The California Change in Relationship form is a written notice you must give any employee you discharge, lay off, place on a leave of absence, or reclassify from employee to independent contractor. The requirement comes from Unemployment Insurance Code Section 1089 and its implementing regulation, and the notice has to reach the worker no later than the effective date of the change.1California Legislative Information. California Unemployment Insurance Code 1089 The Employment Development Department publishes a sample form that meets the minimum requirements, and you can download it or build your own version that covers the same information.2Employment Development Department. Required Notices and Pamphlets
When the Notice Is Required
Four situations trigger the notice: a discharge, a layoff, placing an employee on a leave of absence, or a change in status from employee to independent contractor.3Legal Information Institute. California Code of Regulations Title 22 Section 1089-1 – Employers Duties Regarding Notification to Employees of Potential Unemployment and Disability Insurance Benefits and Change of Status A discharge is a final, employer-initiated separation. A layoff is a separation driven by lack of work, budget cuts, or a position elimination. A leave of absence covers situations where the employee stops working but has not been terminated.
You do not need to issue the notice when an employee voluntarily quits, gets promoted, gets demoted, or stops working because of a trade dispute such as a strike or lockout.2Employment Development Department. Required Notices and Pamphlets Some employers issue it for every departure out of habit. Voluntary resignations don’t call for it.
What the Form Must Contain
The EDD’s sample notice is a single page and can be downloaded directly from the agency.4Employment Development Department. Notice to Employee as to Change in Relationship You aren’t required to use EDD’s version, but whatever document you deliver must include five data points required by regulation:3Legal Information Institute. California Code of Regulations Title 22 Section 1089-1 – Employers Duties Regarding Notification to Employees of Potential Unemployment and Disability Insurance Benefits and Change of Status
- The legal name of the employer, not a trade name or DBA unless that’s what’s on file with the EDD.
- The employee’s full name as it appears on payroll records.
- The employee’s Social Security number, which the EDD uses to match the notice to any future unemployment claim.
- The type of change: discharge, layoff, leave of absence, or reclassification to independent contractor.
- The specific calendar date the change takes or took effect.
The EDD’s sample form has three numbered lines matching the scenarios. Line 1 covers a layoff or discharge with the date. Line 2 covers a leave of absence and its start date. Line 3 is a catch-all for other status changes, including reclassification. Fill in only the line that applies, sign at the bottom, and date it. If your HRIS generates separation paperwork automatically, check that the output includes all five data points. A generic separation letter missing the SSN or the specific type of change won’t satisfy the regulation.
How and When to Deliver It
The notice has to reach the employee no later than the effective date of the change.3Legal Information Institute. California Code of Regulations Title 22 Section 1089-1 – Employers Duties Regarding Notification to Employees of Potential Unemployment and Disability Insurance Benefits and Change of Status For a discharge, that means the day of the separation. For a layoff with a future effective date, you can hand it over on or before that date. Waiting until the following week puts you out of compliance.
In-person delivery during the exit conversation is the simplest approach. If the employee isn’t physically present, mail the notice to the last known address. Section 1089 allows electronic delivery of related unemployment insurance materials if the employee has opted in to electronic delivery in writing or through an electronic acknowledgment, and the employee cannot be penalized for declining that option.1California Legislative Information. California Unemployment Insurance Code 1089 Keep a copy of what you delivered along with a record of when and how it went out.
Other Documents Due at the Same Time
The change-in-relationship notice is one piece of the separation packet. A few other documents are due alongside it, and missing them is a common oversight.
Unemployment Insurance Pamphlet
When you discharge, lay off, or place an employee on leave, you must also give them the EDD pamphlet “For Your Benefit: California’s Programs for the Unemployed” (DE 2320).3Legal Information Institute. California Code of Regulations Title 22 Section 1089-1 – Employers Duties Regarding Notification to Employees of Potential Unemployment and Disability Insurance Benefits and Change of Status It explains unemployment insurance, disability insurance, paid family leave, and job service benefits. The EDD provides it at no cost as a PDF download.2Employment Development Department. Required Notices and Pamphlets The DE 2320 pamphlet and the change-in-relationship notice are separate documents that happen to be required together.
Final Paycheck
If you fire an employee, all earned and unpaid wages are due immediately, at the time of discharge.5California Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages If an employee quits with at least 72 hours’ notice, final wages are due on the last day of work. If the employee quits without 72 hours’ notice, you have 72 hours from the quit date to pay. All earned and unused vacation must be paid out at the employee’s final rate of pay regardless of the reason for separation.6California Department of Industrial Relations. Vacation
Health Insurance Continuation Notice
Employees covered by a group health plan are entitled to COBRA or Cal-COBRA continuation coverage after separation. The employee should receive a notice explaining the right to elect continued coverage and has 60 days from the date of that notice to enroll.7Department of Managed Health Care. Keep Your Health Coverage (COBRA) Missing this notice can leave a former employee unaware they have a coverage option, which creates legal exposure for the employer.
Penalty for Skipping the Notice
An employer who fails to comply with Section 1089 commits a misdemeanor. The statute also prohibits retaliating against any employee who declines to opt in to electronic delivery of the required notices.1California Legislative Information. California Unemployment Insurance Code 1089 A missing notice is also the sort of thing that surfaces during a wage claim, wrongful termination suit, or EDD audit, and it tends to invite closer scrutiny of the rest of your separation paperwork.
How Long to Keep the Copy
California doesn’t set a single retention period for all employment records. Federal FLSA rules call for keeping payroll records at least three years.8U.S. Department of Labor. Fact Sheet 21: Recordkeeping Requirements under the Fair Labor Standards Act The EEOC requires that personnel records for involuntarily terminated employees be kept at least one year from the date of termination.9U.S. Equal Employment Opportunity Commission. Recordkeeping Requirements Because California’s statutes of limitations for wage and employment claims can run longer, many employers keep separation records, including the change-in-relationship notice, for at least four years after termination. That cushion covers most potential claims and works as a default if you’d rather not track different periods for different documents.