both the federal WARN Act and the California WARN Act require specific notifications to the affected employees, the Employment Development Department and their respective labor representatives. However, the notices must be given directly to the affected employees as well as the others named in the acts. In some circumstances, the notices must be given 60 days prior to the effective date of the layoff, while in others the notice can be provided as soon as possible after becoming aware that the layoff will occur. The federal WARN notices must be provided to the affected employees "in writing by mail or other commonly accepted means of communications." 29 U.S.C. § 2102(a)(2)(D). The California WARN notices, however, can be presented orally or in writing. See Cal. Lab. Code § 1401(a). As a best practice, however, the notices should be provided in writing.
Applicable Notice Periods in California
California law mandates varying lengths of advance notice for actual terminations based on the length of employment and the terms of the employment contract. If the term of employment is for more than one year, for example, the employer must provide at least two weeks of notice if the employee has been employed less than five years, and at least one month of notice if the employee has been employed at least five years. If an employee who has ever worked for the company in California is involuntarily terminated and the employment contract does not specify a term, there is no requirement to give any notice, even if the employee was just hired yesterday. For termination of employees without a contract, those who have been employed for less than a year must be given at least 72 hours of notice—three days. Employees employed between one year and two years receive at least one week of notice; and employees employed between two years and three years receive two weeks of notice.
California Exceptions to General Notice Requirements
In many situations, the duty to provide an employee with a reason for termination is obviated by the conduct resulting in the termination. This is most commonly so when the termination arises on the discovery of misconduct, which shows that the employee is not fit for continued employment. Keates v. Koile (2004) 115 Cal.App.4th 84, 90 ("Where an employee calls out sick from work, commits theft and fraud, falsifies documents, and causes financial harm to his employer, the reason for his discharge is not in dispute—that employee exhibited behaviour showing he was unfit for continued employment").
Following a terminations based upon misconduct, particularly theft or other financial misdeeds, courts have found that no notice is required, since without notice misconduct would occur again. Keates v. Koile (2004) 115 Cal.App.4th 84, 90.
A new employee in a probationary period typically does not receive a notice in any form, as it is well know that the employer has discretion to terminate an employee in a probationary period without notice or reason. In Hahn v. The Jameson Inn (1993) 4 Cal.4th 962, 964, a housekeeper who was terminated during her probationary period did not receive a pre-termination five day notice, and was unable to successfully argue at trial that the Hotel had violated the statute, nor could she prevail on appeal.
Legal Ramifications if California Employers Fail to Offer Proper Notice
Failure to provide the required notices can give rise to two significant liabilities for employers in California.
First, an employee who works a shift of less than four hours who is terminated or laid off from employment must be paid two (2) hours on the day of separation as a penalty, in addition to all other wages due. The law does not permit employers to withhold payment for that two-hour minimum penalty on the theory that the employee has given the employer notice of the termination or lay-off through performance on the last day of work. Consequently , California employers should consider whether it is feasible to provide advance notice to these employees whenever they plan to terminate the employment relationship.
Second, the filing of a claim with the California Division of Labor Standards Enforcement for unpaid wages, such as the two-hour penalty under Labor Code section 202, carries with it a possible award of up to 25% of the amount awarded, plus interest as "a penalty for making the employee wait to be paid." (Lab. Code § 98.2.) Employees who prevail on such claims in court can also be awarded attorneys’ fees and costs of suit. (Lab. Code § 218.5.)
Recent Developments and Updates
Over the years, California’s notice requirements for termination have been shaped by various legislative changes and case decisions. One significant change came as the state moved from at-will employment to broader anti-discrimination and employee rights laws.
More recently, in 2013, the California Assembly introduced AB 2416, which sought to establish certain criteria for discharge and resignation notices. It required employers to notify workers in writing regarding the reasons for discharge if they requested it within 15 days. However, this bill did not pass.
In 2016, one year after the failed attempt of AB 2416, Assembly Bill 2339 was introduced to address and clarify the termination notice requirements of California employers. A 2017 amendment to this bill incorporated several changes, notably defaulting to a termination date if an employee does not select one. Employers are required to give a copy of the written notice to the terminated or resigned employee, but this new law does not apply to "temporary services employers" — defined by the Labor Code.
Employers in California should stay informed of any updates to the state’s laws and consequences for non-compliance. There are quite a few reasons for doing so. As stated by the California Department of Industrial Relations, "California law requires employers to notify employees in writing about the reason for discharge when requested by the employee."
More specifically, there are certain sections in the California Labor Code that address the notice requirements for terminated or resigned employees. Section 205 "Right to notice for written reasons" of the Labor Code specifically notes that, "if an employee is involuntarily terminated from employment, the employee has the right to receive written reasons for that termination if the employee requests the reasons from the employer in writing." If the employee does request reasons for the termination, it then states that the "employer shall provide a copy of that notice to the employee within 15 days of the request, including the date of receipt of the request."
If an employee was terminated or quit, the details of the notice requirements are addressed in Section 226.8 of the Labor Code. In this section, the law requires the employer to provide the "employee with the effective date of the doing of the act enumerated in paragraph (1) and the reasons therefor, in writing, upon the employee’s request, following the termination of employment."
As AB 2339, if passed, will relieve some burden from the employers who will no longer have to worry about whether they provided formal notice for the terminated or resigned employees, whether they will have to provide certain notices to employees who are classified under the "temporary services employer," and what happens when a resignation is made prior to being discharged.
However, while there are many updates as to the notice requirements of California, employers should be mindful that it is not only this code section. Several other sections follow suit, and employers have to fully understand the requirements of notice for employees in these circumstances.
What Are the Best Practices for California Employers
In addition to the challenges of complying with California’s varying termination notice requirements, employers are also faced with the difficulty of complying with federal requirements. Section 1401 of the Employee Retirement Income Security Act of 1974 (ERISA) requires employers provide a COBRA "Qualifying Event Notice" to terminated employees, regardless of the reason for the termination. Employers can mitigate their risk of litigation by ensuring they are familiar with all applicable required termination notices. Employers may consider the following best practices: Always give a specific reason for the termination, and make sure the reason is specific to the employee, rather than vague references to company reorganization or staff reductions. If an employer fails to provide a specific reason, the employee may compel the employer to provide a "fairly detailed" or "reasonably specific" explanation of the reasons for the termination under California Labor Code § 2922 . Employees who allege an employer did not provide a valid justification for termination may also use this information to bring a wrongful termination claim, and may seek statutory penalties under California’s Private Attorneys General Act (PAGA). With regard to PAGA, an employee may recover a penalty of $100 per pay period for the first offense, and $200 per pay period for each subsequent offense, capped at $4,000. Thus, an employer that gives one improper termination notice to an employee who was employed for a 40-hour work week can suffer up to $4,000 in penalties. Keep careful documentation of termination notices given to employees. Failure to provide any required notice or to provide the notice by the deadline can be detrimental in the event of a lawsuit, and employers should carefully note in an employee’s file when and what notice(s) were provided. Finally, ensure you have properly trained all managers on how best to conduct an employee termination. Employer’s non-compliance with California’s employee termination notice requirements could mean an employer will miss an opportunity to obtain immunity, or the employer will be liable for substantial PAGA penalties.