What California Law Requires After a Termination — and What Most Employees Don’t Know
The day you are fired is not a good day to think clearly about legal rights. But several of those rights have deadlines, and some of the most important steps are the ones taken — or not taken — in the first weeks after a termination.
An employee who has just been terminated is thinking about income, about health insurance, about how to explain the gap to the next employer. They are not usually thinking about legal rights or filing deadlines. That is understandable, and it is also where mistakes are made — not out of carelessness, but because the legal landscape after a termination is unfamiliar, and the most consequential decisions often have to be made before the employee has had time to absorb what happened.
What follows is a practical overview of what California law requires of the employer after a termination, what rights the employee has, and what steps — taken early — preserve options that may otherwise be lost.
Your final paycheck
California is stricter than most states about when a terminated employee must be paid. Labor Code section 201 requires that when an employer discharges an employee, all wages earned and unpaid at the time of discharge must be paid immediately — at the time of termination, not at the next regular pay date.
This includes not only base wages but all earned compensation: accrued vacation (which California treats as earned wages), commissions that have been earned, and any other compensation owed under the employment agreement or the employer’s policies. Labor Code section 227.3 provides that accrued vacation is not forfeitable and must be paid out at the employee’s final rate of pay.
If the employer does not pay all wages due at the time of termination, section 203 provides a penalty: one day’s wages for each day the payment is late, up to a maximum of thirty days. This “waiting time penalty” is automatic — the employee need not show that the delay caused any particular harm. The penalty is a consequence of the late payment itself.
In practice, many employers fail to provide a final paycheck on the day of termination. Some send it days later. Some withhold amounts for disputed commissions or equipment not yet returned. Each day of delay accrues an additional day’s wages as a penalty, and the aggregate — up to thirty days’ pay — is often more than the unpaid amount itself.
Unemployment insurance
An employee who is terminated — laid off, fired, or separated from employment for reasons other than serious misconduct — is generally eligible for unemployment insurance benefits through the California Employment Development Department. The employee should file a claim as soon as possible after the termination. There is a one-week unpaid waiting period before benefits begin, and filing promptly avoids unnecessary gaps.
Eligibility does not depend on the reason for termination in most cases. An employee who was fired for poor performance, for not being the right fit, or as part of a reduction in force is ordinarily eligible. The narrow exception is for employees terminated for “misconduct connected with the work” — a legal term that requires more than simply doing the job badly. It requires willful or substantially negligent conduct that violates a reasonable employer rule or policy.
The employer may contest the claim. The EDD will make an initial determination. If the claim is denied, the employee may appeal to an administrative law judge. The process is worth pursuing: unemployment benefits provide partial income replacement during the period of unemployment, and eligibility is the rule, not the exception, for involuntarily terminated employees.
Health insurance continuation
Under the federal COBRA statute and its California counterpart (Cal-COBRA), an employee who loses employer-sponsored health coverage due to a termination is entitled to continue that coverage at their own expense for a defined period. Federal COBRA applies to employers with twenty or more employees and provides up to eighteen months of continuation coverage. Cal-COBRA extends the coverage period to thirty-six months and applies to employers with two to nineteen employees — filling the gap below the federal threshold.
The employer is required to provide notice of the right to continuation coverage within a specified period after the qualifying event. The employee then has sixty days to elect continuation coverage. The premiums are the employee’s responsibility and will be higher than the employee portion they were paying during employment — typically the full premium plus a small administrative surcharge.
COBRA coverage is not inexpensive, but it preserves the employee’s existing plan, existing providers, and existing coverage terms. For employees with ongoing medical needs, or for those who cannot immediately obtain coverage through a new employer, a spouse’s plan, or the Covered California marketplace, continuation coverage may be worth the cost during the transition.
Your personnel file
Labor Code section 1198.5 gives every current and former employee the right to inspect and receive a copy of the personnel records the employer maintains relating to the employee’s performance or to any grievance concerning the employee. The request must be made in writing, and the employer must make the records available within thirty days.
Personnel files are frequently relevant to any legal evaluation of the termination. They contain performance reviews, disciplinary records, written warnings, commendation letters, and internal notes — the documentary record of how the employer assessed the employee before the termination. When an employer claims that a termination was for performance reasons, the personnel file is often the first place to look for corroboration or contradiction.
