Ensuring Lawful Layoffs: A Comprehensive Guide to Navigate Layoffs in California

Posted by Catherine Chukwueke | Feb 20, 2024

In California, the at-will employment model allows employers the flexibility to terminate employment for various reasons. However, the termination process comes with responsibilities and legal obligations to ensure a lawful and fair transition for both employers and employees. Here are essential tips for employers navigating lay-offs in California:

Timely and Accurate Final Paychecks

Once the decision to lay off employees is made, it is crucial to provide final paychecks promptly. California law requires employers to issue final paychecks immediately after a layoff. Most employees should receive their final pay on the same day as the layoff. However, employers cannot delay payment beyond 72 hours. Failure to comply may result in a waiting time penalty, requiring employers to pay the daily pay rate for each day they withhold payment, up to 30 days.

Ensure that the final paycheck includes regular wages, overtime, bonuses, commissions, unused vacation, and expense reimbursements. Accuracy is paramount to avoid disputes and legal repercussions.

Severance Agreements and Legal Consultation

While severance pay is not legally required in California, some employers offer severance agreements as part of employment contracts. Employees are not obligated to sign these agreements to receive their final paychecks. Prior to signing any proposed severance agreement, employees are encouraged to consult with a California employment attorney. These agreements frequently involve legal rights and may waive an employee's ability to sue the employer. Seeking legal guidance ensures informed decision-making during this critical process.

Filing for Unemployment Benefits

Employees laid off in California may be eligible for unemployment benefits, providing financial support during the transitional period. To file for unemployment benefits, employees should determine their eligibility, gather essential information about their last employer, and file through the California Employment Development Department. Active job searching is a requirement while receiving unemployment benefits.

Health Insurance Considerations

Experiencing job loss often entails losing health insurance coverage. The Consolidated Omnibus Budget Reconciliation Act ("COBRA") and California's Cal-COBRA program provide a continuation of group health insurance coverage for eligible employees and their dependents.

Under COBRA, employees must cover the entire premium, including any employer contribution, making it potentially more expensive than during employment. COBRA benefits last for up to 18 months, with a potential extension to 36 months in certain situations.

After exhausting COBRA benefits, an extension under Cal-COBRA may be available. Once all COBRA/Cal-COBRA options are depleted, individuals can explore individual health insurance under HIPPA or purchase a policy on the individual market. Understanding these options and adhering to timelines is crucial for employees facing layoffs.

Avoiding Wrongful Termination Claims

Mitigating the risk of wrongful termination claims requires a thorough understanding of California labor laws. Employers must adhere to regulations protecting against discrimination, retaliation for whistleblowing, contract breaches, and compliance with the federal Worker Adjustment and Retraining Notification Act during mass layoffs. Seeking legal guidance can help navigate these complexities and safeguard against potential legal consequences.

WARN Act Compliance

For larger employers, compliance with the federal Worker Adjustment and Retraining Notification ("WARN") Act is crucial during mass layoffs or plant closings. The WARN Act requires covered employers to provide advance notice of such events. Employers failing to comply may face financial penalties, and affected employees may be entitled to damages.

Navigating lay-offs in California requires a careful balance between legal obligations and ethical considerations. Employers and employees alike should be aware of their rights and responsibilities to ensure a smooth and fair transition during challenging times. Seeking legal guidance can be instrumental in upholding the principles of fairness and compliance with California labor laws.

If you have any questions regarding your company's policies or need guidance on California employment law, contact the Law Office of Catherine Chukwueke and schedule a consultation. We are here to help you navigate the complexities of employment law with confidence.

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. 

About the Author

Catherine Chukwueke

Catherine (“Cathy”) Chukwueke is the Owner and Principal Attorney of the Law Office of Catherine Chukwueke, a law firm focusing on labor and employment matters and workplace investigations. Ms. Chukwueke is passionate about helping people who have been mistreated in the workplace.

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