Terminations: Do We Have to Pay Out the Notice Period if the Termination Is Effective Immediately?

Because of the vulnerability of our systems to insiders, if someone gives two weeks’ notice before quitting, we usually have the person leave the premises right away. We handle the termination process in the next day or so under supervised conditions. My first question is, do we have to pay these people for the whole period they gave notice? We’ve also got a question on the flipside of the coin: we had a key staffer leave without giving any notice—she just left a letter of resignation and never came back. Management wants to punish her by not paying her accrued sick and vacation time and refusing to pay some reimbursements that are due her. Can we do that? Do people have to give notice before they leave? — E.F. in Santa Barbara


Shari Dunn of CompAnalysis tackles this termination quandary for us.

Both questions can be answered by looking at California Labor Code sections 201 and 202. Section 201(a) states that an employee who is terminated is owed all wages, including accrued, unpaid vacation time, at the time of discharge. Similarly, according to Section 202(a), in the case of resignation, if the employee gives the employer more than 72 hours (3 days) notice, all wages and accumulated vacation are owed on the last day of work. If the employee gives fewer than 72 hours notice, all wages and accumulated vacation are owed no later than 72 hours from when notice is given. Moreover, if requested, an employee who gives fewer than 72 hours notice can receive his or her final payment by mail; however, it must be postmarked within the 72-hour requirement.

In reference to the first question, though some companies may choose to pay the employee for the notice period, an employer is not required by law to do this. If the termination process is handled in the next day or so, and the employee is told to leave the premises right away because of the sensitivity of the company’s work or some other reason, it’s up to you whether you pay the employee the full two weeks for which notice was given. 

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Concerning the second question, management cannot by law ‘punish’ an employee by not paying accrued vacation time and reimbursements that are due to him or her. Nowhere in the Labor Code is it mandated that an employee give notice. Though it may be an inconvenience to have an employee abandon ship with no advance notice, you still owe the person all wages and accumulated vacation time no later than 72 hours after resigning. According to Labor Code Section 203, the penalty for not paying in accordance to the previously mentioned Labor Code sections is that the employee’s wages will continue at the same rate from the due date until paid but will not continue more than 30 days.” 


Shari Dunn is managing principal of CompAnalysis, an Oakland compensation and performance management consulting firm.


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