There is no legal requirement under California law that employers provide severance pay to an employee upon termination of employment. In the event an employer does provide a severance pay plan, federal laws will apply, and in such a case only in certain situations California laws may apply. (See ERISA, 29 U.S.C. §1001 et seq.). The federal and state laws on this are complex and require a detailed assessment of the facts, and are not addressed in this blog. On the other hand, while California does not require that employers provide severance pay, California law offers other forms of protection to employees upon termination of employment. The lawyers at UELG are knowledgeable about these aspects of California employment law, and can provide you with an assessment of your circumstances to ensure your final paycheck is accurate, that your employer has provided all required notices, and, under certain circumstances, to provide you with guidance to help you negotiate more favorable severance package or termination terms.
If the employer does not have a severance pay plan, what protection do California wage laws provide when an employee is terminated?
While no California law expressly requires an employer to provide severance pay, the California Labor Code governs the payment of wages and provides certain protections to employees who terminate from employment. For instance, an employer must pay all wages due – whether the employee was fired or resigned. (Labor Code §201 and §202, respectively). The wages owed include earned minimum and overtime wages, and meal and rest break premium payments (an extra hour of pay for each shift during which an employer fails to comply with California’s meal and rest break requirements). If a contract for employment or an employer policy provides for paid vacations, upon termination all vested vacation time must be paid. (Labor Code §227.3). However, an employer is not obliged to pay accrued but unused sick time upon termination, unless the employer’s policies provide otherwise. (See Labor Code §246).
What additional protections do employees have upon termination?
Federal laws require certain notices to a terminating employee. For instance, under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), if an employee participates in an employer’s health plan, an employer must notify terminated employees of and provide election forms regarding outplacement assistance or benefits regarding continued health insurance. In addition, under some circumstances, if termination is due to a layoff or elimination of a position, under the WARN Act, notice must be sent out 60 days prior to termination; these employer requirements allow workers time to get a new job. Further, if the employer provides a retirement plan, the IRS requires advising notices to terminating employees within certain time frames regarding their rights and retirement benefits.
California has additional requirements upon termination of employment. In addition to the Federal WARN Act provisions, certain employers in California are required to give notices to workers impacted by closures or lay-offs, and must email the notice to the California Employment Development Department (“EDD”). Further, as with federal COBRA requirements for the continuation of health insurance, employers must notify any covered, terminated employees of the rights provided by Cal-COBRA. Similarly, upon termination an employer is responsible to provide a review of the employer-sponsored health coverage or an explanation of benefits upon termination, to include “notification of all continuation, disability extension, and conversion coverage options” under the plan for which the employee may remain eligible. (Labor Code §2808). Further, upon termination, the California EDD requires that employers must timely provide an unemployment benefits pamphlet (“For Your Benefit: California’s Programs for the Unemployed”) to all discharged or laid off employees. In addition, pursuant to the California Unemployment Insurance Code, in some circumstances, the employer must provide a written Notice to Employee as to Change in Relationship form. Under other circumstances governed by the Department of Health Care Services, the employer must provide a Health Insurance Premium Payment, “HIPP” program notice (HIPP is an optional premium reimbursement program that falls under Medi-Cal). And, further, under the Worker Adjustment and Retraining Notification Act, certain employers must give affected employees 60 days written advance notice of any plant closing or mass layoff.
Visit us at UELG to get a better grasp on California labor laws for options regarding severance pay:
If your employer does offer severance pay, then, experienced attorneys at UELG can help to assess the severance package, and if warranted, help you to negotiate a more favorable severance package.
In the event your employer does not offer severance pay, it might be tough to understand what options and protections you have under California law. It may be beneficial for employees to consult with an employment law firm, such as UELG, to get a better grasp of what options are available, and under certain circumstances to obtain guidance to help you negotiate more favorable terms of termination. We have the knowledge and experience to guide you through the process of your termination, to help protect your right to a final paycheck that contains all wages and other termination compensation owed, to assess that your termination aligns with all legal requirements, and under certain circumstances to provide you with guidance to help you negotiate more favorable termination terms.
Furthermore, having skilled legal counsel on your side might assist in resolving any possible conflicts that might come up during termination. Employees who want to make sure that termination is compliant with California law, and who seek guidance to obtain more favorable termination terms, might especially benefit from contacting UELG.
Conclusion
While California law does not specifically require that an employer provide severance pay upon termination, should your employer provide a severance pay package, experienced attorneys at UELG can help you assess your severance package and, if circumstances warrant, help you to negotiate more favorable severance pay terms. If your employer does not provide for severance pay, rest assured that California wage and hour laws and other federal and California statutes provide certain protections to terminated employees, which help employees through the often unexpected and difficult period experienced upon loss of a job. For a deeper understanding of California labor laws related to rights and protections upon termination of your employment, it is highly recommended that you reach out to a knowledgeable law firm like UELG. UELG attorneys can help to protect your rights and help make sure things go as smoothly as possible during the difficult times that may arise when you resign from or are terminated from your job.
Visit our website at United Employees Law Group, or reach out to us at (888) 455-7434.
