Layoffs are an inevitable part of doing business. California law doesn't prevent employers from laying off employees, but it does govern how they can do it. Certain employees are entitled to 60 days notice of a layoff. Laid-off employees must receive an immediate, final check that includes accrued benefits and often are eligible for unemployment benefits.
The federal Worker Adjustment and Retraining Notification rule -- known as WARN -- requires large and medium-sized employers to give notice of mass layoffs. California's mini-WARN rules cover even more employees. In California, employers with more than 75 employees that operate an industrial or commercial facility must give at least 60 days notice of intended mass layoffs. A layoff that affects more than 50 employees during a 30 day period is considered to be a mass layoff.
Vacation and PTO
California considers accrued vacation and paid time off to be a form of wages. Because of this, employers must pay laid off employees for any unused vacation or paid time off. Vacation and paid time off must be paid out at the employee's current pay rate and included in the final paycheck. For example, an employee that earns $300 a day and has three unused vacation days is entitled to a $900 payout. Unused sick leave does not need to be paid out.
Final Pay Rules
Final pay must be made to employees immediately at the time of layoff. That means that as long as the employer knows that the employee will be leaving, it must issue the employee a final paycheck on their last day. Failure to comply with this rule results is a waiting time penalty for the employer. Employees that report a late final paycheck are entitled to an extra day's worth of pay for every day the employer was late in producing the final paycheck.
Employees that lose their jobs due to no fault of their own -- in other words, laid off employees -- may be eligible for unemployment benefits. In order to qualify for benefits in California, the employee must have earned more than $1,300 in her standard base period. The standard base period is the first four of the five most recent quarters before the employee files the claim. If eligible, the laid-off employee can receive a weekly benefit from $50 to $450 for up to six months.