Terminating Employee Who Has Given Two Weeks’ Notice

Savage-EMy employee gave two weeks’ notice that she is quitting, but I want to end her employment today. Will that turn her quit into a termination? And if so, will it mean she can collect unemployment insurance even though she quit? And do I have to pay her out for the two weeks?

If an employee gives two weeks’ notice that she is quitting and instead you end her employment earlier than the notice period, you have turned a voluntary quit into a termination.

Let’s look at how that will affect her unemployment insurance (UI) eligibility, and whether you must pay her out for the notice period she gave.

UI Eligibility

An employee who is terminated for “misconduct” is disqualified from receiving UI benefits. If you terminate an employee as a result of her having given notice to quit, she will not have been terminated by you for misconduct and thus would not be disqualified.

In this situation, she will likely be eligible to collect benefits, which could in turn have a negative effect on your UI reserve account and cause your UI rates to go up.

If, however, you pay the employee for the full period of notice, then the Employment Development Department (EDD) still will consider the separation to be a voluntary quit for UI purposes. This is because by being paid out for the notice period, the employee has not suffered any loss of wages.

According to EDD, for UI purposes, a voluntary quit becomes a termination only if the employee suffered a wage loss.

(Note that this discussion pertains only to UI eligibility, not whether the separation was a quit or a termination for other legal purposes, such as a wrongful termination lawsuit.)

In deciding whether to pay out the notice period even though you are terminating the employee, it is critical to first determine whether she would be eligible for UI even if EDD still considers it a voluntary quit. Remember that an employee who quits with good cause (such as to relocate with his/her family to another state, or to take a substantially better job) might be eligible to collect UI anyway. If that is the case, your turning the quit into a termination will make no difference in whether she will collect UI.

Paying for Notice Period

If you are an at-will employer and don’t require employees to give advance notice of quitting, then there is no legal obligation to pay out a notice period if you terminate the employee early. Note that the lack of a legal obligation to pay those wages does not change the UI eligibility discussed above.

However, it’s important to check your employee handbook or other company documents that might create a requirement for employees to give notice.

It’s not unusual to find an employee handbook that states that employment is at will, meaning either party can end the relationship without notice, but then to find a policy in the same handbook asking that employees give two weeks notice if they are planning to quit. By requiring notice, you may be creating an obligation to allow the employee to work the two weeks or to be paid out for it.

The Labor Law Helpline is a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.

Staff contact: Ellen Savage