HR Topic: How to Ensure Rightful Terminations in California

​This is the last in a four-part series excerpted from the newly released California Employment Law: An Employer's Guide, Revised and Updated for 2018 (SHRM). Part three addressed implementing a reduction in force; part two discussed creating defensible severance agreements; and part one spoke to setting up defensible terminations.

In addition to the final paycheck, federal and state law requires that terminating employees be given the following documents:

• COBRA notice. Employers of 20 or more full-time equivalent employees must provide the federal COBRA notice, which may be accessed at www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra. This notice should be mailed to the employee's home and addressed to the employee and employee's spouse, or to the employee "and Family" if the spouse or family are covered by the plan. Employers of 19 or fewer employees that provide health coverage through an insurance company must provide notice to the insurer, which will then issue a notice to the employee under Cal-COBRA. Self-insured employers of fewer than 20 employees are not covered by Cal-COBRA.
• California Employment Development Department (EDD) unemployment benefits pamphlet DE 2320, which may be accessed at www.edd.ca.gov/pdf_pub_ctr/de2320.pdf
• Written notice to employees who are terminated or laid off as to their change in employment status. No specific form of notice is required but a sample notice may be accessed at www.edd.ca.gov/Payroll_Taxes/Required_Notices_and_Pamphlets.htm
• Employers of 20 or more employees must provide the Department of Health Care Services Health Insurance Premium Payment (HIPP) notice, DHCS 9061, which may be accessed at www.dhcs.ca.gov/services/Pages/HIPPOnlineForms.aspx.
  

Unemployment Insurance

Employees in California who lose their jobs through no fault of their own are generally eligible for unemployment insurance benefits. These benefits, which may range from $40 to $450 per week depending on earnings during a 12-month "base period," are administered by the EDD and are funded by employer taxes. A person will not be eligible for unemployment benefits if he or she meets any of the following criteria:

• Was an independent contractor and not an employee.
• Is not able to work (for example, is on disability).
• Is not available to work (is on a vacation out of state, for example).
• Resigned without good cause.
• Was terminated for misconduct related to work.
• Is actively looking for work each week for which benefits are claimed.
  

Good cause for resigning may exist if:

• The employer moves the place of employment beyond a reasonable commuting distance.
• The employee moves to accompany his or her spouse or domestic partner who moves to a place from which it is impractical to commute.
• There are safety or harassment issues in the workplace that the employee has unsuccessfully attempted to correct.
• The employee must leave the workplace to protect himself or herself or his or her family from domestic violence.
• The employee must care for a seriously ill family member who is unable to care for himself or herself.
  

Inherent in the notion of "good cause" is that the reason for leaving work must be compelling. Good cause, therefore, typically will not be found to exist when the employee resigns to look for a better job, to return to school, because of the inconvenience of a normal commute, or as the result of a general dissatisfaction with pay, working conditions, or management.

An employee terminated for misconduct related to work will not be eligible for unemployment benefits, but active and serious misconduct is required for this exclusion to apply. Poor work performance, errors, or mistakes will not qualify. Not all violations of company policy will qualify as misconduct, moreover. Occasional tardiness or absenteeism will likely not qualify, especially if the employee complied with prior notice requirements. When relatively minor offenses are involved, one factor the EDD will consider is whether the employee received prior documented warnings.

If a former employee files a claim for unemployment benefits, you will receive a Notice of Claim Filed. You must respond to this notice, indicating the reason for the employee's departure, within 10 days of the mail date of the notice. This does not provide much time for you to complete the response. The EDD may call you and conduct a follow-up interview by phone if it needs more information. Then the EDD will make its determination of whether the employee is or is not eligible for benefits, and the agency will mail you a Notice of Determination. It is not up to the employer in California whether a departed employee will be able to collect unemployment benefits. The EDD will reach its own determination regardless of whether you oppose the unemployment claim.

Should the EDD award unemployment, you have 20 days from the mail date of the Notice of Determination to file an appeal with the California Unemployment Insurance Appeals Board (CUIAB), which will hold a hearing before an administrative law judge. You may attend such hearing in person or by telephone, but the hearing will be recorded, and you will be required to testify under oath and provide copies of relevant documents to the judge. If future litigation with the former employee appears likely, you should consider whether pursuing an appeal of a grant of unemployment benefits is a good idea because:

• The standard for determining eligibility for benefits is favorable to the ex-employee.
• Failure to appeal will result in charges to your employer account but will have no impact on any future litigation; the results of an EDD determination or a CUIAB appeal are not admissible in a lawsuit in court.
• If the ex-employee is able to collect unemployment, he or she may be less inclined to sue.
• If you appear at the hearing and testify under oath without thorough preparation, you may say something that could be used against you in a later lawsuit. Although the result of the CUIAB appeal is not admissible in court, your recorded testimony under oath at the CUIAB hearing may be used to impeach your testimony in a later court case.
• If the ex-employee wins the appeal, he or she may think "the judge thought I had a great case" and decide to sue in the hope of a repeat victory in court.
  

Employee Resignations

An employee who resigns need not be permitted to rescind the resignation later. The same result applies even if the employee claims not to have been in his or her "right mind" when resigning, and even if the employee in fact was suffering from a mental disorder at the time of resignation. An employer need not accommodate such an employee by rescinding the resignation.

May an employee who gives two weeks (or some other amount) of notice be terminated immediately? That depends on whether you have a policy in your employee handbook or otherwise requiring two weeks' notice of termination, or whether the employee has a contract requiring that a specific amount of notice be given. If so, you may terminate the employee immediately but if you do not pay the employee for the notice period the employee would likely have a valid claim for breach of contract.

If there is no policy or contract requiring prior notice of resignation (as would be the case with at-will employees), an employee who gives notice of resignation need not be paid for the notice period. Note, however, that in such a circumstance the EDD is likely to find that the employee was terminated and determine that the employee is eligible for unemployment insurance benefits. Such a result may generally be avoided by paying the employee for the notice period unless the employee can show "good cause" for resigning.

Please visit the SHRMStore to order your member-discounted copy of California Employment Law: An Employer's Guide, Revised and Updated for 2018 by James J. McDonald Jr. 

James J. McDonald Jr., J.D., SHRM-SCP, SPHR, is managing partner of the Irvine, Calif., office of the labor and employment law firm Fisher & Phillips LLP. His practice involves trials, arbitrations and appeals of employment law claims. He also has more than 25 years of experience advising California employers about all aspects of labor and employment law, strategic human resource issues, and how to avoid employment claims and lawsuits. He received his undergraduate degree from New College of Florida and his law degree cum laude from Georgetown University.

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