Human Resource Blog

Employee termination

What is the law, when it comes to an employee being let go, and salary and commission are still due?  The employer is in Illinois and the employee is in California?

Recently, the California Supreme Court ruled that any employee working in the state of California is entitled to protection under state law. Therefore, this employee is covered under California labor laws. That is bad news for the employer, since those laws are much more stringent than Illinois labor laws.

Under California law, it is very difficult to terminate an employee without facing a lawsuit for wrongful termination, However, we will assume that you have handled this process correctly.

Under California law, the employee is entitled to immediate payment of all wages and vacation, at the time of termination. This payment must be in the form of a check — direct deposit is automatically cancelled. The employee also must be paid any commissions due at this time. However, sometimes there is a valid reason why commssions cannot be tabulated immediately. For example, they may be based on sales figures at the end of the month. In that case, the commissions only can be paid at a later date.

Most California employers handle this by suspending the employee without pay for 2 to 3 days while they FedEx a final check to the place of termination.

The penalties for noncompliance with this law are severe. The employee may be due one days pay for each day the final check is delayed, up to 30 days. In other words, if you are 3 days late delivering the final check, you must pay the employee for 3 additional days that she did not work.