How to Lay Off an Employee in California

Layoff Decision

• At-will employers can lay off employees at any time and for any reason, as long as that reason is nondiscriminatory and as long as it’s in keeping with company policies. Also, in California, companies can’t consider salary as a determining factor when deciding whether an individual must be laid off.
  
  

Layoff Notices

• The Worker Adjustment and Retraining Notification Act requires companies that employ full time workers and that plan to lay off at least 50 people at a single employment site provide “WARN” notices. These notices tell employees who'll be laid off about the impending layoff. It typically must be issued 60 days prior to the layoff date. California labor rules expand on WARN, including part-time workers in WARN notices and defining “mass layoffs” as the layoff of at least 50 employees, both full- and part-time, within 30 days.
  
  

Final Payment

• Employees who are laid off typically have a right to collect their wages, including any vacation that has accrued, immediately upon their termination, according to California’s Labor Code. There are some exceptions, however. Those laid off from seasonal employment, such as canning and packing fruit, must get their final pay within 72 hours of the layoff. And those laid off from motion picture jobs must be paid by the next regular payday. While you can deduct a loan that a laid off employee took out against his 401K from final pay, you can’t deduct other loans made by your company to the employee from the final pay. You also can’t withhold final payment until an employee returns company property.
  
  

Health Insurance

• The Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, and the California equivalent of the federal law, Cal-COBRA, require that employers offer health coverage to laid off employees for up to 36 months after the layoff. However, the employees are responsible for the entire premium.