There are no state-specific laws that Californian employers should follow when handling severance pay when firing employees. Entrepreneurs and administrators need to be cautious when suspending their employees. California is a state where employees can be fired at any time with or without cause because of its at-will status. The process that you use to send your workers home will either send a positive or negative message to your employees.
By the Books
The firing of employees should be the last thing that is included in the company manual. Employers should use when all the other reconciliation efforts have failed. The company should have a disciplinary procedure that is followed when terminating the services of an employee.
There are specific Californian laws that state the time that employees should receive their final paychecks after termination. A staff who resigns willfully must be paid all his dues within three days after submitting his or her resignation letter. However, if the employee had notified the employer of his intention to quit three days earlier, then the employer should pay all his or her wages at the time the employee leaves the company. Neither of these employees are entitled to severance pay in California by law, but are if in the written contract signed by the employee when hired.
Employers who fail to pay wages when firing employees will be forced to pay penalties up to a thirty days period after the wages became due. California law does not state whether employees are entitled to severance pay. However, employers at their discretion may decide whether to offer it or not to employees who are leaving employment. Various reasons make employers to offer severance despite the fact that it is not in the California laws.
Severance Pay Reasons
California employers offer severance pay to cushion their employees from the effect of job termination. Secondly, an employer can offer severance when he knows that there is a dispute with his fired employee. This helps the employer to avoid any future litigation with the employee. If an employee signs the severance agreement, then all his claims about his employer are waived immediately to prevent any further litigation against the employer.
If there is any dispute that occurred during the employment, then severance agreement would be the best way of avoiding time-consuming and costly litigation in the future.
If an employer wants an employee to drop his claims against him, then he should offer some consideration to the affected employee. Severance pay must be inclusive of the number of years that an employee has worked for the employer. This article is a must-read for California employees who have quit their jobs and are seeking legal redress.