Seyfarth Synopsis: While Mr. Sinatra could get away with doing things his way, California law requires that employers provide employees facing the final curtain with specific paperwork and a check on their final day. Although these various items may seem simple, failure to correctly provide them can lead to more than a few regrets for employers.
On an employee’s last day there are several things that you, the California employer, want to make sure you receive—things such as company cell phones, company laptops, office keys, and confidential files. But there are also things you must give the departing employee, including certain paperwork and a final paycheck for all wages earned through the end of employment.
Each Careful Step Along The Byway of Final Paperwork
Employers should plan their charted course and make sure they comply with both federal and state requirements for what they need to give a departing employee. Here are key examples:
- A COBRA notice and election form must be provided before the termination of the employee’s benefits (if you employ 20 or more employees in California and the departing employee is participating in the employer’s group health plan). Note that this paperwork typically can be obtained from your insurance provider or a third party service for providing COBRA notices.
- A notice of Cal-COBRA continuation rights must be provided to any covered, terminated employees. Cal-COBRA must be offered to both terminated employees of small employers (2-19 employees), and terminated employees covered under federal COBRA when their 18 months of federal COBRA coverage expires.
- A “For Your Benefit” (DE 2320) pamphlet from the EDD, about the unemployment benefits available to all discharged employees, must be provided no later than the effective date of termination.
- An Unemployment Insurance Code section 1089 written notice informing the discharged employee of a change in the relationship (i.e., it has been terminated).
- A Health Insurance Premium Payment (HIPP) notice (DHCS 9061) required by the DHCS to certain employees covered under the program (if you employ 20 or more employees).
- California Labor Code Section 2808(b) requires notification of all continuation, disability extension, and conversion coverage options under any employer-sponsored coverage for which the employee may remain eligible after employment terminates.
There may be additional documents that you need to provide depending on your industry, so you should contact counsel if you have any questions.
Face It and Stand Tall: Giving The Final Paycheck
An employee who quits and gives at least 72 hours of notice is entitled to a final paycheck at the time of separation (such an employee otherwise is entitled to the final paycheck within 72 hours of the notice).
But what should the final pay check include?
Labor Code sections 201 and 202 mandate that all unpaid earned wages are due and payable on the last day of work. “Earned wages” includes all accrued and unused vacation pay and paid time off, reporting time pay, and overtime wages. Other items such as commissions and bonuses could also be considered wages earned and would need to be included in the final paycheck or paid as soon as the amounts are capable of being determined.
How or where should I send the final paycheck?
California requires final payment at the place of termination. Normally, this is not a problem, as employees typically end their employment at their employer’s place of business. For remote workers, the final paycheck should be sent by mail, to ensure that the employee receives it by the last day of work. Consider sending the paycheck in a way that is trackable, to avert any dispute about when the final pay was sent. (Employers using authorized direct deposit can accomplish these matters electronically.)
What happens if I forget to send the final paycheck, or forget to include some of the pay?
Failure to provide final pay on the last day of work can result in penalties in an amount equal to a day’s wage for each day of delay—up to a maximum of 30 days. If an employee sues to recover unpaid wages (and penalties), the Labor Code provides for the recovery of attorneys’ fees.
So small mistakes on final pay can end up being very costly. For example, if an employer accidentally overlooks paying out one hour of PTO accrued during the last week of work, the employer may end up owing the now-departed employee as much as one month’s wages for a small oversight! (Though a claim for such an amount could, under the circumstances, be challenged as unconstitutionally excessive.) So more, much more than this, please make sure to carefully double check pay calculations before cutting a final check.
Workplace Solutions: When the end is near, employers need to be sure they provide employees with all the leaving presents that California law requires. If you have any further questions as to what that might include, please, don’t do it your way and end up with a few regrets; instead, contact the author or your favorite Seyfarth attorney.
Edited By: Coby Turner