Requesting the file is a step worth taking early. The employer is required to maintain personnel records for a specified period after separation, but requesting the file promptly — while the records are most likely to be complete — is good practice.
Preserve evidence
An employee who believes the termination was wrongful should take care, in the days and weeks that follow, to preserve any evidence that may be relevant.
This includes: any written communications related to the termination or the events leading to it — emails, text messages, instant messages, performance reviews, written warnings, or the termination letter itself. If the employee has copies of relevant documents from the workplace — sent to a personal email or maintained in personal records during employment — those should be preserved. Notes about conversations, meetings, or incidents, written as close to the time of the event as possible, can also be valuable.
Two cautions. First, do not remove or copy confidential or proprietary employer documents that the employee is not authorized to possess. Taking company trade secrets or confidential business records, even to support a future legal claim, can create separate legal exposure and undermine the employee’s credibility. What is appropriate to preserve: the employee’s own communications, documents the employee received in the ordinary course of work (such as performance reviews and policy acknowledgments), and personal notes. Second, do not destroy anything. If litigation is reasonably anticipated, there is a duty to preserve relevant evidence. Deleting emails, text messages, or documents that relate to the employment or its termination can have serious consequences.
Understand the deadlines
Different types of employment claims have different filing deadlines, and some of those deadlines are shorter than employees expect.
FEHA claims (discrimination, harassment, retaliation). Before filing a lawsuit under the Fair Employment and Housing Act, an employee must first file an administrative complaint with the California Civil Rights Department (formerly the DFEH). The deadline to file that complaint is three years from the date of the alleged unlawful practice. Once the complaint is filed, the employee may request an immediate right-to-sue notice from the CRD, after which they have one year to file a civil action in court.
Wage and hour claims. The statute of limitations for most wage claims — including unpaid overtime, meal and rest break violations, and minimum wage violations — is three years. When the claim is brought under Business and Professions Code section 17200 as an unfair business practice, the limitations period may extend to four years.
Wrongful termination in violation of public policy. A common-law Tameny claim is subject to a two-year statute of limitations under Code of Civil Procedure section 335.1.
WARN Act claims. Claims under the federal and California WARN Acts are generally subject to a three-year limitations period under California law.
These deadlines are not interchangeable, and missing one can permanently foreclose a claim. An employee who was fired six months ago may have ample time to file a FEHA complaint but may need to move more promptly on a common-law claim. Understanding which deadlines apply — and which are shortest — is part of the initial evaluation.
Non-compete agreements
An employee who has been fired may worry about the enforceability of a non-compete or non-solicitation agreement they signed during employment. In California, the worry is usually misplaced.
Business and Professions Code section 16600 provides, with narrow statutory exceptions, that every contract by which anyone is restrained from engaging in a lawful profession, trade, or business is void. California has the strongest prohibition on non-compete agreements of any state. The Legislature reinforced this in 2023 with AB 1076, which codified existing case law and required employers to notify current and former employees that any non-compete clauses in their agreements are void.
An employee terminated from a California job may, in virtually all cases, immediately begin working for a competitor, start a competing business, or solicit the former employer’s clients — regardless of what any agreement says to the contrary. There are limited exceptions for the sale of a business and for the dissolution of a partnership, but for the ordinary employment relationship, non-compete provisions are unenforceable.
When to talk to an attorney
There is no required timeline for consulting with an employment attorney after a termination, but earlier is generally better than later. An attorney can evaluate whether the termination gives rise to a legal claim, identify which deadlines apply, assess the value of any severance offer, and advise on evidence preservation — all of which are more effectively done before deadlines pass or evidence is lost.
An initial consultation does not commit the employee to filing a lawsuit. Many consultations conclude with the assessment that no viable claim exists, or that the practical considerations weigh against litigation. Others lead to a demand letter or a negotiation rather than a court filing. The purpose of the consultation is to understand the legal landscape while the employee still has options — not to make a commitment the employee is not ready for.
If you have been terminated and are trying to determine whether you have legal recourse, the steps you take in the first weeks matter. Preserving evidence, understanding deadlines, and evaluating the circumstances of the termination are all more effective when they are done early.
This article is general information about California law and is not legal advice. Every situation turns on its particular facts.