The coronavirus pandemic is creating unprecedented challenges, both for public health and the economy—and those challenges are causing many businesses to lay off their employees and shutter their doors, at least for the time being.
If your business is having to lay off employees, the process can feel overwhelming and confusing. Let’s take a look at some of the most common questions about how to navigate employee layoffs and terminations in California—and, more importantly, the answers you need to navigate layoffs during the coronavirus:
Q: What information do I need to get my employees to ensure they have what they need to file for unemployment benefits?
A: When your employees file an unemployment insurance (UI) claim with the Employment Development Department, they’ll need the following information:
- Your official company name (as it appears on their pay stub or W2)
- Company contact information, including both mailing and physical addresses, direct supervisor’s name, and company phone number
- Their last physical workday
- Gross earnings in the last week they worked, beginning with Sunday and ending with their last day of work
If you want to make the process easier for your employees, you can provide this information at their termination meeting so they have it readily available when they apply for UI benefits. (You can access their earnings information through Hourly’s Payroll function and information on hire date on each employee’s individual W4.)
Q: How do I confirm my employee’s unemployment status with the Employment Development Department?
A: Once your employee files a UI claim, you’ll receive a Notice of Unemployment Insurance Claim Filed from the EDD through the mail. Unless you wish to dispute the claim, there’s nothing you need to do. If there is any incorrect information on your employee’s claim (for example, the time of termination), you’re required to return the form with the correct information within 10 days of receipt.
Q: Is it even legal for me to lay off all of my employees—especially suddenly and without warning?
A: Under normal circumstances, the California WARN Act requires employers to give employees and state and local representatives 60 days’ notice before moving forward with mass layoffs.
However, we’re not operating under normal circumstances—and many businesses are having to close their doors immediately, both to protect their employees’ safety and to comply with the current statewide shelter in place order.
In response, Governor Newsom has issued Executive Order N-31-20, which temporarily suspends the WARN Act’s 60-day notice requirement. There are still, however, a number of requirements employers have to meet in order to remain compliant with the WARN Act, including providing written notice to all affected employees, the EDD, the Local Workforce Development Board, and the chief elected official of each city and county government where the closure and/or layoffs are taking place.
Q: When do I give my employees their last check—and what needs to be included?
A: The appropriate time to give your employee their final paycheck is at their termination meeting. Their final paycheck needs to include any outstanding money owed to the terminated employee, including any accrued PTO.
To process and print a termination check through Hourly, follow these steps:
- Choose “Payroll” in the navigation bar;
- Choose the employee you are terminating;
- Ensure the direct deposit option is off;
- Confirm all hours worked during the week are entered into the timesheet;
- Navigate to “Manual Timesheet” and add any accrued PTO hours and/or sick pay;
- Return to the Payroll screen;
- Select the terminated employee;
- Click “Pay” in the upper right of the screen;
- Choose the “Print at Home or Office” option;
- Click “Run” at the bottom right of the screen;
- Confirm Payroll Run
Once you go through these steps, the check will be sent straight to your email address on file—that way, all you have to do is print and you’re ready to go.
Need compatible checks for your printer? You can order them on Amazon.
Q: With social distancing in full effect, how do I make sure my employees get their final paycheck in a timely manner?
A: Under normal circumstances, you would terminate your employee and give them their final paycheck in person. But the coronavirus—and accompanying social distancing—is changing the way we interact; in order to protect the safety of yourself and your employees, an in-person meeting might not be possible. You still, however, need to get them their final paychecks in a timely manner.
Unfortunately, this is a new situation—and, as such, there’s no clear answer as to how to handle the situation and what constitutes a “timely manner.” If you’re unclear, talk to your lawyer or call the EDD or the Labor Commissioner’s Office for additional guidance.
Q: What about insurance?
A: If you offer health, dental, vision, and/or medical reimbursement plans, you’ll need to provide terminated employees with a COBRA notice outlining their rights for continued coverage. You’ll also need to contact your insurance carrier and fill out any paperwork necessary to terminate the employee’s coverage.
Q: What other steps do I need to take when terminating an employee?
A: There are a few other housekeeping issues you’ll want to take care of when laying off employees, including:
- Collecting any company property (cell phones, tools, company computers, etc.)
- Terminating access to any sensitive company information
- Canceling or removing access to any company accounts or credit cards
Q: Is there any support available to help employers prevent layoffs during the coronavirus pandemic?
A: There is. Both the federal government and the state of California are moving forward with initiatives to help employers during the coronavirus pandemic.
Rapid Response Team
If you’re considering large-scale layoffs or closing your business, Rapid Response Services may be able to help. Rapid Response is a business-focused program designed to assist companies facing potential layoffs and closures. If you need assistance, the Rapid Response team can meet with you to discuss your options—including ways to potentially avoid layoffs or closing your business—as well as provide transitional services to affected workers facing job losses.
Payroll tax extensions
If you’re experiencing financial hardship as a result of COVID-19, the EDD is allowing businesses to request an up to 60-day extension to file state payroll taxes and/or deposit state payroll taxes without interest, penalties, or fines. In order to qualify, businesses need to request an extension in writing within 60 days of the original due date of the payment or return.
Q: What should I do if I have to slow down operations or cut down on employee hours? Do I have to lay off my team so they can apply for unemployment?
A: The state of California’s Unemployment Insurance (UI) Work Sharing Program is an alternative that may be able to help prevent layoffs in your business—while also making sure your employees are eligible for unemployment benefits while their hours are reduced or cut.
There are strict employer requirements for the Work Sharing Program, including restrictions on how much hours and wages can be reduced. For the full eligibility requirements and to apply for the Work Sharing Unemployment Insurance plan, visit the EDD’s website.
Q: How can I make sure terminating my California employees doesn’t result in legal action or a wrongful termination suit?
Clearly, the coronavirus is the reason behind the vast majority of layoffs at the moment. But regardless of the reason, in order to protect yourself, your business, and your employees, it’s important to make sure you follow California law, federal law, and applicable employment law (state or federal) when ending the employment relationship.
While California is an at-will employment state (which means California employers can end the employment relationship at any time, for any reason), there are certain exceptions. Moving forward with a layoff or a firing for any of the following reasons could result in an accusation of wrongful termination:
- Discrimination, including based on gender identity, age, race, disability, citizenship status, national origin, medical status, sexual orientation, or religion;
- Retaliation (for example, for filing a worker’s compensation claim, taking medical leave, or coming forward with sexual harassment allegations); or
- Violation of Public Policy (for example, refusing to work in an unsafe or illegal work environment or refusing to partake in illegal activity as part of their job responsibilities)
If you have an employment contract in place with your employees, it’s also important to ensure that you comply with the terms of your contract during the termination process.