To terminate an employee in California, you need to confirm the reason is lawful, document it, prepare a final paycheck that covers every dollar owed on the day of discharge, hold a short and witnessed meeting, and hand over the state-required notices before the employee leaves. California is an at-will state under Labor Code Section 2922,1California Legislative Information. California Labor Code 2922 but that default is narrowed by so many statutes and penalties that the process below is what actually protects an employer from a claim.
Confirm the Reason Is Not Legally Off-Limits
Before anything else, test the reason against the categories where California blocks a firing outright.
The Fair Employment and Housing Act applies to any employer with five or more employees and prohibits discharging someone because of a protected characteristic. The protected categories include race, color, national origin, ancestry, religion, age (40 and older), physical or mental disability, medical condition, genetic information, sex, gender, gender identity, gender expression, sexual orientation, marital status, reproductive health decision-making, and veteran or military status. An employee with a disability can be terminated only if that person cannot perform the essential duties of the job even with reasonable accommodations.2California Legislative Information. California Government Code 12940
Retaliation is the second common trap. Labor Code Section 1102.5 prohibits firing an employee who reports a suspected legal violation to a government agency, law enforcement, or a supervisor, or who refuses to participate in unlawful activity. Violations carry a civil penalty of up to $10,000 per employee per violation.3California Legislative Information. California Labor Code 1102.5 Retaliation protection also covers filing a wage claim, reporting a safety hazard, serving on a jury, and filing a workers’ compensation claim,4California Department of Industrial Relations. Retaliation/Discrimination and federal law adds protection for participating in a discrimination complaint process.5U.S. Equal Employment Opportunity Commission. Facts About Retaliation
The California Family Rights Act makes it unlawful to fire an employee for taking protected family or medical leave, and employers with five or more employees must guarantee the returning worker the same or a comparable position.6California Legislative Information. California Government Code 12945.2 This is the timing trap that catches employers most often. A termination that lands soon after a leave request or a return from leave invites a retaliation claim even when the performance record is real, so the documentation needs to predate the leave.
Off-duty conduct is largely off-limits as a reason. Labor Code Section 1101 bars any policy that controls an employee’s political activities or affiliations.7California Legislative Information. California Labor Code 1101 Since January 1, 2024, employers also generally cannot fire an employee for using cannabis off the job and away from the workplace, or based on a drug test that shows non-psychoactive cannabis metabolites. A test showing psychoactive THC is still a permissible basis for action. The cannabis rules do not apply to employers with four or fewer employees, positions requiring federal security clearance, or workers in the building and construction trades.8California Civil Rights Department. Discrimination in Employment: Use of Cannabis
Finally, at-will can be undone by the employer’s own conduct. Handbook language about progressive discipline or “for cause” termination, long tenure with consistently positive reviews, or verbal assurances about job security can create an implied contract that overrides at-will status. A clear, conspicuous at-will disclaimer in the handbook and offer letter is the standard way to keep that door closed.
Prepare Before the Meeting
A defensible termination is built in the days before the conversation, not during it.
- Review the personnel file and confirm it contains documented performance issues, prior warnings, or the specific business reason supporting the decision. A thin record becomes the centerpiece of any later claim.
- Check whether the employee recently filed a complaint, took CFRA or FMLA leave, reported a safety issue, or engaged in other protected activity. If so, the timing alone raises a retaliation inference you will need documentation to answer.
- Compare the decision against how the company has handled similar situations. Firing one worker for conduct that others were only warned about is a common trigger for a discrimination claim.
- Calculate final pay to the penny, including accrued vacation and any earned commissions.
- Assemble the notice packet: the written notice of change in relationship, the DE 2320 pamphlet, and COBRA or Cal-COBRA information.
Get the Final Paycheck Right
When you discharge an employee, all wages earned and unpaid are due and payable immediately, not on the next pay cycle.9California Legislative Information. California Labor Code 201 The check has to be ready at the meeting.
The final paycheck must include all earned wages plus accrued, unused vacation. California treats vested vacation as wages, and a policy cannot force forfeiture at termination.10California Legislative Information. California Labor Code 227.3 Earned commissions are also included: if a commission was fully earned before the discharge date, it must be calculated and paid at that moment. If the commission was earned but hinges on a condition that hasn’t happened yet, such as the client paying, it must be paid as soon as that condition is met.11California Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages Accrued sick leave, by contrast, does not have to be paid out.12California Department of Industrial Relations. Final Pay
Direct deposit does not carry over. A prior direct-deposit authorization terminates at discharge, so to pay the final wages electronically you need fresh voluntary consent from the employee. Without it, hand over a physical check at the place of termination.11California Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages
An employer that willfully fails to pay final wages on time owes a waiting-time penalty equal to the employee’s daily rate for each day the wages remain unpaid, up to 30 calendar days.11California Department of Industrial Relations. Paydays, Pay Periods, and the Final Wages For a worker earning $200 a day, that alone can reach $6,000 on top of the wages actually owed.
Run the Meeting
Keep it short, professional, and witnessed. Have two company representatives present, usually the direct manager and someone from HR. Hold it in a private space where other employees cannot overhear.
State the decision clearly. Give the reason in one or two sentences tied to the documented basis, and stop there. This is not a negotiation, and anything said in the room can become evidence later. Avoid personal criticism and predictions about the employee’s future.
