How to Meet California and Federal Requirements When Terminating Employees

terminating employeesDo you know what the requirements are when terminating employees?

Federal laws require some forms and notices to be given to employees upon termination, but California has additional requirements that employers need to be aware of. Although this should not be relied on as an exhaustive list, below are the specific notices or forms we are currently aware of that California employers should provide to terminating employees.

See also: Why Every Employer Should Have an Employee Handbook

Federal Requirements

  1. For employers with 20 or more employees, a Consolidated Omnibus Budget Reconciliation Act (COBRA) notice and election form needs to be provided to employees who are participating in the employer’s group health plan the day before the termination and to any of the terminating employee’s dependents on the plan.
  2. If termination is due to a layoff or position elimination covered under the WARN Act, notices need to be sent out 60 days prior to termination.
  3. The IRS requires notices to terminating employees within certain time frames to advise them of their rights to retirement benefits.

NOTE: While there was once required to provide a Health Insurance Portability and Accountability Act (HIPAA) certificate of group health plan coverage to all terminated employees who are participating in the group health plan at the time of termination, this is no longer the case. This requirement was removed due to the ACA rules that removed pre-existing condition requirements of qualified health plans. 

  1. A Health Insurance Portability and Accountability Act (HIPAA) certificate of group health plan coverage should be provided to all terminated employees who are participating in the group health plan at the time of termination.

See also: Use This California Termination Checklist to Protect Your Business

California Requirements

  1. The California Employment Development Department (EDD) requires employers to provide their unemployment benefits pamphlet, For Your Benefit, DE 2320, to all discharged or laid off employees no later than the effective date of the discharge or layoff.
  2. California Unemployment Insurance Code 1089 requires employers to give a written Notice to Employee as to Change in Relationship form to all discharged or laid off employees immediately upon termination.
  3. The Department of Health Care Services requires employers with 20 or more employees to provide the Health Insurance Premium Payment (HIPP) notice, DHCS 9061, to certain employees covered under the program.
  4. Employers must notify any covered, terminated employees of their Cal-COBRA continuation rights. Cal-COBRA must be offered to both terminated employees of small employers (2-19 employees) and terminated employees covered under federal COBRA when their 18 months of federal COBRA coverage expires.
  5. California Labor Code Section 2808(b) requires employers to provide to employees, upon termination, notification of all continuation, disability extension and conversion coverage options under any employer-sponsored coverage for which the employee may remain eligible after employment terminates.

 

Here you will find a sample form that you can use when doing a termination.

Don’t forget to send us the Notice of Employee Termination.

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