Terminating Employees in California

BUSINESS & PEOPLE STRATEGY CONSULTING GROUP FREE WEBINAR SERIES

Agenda

Common Mistakes

Types of Termination

Making the Decision to Terminate

Final Paychecks & Notices

Penalties

Best Practices

Your Presenter

Dr. Carlyle Rogers

President & CEO of Business & People Strategy Consulting Group, LLC

25+ years’ HR and compliance experience

Expertise in labor & employment laws

Doctor of Jurisprudence (JD; Law)

Doctor of Psychology (PsyD)

Certified Interviewer & Interrogator

Common Mistakes Failure to properly investigate the facts upon which the termination is based.

Not examining prior documentation.

Mishandling the termination (i.e., apologizing, providing inaccurate or too much information).

Mishandling internal and external communication of the employee’s departure (defamation).

Employer doesn’t pay employee wages at time of termination.

Employer withholds or deducts from the employee’s final paycheck.

Employer miscalculates when to offer severance to reduce risk.

Employer doesn’t seek assistance prior to terminating employees.

Types of Termination

Involuntary (Employer Decision)◦ At-Will◦ With/For Cause◦ Without Cause◦ Lay-Off

Voluntary (Employee Decision)◦ Resignation◦ Retirement

At-Will and Termination Either party can terminate the employment relationship at any time, with or

without cause, and with or without notice.

Exceptions ◦ Terminating contrary to public policy◦ Employment contract

Emphasizing the at-will relationship◦ Offers of employment◦ Employee handbook◦ Separate policy

Avoid using language that could void the at-will relationship.◦ Verbiage and statements reflecting potential job security or permanence.

Lay-OffsRequires 60 days notice of layoff or plan closure to affected employees and

other required state/local offices

Federal WARN California WARN

100+ FT employees; 6/12 months 75 FT/PT employees; 6/12 months

Plant closing 50/30 Plant closing, layoff or relo 50/30

Layoff 50-499-33%FT/30 (single site)

Layoff 500+

Remote Employees

In-person terminations not always available or practical.

Can be terminated by video conference or phone.

Be sure that payment of final wages is consistent with the state’s law where the employee works.

It is a good practice to let the employee know who will be participating on the call/conference and to be cognizant of time zone differences.

Making the Decision

The Road to Termination for Cause Employees are often subject to termination due to the following:

Poor hiring decision by the company

Lack of training, resources, & equipment to perform job

Lack of understanding of expectations

Inability to perform

Poor decision making

Don’t care

The Decision to Terminate Good reasons to terminate employees:

Violations of policies, procedures, and practices

Poor performance

Not a fit

Company restructure

Company reductions

Objective reasons

What to Avoid Avoid terminating employees based upon:

Emotions

Subjective information

Their engagement in protected activities

Protected classes

Retaliation

Limited information

Considerations Before Terminating Is the employee pregnant?

Have they recently returned from a leave of absence?

Have they made complaints against a manager in the past 6 months?

Have they complained of sexual harassment (or other harassment), discrimination, retaliation, workplace safety issues, etc. in the past 6 months?

Have they been injured on the job?

Is there a pattern of termination in the company or department based upon a protected class?

Considerations Before Terminating Is there paperwork to support the events leading to termination?

Does the termination make sense?

Is it consistent with other employees who have engaged the same behaviors or issues?

Is the reason tied to clearly defined policies, practices, procedures or expectations?

Has the terminating manager (or employee’s manager) been subject to complaints of harassment, discrimination or other issues in the past 6 months by any employee?

Severance AgreementsNot required by law

Good to use in high risk situations such as:◦ Protected classes◦ Recent engagement in protected activity◦ Employment contracts

If used should include General Release

Provides additional compensation, benefits, etc. in exchange for agreeing not to sue the employer

Employees 40 and older required terms consistent with ADEA and OWBPA◦ Provides 21 to 45 days to consider the agreement

Documentation Not required by law (except for Notice of Change in Employment Relationship)

Definitely a best practice

Use for:◦ Verbal & written warnings◦ Demotions, probation & suspension◦ Termination

Should include only:◦ Violations/Issues (tie them to written policies when possible) When it occurred, what the issue is, etc.