Hand over the final paycheck, the required notices, and benefits-continuation information during the meeting. Have a plan for collecting laptops, badges, and keys. Answer logistical questions about pay, benefits, and property, but redirect legal arguments to HR or outside counsel rather than debating in the moment.
Deliver the Required Notices
Unemployment Insurance Code Section 1089 requires immediate written notice of a firing or layoff. The notice must identify the employee and state the date and nature of the change in employment status. The EDD publishes a sample form that meets the minimum. It is not required for voluntary quits, promotions, or demotions.13Employment Development Department. Required Notices and Pamphlets
Give the employee the DE 2320 pamphlet, “For Your Benefit: California’s Programs for the Unemployed,” which explains eligibility for unemployment insurance, disability insurance, paid family leave, and job service benefits.14Employment Development Department. For Your Benefit: California’s Programs for the Unemployed (DE 2320) The EDD also lists the Disability Insurance Provisions brochure (DE 2515) and the Paid Family Leave brochure (DE 2511) among the pamphlets employers should provide when applicable.13Employment Development Department. Required Notices and Pamphlets
If the employee was on a group health plan, provide notice of the right to continue coverage. Federal COBRA applies to employers with 20 or more employees. Cal-COBRA covers employer group health plans with 2 to 19 employees. The employee has 60 days from notification to elect coverage, and missing that window generally forfeits the right to enroll.15California Department of Managed Health Care. Keep Your Health Coverage (COBRA)
Severance Agreements: What You Cannot Include
California does not require severance pay. When it is offered in exchange for a release, several restrictions govern what the agreement can say.
Under SB 331, effective January 1, 2022, a separation agreement cannot contain any provision prohibiting the employee from disclosing information about unlawful acts in the workplace, including harassment, discrimination, and other conduct the employee reasonably believes is unlawful. Any such provision is void. A non-disparagement clause must include substantially this language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” The law still permits keeping the dollar amount of the severance confidential and still allows protection of unrelated trade secrets and proprietary information.16LegiScan. Bill Text: CA SB331 – Chaptered
If the employee is 40 or older, a release of federal age discrimination claims must satisfy the Older Workers Benefit Protection Act. The waiver counts as knowing and voluntary only if the employee gets at least 21 days to consider it (45 days for a group termination program), plus a non-waivable 7-day revocation period after signing. The agreement must advise the employee in writing to consult an attorney and must be written in plain language. A material change to the final offer restarts the consideration clock.17Office of the Law Revision Counsel. Title 29 USC 626 – Recordkeeping, Investigation, and Enforcement
Do not include a non-compete. Business and Professions Code Section 16600 voids any contract restraining someone from engaging in a lawful profession, trade, or business, and the statute is read broadly to cover any non-compete however narrowly drafted.18California Legislative Information. California Business and Professions Code BPC 16600 Section 16600.5, effective January 1, 2024, makes a non-compete unenforceable regardless of where or when it was signed, and an employer that tries to enforce a void non-compete commits a civil violation and may owe the employee attorney’s fees and actual damages.19California Legislative Information. California Business and Professions Code 16600.5
If You’re Letting Go of a Group at Once
The California WARN Act applies to any covered establishment that has employed 75 or more full-time and part-time workers in the preceding 12 months. A mass layoff is 50 or more employees within a 30-day period, and the employer must give written notice at least 60 days in advance to the affected employees, the EDD, the local workforce investment board, and the chief elected official of each affected city and county.20Justia. California Labor Code 1400-1408 – Relocations, Terminations, and Mass Layoffs Starting in 2026, the WARN notice must also explain how the employer will support workers who are laid off.21Employment Development Department. Worker Adjustment and Retraining Notification (WARN) The state law does not apply to seasonal employees hired with the understanding that the work was temporary, or to employees in certain entertainment and construction wage orders hired for a specific project.
Federal WARN applies to employers with 100 or more full-time employees (or 100 or more employees working a combined 4,000 or more hours per week) and requires 60 days’ notice before a plant closing that displaces 50 or more workers, or a mass layoff of at least 500 employees or at least 50 employees representing 33 percent or more of the workforce.22Office of the Law Revision Counsel. Title 29, Chapter 23 – Worker Adjustment and Retraining Notification California’s thresholds are lower, so the state law often triggers first.
Workplace Violence and Records After the Fact
Since July 1, 2024, most California employers must maintain a written Workplace Violence Prevention Plan under Labor Code Section 6401.9. Termination meetings are a recognized risk scenario, and the plan should address how the employer identifies and evaluates violence hazards tied to involuntary separations. If a violent incident occurs during or after a termination, the employer must record it in a Violent Incident Log, conduct a post-incident investigation, and retain those records for at least five years.23California Department of Industrial Relations. Workplace Violence Prevention in General Industry – Information for Employers For higher-risk terminations, practical measures include choosing a meeting room near an exit, alerting security in advance, and planning how the employee will leave the building with their belongings.
Keep the personnel file, performance documentation, the termination decision memo, all signed notices, and proof of final pay delivery. FEHA claims can be filed up to three years after the alleged violation, and wrongful-termination suits can follow. Workplace violence prevention records must be kept for at least five years.23California Department of Industrial Relations. Workplace Violence Prevention in General Industry – Information for Employers Organized records are the most useful thing an employer has if a former employee files a claim.