Firing an Employee in California: What the Law Requires

Final pay is due on the last day

When you discharge an employee, all wages earned and unpaid are due immediately. Plan the termination for a time when the final check (or a same-day direct deposit) is ready. California treats earned vacation as wages: under Labor Code 227.3 all earned and unused vacation must be paid at the employee's final rate of pay, and a use-it-or-lose-it policy is not legal. A combined paid time off (PTO) bank follows the same rule.

California final pay deadlines
How the job ends	Deadline	Law
You fire or lay off the employee	Immediately, at the time of termination	Labor Code 201
Employee quits with at least 72 hours' notice	On the last day of work	Labor Code 202
Employee quits without 72 hours' notice	Within 72 hours of quitting (by mail if they ask)	Labor Code 202

Paid sick leave is different. Labor Code 246(f) says you do not have to pay out accrued, unused paid sick days at separation, unless your own policy says you will. If you rehire the person within one year, their unused sick days must be reinstated.

Waiting time penalties

If an employer willfully fails to pay final wages on time, the employee's daily wage keeps running as a penalty for each day the wages stay unpaid, up to 30 calendar days (Labor Code 203). "Willful" does not mean bad intent. The Division of Labor Standards Enforcement explains that it is enough that the employer knew what it was doing and failed to pay. A good faith dispute about whether wages are owed prevents the penalty, but undisputed wages must still be paid on time.

Common mistake: running the final check on the next regular payroll instead of on the termination date.
Common mistake: leaving accrued vacation out of the final check.
Filing a wage claim with the Labor Commissioner does not stop the penalty from growing. Paying the wages does.

Notices to hand over at separation

Notice of change in relationship: California Unemployment Insurance Code section 1089 requires every employer to notify each employee immediately of any change in their relationship with the employer. A firing, layoff or leave of absence counts. The EDD publishes a sample notice that meets the minimum requirements.
For Your Benefit (DE 2320): under the EDD's regulations, when you discharge, lay off, or place an employee on a leave of absence, you must give them this pamphlet about unemployment, disability and paid family leave benefits.
Health coverage options: Labor Code 2808 requires you, at termination, to tell the employee about all continuation, disability extension and conversion coverage options under your health coverage. Labor Code 2807 requires you to include the state's written description of the Health Insurance Premium Program with the federal COBRA notice.

The current version of section 1089 also allows these materials to be delivered electronically if the employee opts in. Paper in hand at the termination meeting is still the simplest way to show you complied.

Health coverage: COBRA and Cal-COBRA

Which continuation law applies
Employer size	Law	What you must do
20 or more employees (federal test)	Federal COBRA	Notify the plan within 30 days; the plan sends the election notice. Usually up to 18 months after a job loss.
2 to 19 eligible employees on at least half of working days last year	Cal-COBRA	Notify your health plan in writing within 30 days of the qualifying event; the plan then sends the enrollment information within 14 days. Up to 36 months of coverage.

More detail, including who counts as an employee for these tests, is in when you need to offer COBRA.

Discrimination and retaliation rules are broader

California's Fair Employment and Housing Act (FEHA) bars discrimination and retaliation by employers with 5 or more employees, far below the federal 15-employee line. Harassment is prohibited at every workplace, even one with fewer than five employees. Protected categories include race, color, ancestry, national origin, religion, age (40 and over), mental and physical disability, sex and gender (including pregnancy, childbirth and breastfeeding), sexual orientation, gender identity and expression, medical condition, genetic information, marital status, military or veteran status, and reproductive health decision-making. Before you fire someone who recently complained, asked for an accommodation or took protected leave, review the timing and the record with a second person.

Layoffs: the California WARN Act

California has its own WARN Act. It covers a "covered establishment," meaning a facility that employs, or has employed in the past 12 months, 75 or more people. A mass layoff is 50 or more employees laid off in any 30-day period. Covered employers must give written notice 60 days before a mass layoff, relocation or termination to the affected employees, the EDD, the local workforce development board, and the chief elected official of each affected city and county. From January 1, 2026, the notice must also cover workforce board services, CalFresh food assistance, and a working email and phone number for the employer. See WARN Act layoffs and the California HR guide.

Common questions

Can I pay a fired employee on the next regular payday in California?

No. Wages for a discharged employee are due immediately at the time of termination. Waiting for the next payroll can trigger waiting time penalties of up to 30 days of wages.

Do I have to pay out unused sick leave in California?

No. Labor Code 246(f) does not require payout of unused paid sick days at separation. Vacation and PTO banks are different and must be paid out.

What if the employee quits instead?

With at least 72 hours' notice, final pay is due on the last day. Without notice, it is due within 72 hours, and the employee can ask for it by mail.

How MambaHR handles this

When a California termination is requested, MambaHR works out the final pay, including accrued vacation, for a person to approve before the last day, drafts the separation paperwork, prepares the continuation notices, and removes system access. The termination itself always goes to a person, and every step is logged.

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Sources

Last reviewed October 2, 2026. This page is general information, not legal advice. Laws change and exceptions apply, so check the sources above or an employment lawyer before you act on a specific case.