If your company plans to fire an employee, you may want to negotiate a severance agreement and liability waiver. Our team at Hackler Flynn & Associates will work closely with you and your team to make sure the provisions of those agreements protect your company and comply with the law.
At-Will or For Cause Termination
Whether your employee is let go “for cause” or “at will,” you should always review the person’s file before letting them go. Before proceeding, it is crucial to check if the employee has made any complaints about mistreatment, discrimination, or wage and hour issues. This way you are not firing the employee for a reason that he or she could claim is retaliatory.
Following Your Policies
Many companies have written policies that list the steps your company must take before terminating an employee. For example, your company may have a policy of terminating employees after a certain number of written warnings. If your company only fires several employees while overlooking others who also have warnings, your company could be vulnerable to a discrimination or wrongful termination lawsuit.
Final Pay and Waiting Time Penalties
California Labor Code section 201(a) mandates, “If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.” Section 227.3 requires that if your company offers paid vacation, you must pay out any vested but unused vacation time to the employee upon termination.
There are also strict rules in regards to the timing of the final check for employees who quit. If you give an employee two weeks’ notice but the employee quits on the spot, your company cannot wait two weeks to send final pay. Labor Code section 202(a) states that employees who quit on the spot are still entitled to have their final pay mailed out no later than 72 hours after they quit.
If you need assistance, our attorneys at Hackler Flynn & Associates can assist you in ensuring you pay the correct amount and avoid wage and hour litigation.
Severance Agreements and Liability Waivers
Under California law, you are not required to provide severance pay to terminated employees unless you previously contracted to do so. However, you may choose to offer severance pay in exchange for the employee’s agreement to certain terms. Here are a few terms that may call for a severance agreement:
1) Severance Pay
You may wish to offer a severance payment in exchange for the employee’s waive of claims against your company. These can include claims for wrongful termination, discrimination, or harassment. Liability waivers in severance agreements are generally enforceable, but some are not, including:
- Individual claims for wage and hour violations
- Unemployment compensation claims
- Workers’ compensation claims
- Waivers of age discrimination claims for employees over 40
- Waivers of unknown claims
2) Have an Employee Agreement
You may wish to offer severance pay to ensure the employee keeps certain information confidential. This typically includes trade secrets and other proprietary information.
3) Do Not Ask an Employee to Violate the Law or Lie to a Court
You should not include any provision in the severance agreement that would require an employee to violate the law or lie in a court or an official proceeding.
Contact us and our expert attorneys will help you prepare a severance agreement that best fits your company’s circumstances.
Whether you are just starting a brand new company, run a “mom & pop” business, or already have a large established corporate enterprise, we are here to grow with you and meet your legal needs.
Considering employee termination?
Fill out our form to download our Termination Checklist, which includes a list of the documentation and actionable items you should prepare to minimize your potential liability, such as:
- Notice to Employee as to Change in Relationship
- Cal-COBRA Notice to Carrier
- Health Insurance Premium (HIPP) Notice
- Exit Interview