◦ Expected changes ◦ Timeline for changes◦ What happens if not accomplished◦ Objective information only (don’t get creative)

Documentation: PIP

Performance Improvement Plans◦ SMART Methodology◦ Assume that the employee doesn’t know how to correct/change◦ If not accomplished, then confirms that they can’t, don’t want to, or don’t care

Documentation: Signing

Often employees will refuse to sign the document provided (whether a warning or PIP).

◦ Not signing the document doesn’t diminish its value or validity◦ If the employee refuses to sign, simply note on the document: Date & time of the discussion Parties present That the employee was provided the document and refused to sign it

Final Paychecks & Notices

Final Paychecks: Timing Terminations and Layoffs

◦ Must be paid on last day of work

Resignations ◦ 72+ hours notice…final check due on last day

Less than 72 hours notice…final check must be provided to employee within 72 hours (date of mailing is considered the date of payment)◦ It is advisable to use a method which tracks and confirms receipt.◦ Weekends and holidays are considered in the 72 hours deadline

Final Paychecks: Wages Employers must include all of the following in the final paycheck:

◦ Pay for all work performed.◦ All accrued, unused vacation, PTO, and personal/floating time that isn’t attached to

a specific date or event.◦ Commissions If earned and are able to be calculated on or before the date of termination, must

be included in the final check. Not permissible to delay until next regularly scheduled date. If not earned and unable to calculate, then must be paid at the time it is.

Final Paychecks NotesIf the termination is unforeseen and the check can’t be provided on the same day, the employer should consider paying an additional number of days of wages representing he date the paycheck will be ready for the employee.

For employees requesting the final check to be direct deposited, CA Labor Code 213(d) provides that it is permissible if the employee has voluntarily provided written authorization for that specific deposit.

◦ Keep in mind that the rules related to timing of pay still apply.

Final Paychecks: Prohibitions Employers may not withhold a final paycheck.

It is illegal to withhold a final paycheck due to an employee owing money, not returning company property, and not turning expense reimbursement forms.

Absent a written agreement at the time by the employee, employers may not deduct from the final paycheck for money owed, non-returned company property, etc.

Thought: Have the employee sign a promissory note for repayment. If during employment, have them pay with a check or other method. If not able to get in place, you may need to seek out repayment in court.

Required Notices

DE 2320: For Your Benefit: California Programs for the Unemployed

Change of Status Notice The reason for termination does not have to be included in the document.

Notice of COBRA Rights (20+) or Cal-COBRA (2-19)

Health Insurance Premium Payment Program (HIPP) Notice (applies to employers with 20+ employees who provide health insurance)…DHCS 9061

Penalties

Penalties

DLSE and DOL claims to collect wages due and penalties

EEOC and DFEH claims

Civil lawsuit (individual and class)

Wrongful termination

Retaliation

Penalties

Waiting time penalty…Employee’s daily rate of pay X each day not paid (up to 30 calendar days).

Liquidated damages

Emotional distress damages

Lost wages

Other statutory penalties

Punitive damages

Attorney’s fees

…and potential audits from the DLSE and DOL

Best Practices

Best Practices Decisions should be impartial, objective and fair.

Best practice is to tie the decision to an established policy, practice, or standard.

Terminations should be consistently applied.

Documentation, although not necessarily a requirement, is preferred.◦ Stick to the facts…avoid subjective remarks.

Have a process of review.◦ The terminating manager provides their basis and support for review.◦ Can help identify retaliation and wrongful termination situations.

Determine if severance agreement should be used.

Best Practices When possible, have a member of HR or another manager present as a witness.

Be calm and professional…even if the employee get’s angry. Remember that this is often a life-changing event.

Separate the employee from the action…in other words, think “the employee isn’t bad…they just made a bad decision”.

Don’t argue.

Don’t get drawn into challenges or demands.

Treat them with respect and dignity.

QUESTIONS

Thanks for joining us today!

To download a copy of today’s presentation or to listen to it again, please visit our website at www.bpscllc.com and check out our Free Webinars tab.

If you need assistance with terminating an employee or have any other HR & compliance needs, please feel free to contact us at:

Email: carlyle@bpscllc.com

Phone: 661-312-7737

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May 13, 2015 at 10:00AM