Terminating an employee is sometimes necessary. Doing it incorrectly, however, can turn an ordinary personnel decision into an expensive employment dispute.
California is an at-will employment state in many circumstances, meaning an employer or employee generally may end an at-will employment relationship without advance notice. But “at-will” does not mean an employer can terminate an employee for an unlawful reason.
California employers must navigate a wide range of protections involving discrimination, retaliation, medical and family leave, disability accommodation, wage-and-hour rights, whistleblower activity, workplace complaints, and other protected conduct.
For business owners, executives, and HR professionals considering terminating an employee, the period before the termination occurs can be critical.
Here are seven mistakes California employers should consider avoiding before making the decision final.
1. Assuming “At-Will” Means “We Can Fire Anyone for Any Reason”
This is one of the most common misconceptions among California employers.
At-will employment generally provides employers significant flexibility to make legitimate personnel decisions. It does not, however, authorize a termination based on an unlawful reason.
For example, California’s Fair Employment and Housing Act (FEHA) prohibits covered employers from discriminating against employees based on protected characteristics such as race, religion, national origin, disability, sex, gender, sexual orientation, gender identity or expression, medical condition, age for employees 40 and older, and other protected categories.
California law also protects employees from retaliation for engaging in various legally protected activities.
The practical question therefore should not simply be:
“Can we fire this employee?”
Employers should also ask:
“Can we clearly demonstrate the legitimate, lawful business reason why we are terminating this employee?”
That distinction can become extremely important if the termination is later challenged.
2. Firing an Employee Shortly After a Workplace Complaint
Timing matters.
Suppose an employee recently complained about harassment, discrimination, unpaid wages, workplace safety, a disability accommodation, or another potentially protected issue. Shortly afterward, management decides to terminate that employee for poor performance.
Even when management believes the performance problem is legitimate, the timing may create an appearance that the termination was retaliatory.
California's Civil Rights Department explains that retaliation can include firing, disciplining, or otherwise taking adverse action against an individual because that person engaged in activity protected under FEHA. California's Labor Commissioner also enforces numerous laws protecting workers against retaliation for exercising workplace rights.
Before terminating an employee who recently made a complaint, an employer should carefully examine the timeline.
Ask:
What did the employee complain about?
Who knew about the complaint?
When did management first identify the performance or conduct problem?
Is there documentation showing the problem existed before the complaint?
Have other employees been treated consistently for comparable conduct?
The closer a termination occurs to potentially protected activity, the more important it becomes to evaluate the decision carefully.
3. Having a Legitimate Reason—but Poor Documentation
An employer may have a completely legitimate reason for terminating someone and still find itself in a difficult position if the personnel file tells a different story.
Consider an employee whom management describes internally as a chronic poor performer.
But the employee's file contains positive performance reviews, no written warnings, no documented performance concerns, and perhaps even a recent raise.
If litigation follows, the question becomes predictable:
If this employee was performing so poorly, where is the documentation?
Documentation does not mean manufacturing a paper trail immediately before termination. In fact, suddenly creating exaggerated disciplinary records can create additional credibility problems.
Instead, employers should develop consistent practices for documenting significant performance issues, attendance problems, policy violations, coaching, disciplinary action, and employee responses as they occur.
Good documentation can help establish that a termination resulted from a legitimate business decision rather than an unlawful motive.
4. Ignoring Medical Leave, Disability, Pregnancy, or Accommodation Issues
This is an area where employers should proceed particularly carefully.
A performance or attendance problem may appear straightforward until the employer learns that the employee has raised a medical condition, requested an accommodation, taken protected leave, or disclosed circumstances potentially triggering additional legal obligations.
California law provides significant protections involving disability, pregnancy, medical conditions, reasonable accommodation, and certain forms of protected leave.
For covered employers and eligible employees, the California Family Rights Act (CFRA), for example, can provide job-protected leave in qualifying circumstances. California law also imposes obligations concerning reasonable accommodations for qualifying disabilities.
A termination decision involving these issues should therefore be evaluated based on the specific facts rather than treated as an ordinary attendance or performance termination.
The question may no longer simply be whether the employee violated an attendance policy. The employer may need to determine whether protected leave, reasonable accommodation, or another legal protection is involved.
5. Giving Different Reasons for the Termination
Consistency matters.
Suppose a supervisor tells the employee:
“We're eliminating your position.”
HR records the reason as:
“Poor performance.”
Management later states:
“The employee violated company policy.”
Three different explanations can create an unnecessary credibility problem.
In subsequent litigation, inconsistent explanations may be used to argue that the employer's stated reason was not the real reason for the termination.
Before communicating the decision, employers should therefore determine the legitimate basis for the termination and ensure the relevant decision-makers understand it.
That does not mean every manager needs a scripted statement. It means the company should be able to articulate a truthful and consistent business reason for its decision.
6. Mishandling Final Pay and the Termination Process
Legal exposure does not end when the employer says, “You're terminated.”
California has specific rules concerning final wages. For an employee who is discharged, wages that are due generally must be paid at termination. A willful failure to timely pay wages due can potentially result in waiting-time penalties.
Employers should therefore coordinate termination logistics in advance, including:
- final wages;
- accrued vacation or other amounts that must be paid under applicable law and company policy;
- expense reimbursements;
- company property;
- access to company systems;
- benefits-related notices;
- confidential or proprietary information; and
- other required termination documentation.
For larger layoffs or facility-related employment actions, employers should also determine whether federal or California WARN requirements apply. California's WARN Act can impose advance-notice requirements for certain covered mass layoffs, relocations, and terminations.
The termination meeting itself should be professional, controlled, and appropriately documented.
7. Waiting Until After the Termination to Call Employment Counsel
This may be the most expensive mistake.
Employers frequently contact attorneys only after receiving a demand letter, agency complaint, or lawsuit.
By that point, the most important event—the termination—has already occurred.
A pre-termination legal review can allow employment counsel to evaluate potential risk factors before the company acts.
Depending on the circumstances, counsel may examine:
- the employee's complaint history;
- protected leave or accommodation requests;
- the disciplinary record;
- performance evaluations;
- employment agreements;
- applicable company policies;
- the proposed reason for termination;
- comparators and consistency of discipline;
- wage-and-hour concerns;
- potential retaliation allegations; and
- the timing of the proposed termination.
Sometimes the conclusion will be that the termination can proceed.
Sometimes additional documentation or investigation may be appropriate.
And sometimes the facts reveal legal risks that management had not previously considered.
The important point is that these issues are generally easier to address before the employee is terminated than after litigation begins.
A Five-Minute Pre-Termination Risk Check
Before terminating a California employee, employers should consider asking five basic questions:
1. What is the exact reason for the termination?
Management should be able to articulate a legitimate business reason clearly and consistently.
2. What documents support that reason?
Review performance evaluations, warnings, emails, attendance records, complaints, policies, and other relevant materials.
3. Has the employee recently engaged in potentially protected activity?
Look for complaints involving discrimination, harassment, wages, workplace safety, leave, disability accommodations, whistleblowing, or other legally protected conduct.
4. Have similarly situated employees been treated consistently?
Inconsistent discipline can create unnecessary litigation risk.
5. Is there anything unusual about the timing?
A termination immediately following a complaint, leave request, accommodation request, workplace injury, or other protected event deserves additional scrutiny.
If any of these questions produces uncertainty, obtaining legal advice before proceeding may be prudent.
The Cost of Prevention Is Often Lower Than the Cost of Litigation
A termination that takes several minutes to communicate can result in months—or years—of litigation.
Employment disputes may involve claims for lost wages, emotional distress damages, statutory penalties, attorneys' fees, and, depending on the claims and circumstances, other forms of relief.
The financial cost is only part of the equation. Litigation can also consume management time, require extensive document production, involve depositions of executives and employees, and disrupt business operations.
For California employers, sound employment practices are therefore not simply an HR issue.
They are part of business risk management.
Considering Terminating an Employee? Review the Risk Before You Act.
The Law Offices of Paul P. Cheng & Associates (PPRCLaw) advises California employers and businesses regarding employment disputes, workplace risk, and business litigation. Whether you are an employer seeking to reduce legal risk or an employee seeking to protect your workplace rights, experienced legal counsel can make a significant difference.
If your company is considering terminating an employee, particularly following a workplace complaint, leave request, accommodation issue, disciplinary dispute, or other sensitive event, legal review before the termination may help identify potential risks while options remain available.
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Call (626)356-8880 to schedule a confidential consultation and learn how proactive legal counsel can help protect your business before employment disputes become costly litigation.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Employment laws are highly fact-specific and subject to change. Reading this article does not create an attorney-client relationship.