Layoffs vs. Terminations in California: Legal Perspectives and Employee Rights

Imagine this: In California, over 50,000 employees face job loss annually due to layoffs and terminations. Distinguishing between these two is not just semantics but can significantly impact your legal rights and financial security. At Hershey Law, our employment lawyers for layoffs understand the complexities of employment law and are dedicated to ensuring fair treatment for employees across the state.

👉Also Read: Navigating WARN Act Requirements: Understanding Layoff Laws in California and Federally

Layoffs vs. Terminations Under California Law

Layoffs

California layoffs typically occur when a company reduces its workforce due to reasons beyond individual employees’ control. This can stem from factors such as economic downturns, restructuring efforts to streamline operations, or technological advancements that render certain positions obsolete. Employees affected by mass layoffs typically lose their jobs through no fault of their own. This makes it critical to understand their entitlements to severance pay, benefits continuation, and potential reemployment assistance.

Terminations

Terminations, on the other hand, involve the dismissal of an employee due to performance issues, misconduct, or other specific reasons related to individual performance or behavior. Unlike layoffs, terminations usually result from employer decisions based on an employee’s actions or capabilities within the company. Understanding the distinction is crucial as it can affect eligibility for unemployment benefits and legal recourse if there are allegations of wrongful termination or discrimination.

Key Differences Between Layoffs and Terminations

Cause and Control: Layoffs are typically driven by business decisions beyond an employee’s control, while terminations stem from specific performance or conduct issues.

Legal Implications: Layoffs may involve legal requirements such as advance notice under state or federal laws, especially in larger-scale layoffs affecting numerous employees. Terminations often require documentation of performance issues or misconduct to justify the employment separation.

At Hershey Law, our employment lawyer for layoffs and terminations will navigate these distinctions to ensure our clients understand their rights and receive fair treatment under California employment law. Whether you are facing a layoff due to corporate restructuring or challenging a termination based on alleged misconduct, our experienced employment attorneys are here to advocate for your rights and guide you through every step of the process.

Understanding these key differences helps employees prepare for the job hunt, protect their employee rights, and work with an employment lawyer if necessary.

What Is a Layoff?

A layoff typically occurs when a company reduces its workforce due to business needs beyond an employee’s control. These often include:

• Budget shortfalls
• Company-wide restructuring
• Mergers, acquisitions, or closures
• Redundant roles due to automation or efficiency shifts

A mass layoff can affect dozens or even hundreds of staff members, especially during economic downturns or internal restructuring.

Key Rights in a Layoff:

• Retraining notification under the WARN Act or California law (Cal-WARN)
• Eligibility for unemployment benefits through your local unemployment office
• Option to continue health coverage via COBRA
• Negotiating a severance package and outplacement services

What Is a Termination?

A termination means an employee is let go for specific reasons related to their actions, behaviors, or job performance. This can be either:

• For cause (e.g., violation of company policies, poor performance, misconduct)
• Without cause, often under at will employment conditions

In California, at will means an employer can fire employees at any time, without giving a reason—unless it violates federal law, California law, or a signed employment contract.

Rights After Termination:

• Immediate receipt of a final paycheck, including unused PTO
• Access to personnel files and the reason for termination based on company rules
• Potential to file for wrongful termination if discrimination or retaliation is involved

Independent Contractors vs. Employees: Classification Matters

Some workers are wrongfully denied layoff or termination protections because they are misclassified as independent contractors. In California, the ABC test and the California Labor Code determine whether someone is truly an independent contractor.

If you were misclassified, you may have been illegally denied unemployment benefits, severance pay, or wage protections. Hershey Law regularly represents misclassified workers in recovering back pay, benefits, and damages for wrongful termination.

Legal Framework in California

California’s employment laws provide important protections for affected employees facing layoffs and terminations, ensuring fair treatment and adherence to legal standards. Understanding these laws is essential for safeguarding your rights in the workplace.

At-will Employment and Its Implications

California follows the at-will employment doctrine, which means that employers can terminate employees at any time and for any reason, as long as it is not illegal. Similarly, employees can leave their jobs at any time without reason. However, this doctrine does not override laws that protect employees from wrongful termination or discrimination.

Specific Laws Protecting Employees

1. Employee Rights During Layoffs
   • Notification under the Federal WARN Act: The federal Worker Adjustment and Retraining Notification (WARN) Act and California’s version (Cal-WARN Act) require employers to provide advance notice of layoffs affecting a certain number of employees. This notice helps employees prepare for job loss and potentially seek new employment.
   • Severance Pay and Benefits: While California law does not mandate severance pay, some employers offer it as part of a severance package. Negotiating for severance pay and continuation of benefits can be critical for financial stability during job transition.
   • Unemployment Benefits Eligibility: Employees who lose their jobs through no fault of their own, including due to a mass layoff, are typically eligible for unemployment benefits. This support helps bridge financial gaps during periods of unemployment.
   • Rights to Health Insurance Continuation (COBRA): The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows employees and their families to continue health insurance coverage after job loss, albeit at their own expense.
2. Employee Rights During Terminations
   • Wrongful Termination and Grounds for Legal Action: California law prohibits termination based on protected characteristics such as race, gender, sexual orientation, religion, and disability. Wrongful termination claims can arise if an employee is fired in violation of these rights or in retaliation for whistleblowing or exercising legal rights.
   • Final Paycheck Requirements: Employers must provide employees in the corporate workforce with their final paycheck, including any accrued vacation time, immediately upon termination or within a specified timeframe.
   • Access to Personnel Files and Reason for Termination: Employees have the right to access their own personnel files and review the reasons for termination. This transparency ensures accountability and provides grounds for legal recourse if termination appears unjust or discriminatory.
   • Rights to Unemployment Benefits: Employees terminated for reasons other than misconduct are generally eligible for unemployment benefits, provided they meet other eligibility criteria.

Handling the complexities of California’s employment laws, Civil Rights Act, sexual harassment laws, and any other workplace state or federal law when employees laid off requires a thorough understanding of these regulations and how they apply to your specific situation.

At Hershey Law, our employment attorneys are committed to protecting your rights and ensuring that employers adhere to these legal standards during layoffs and terminations in a tough job market. Whether you need assistance negotiating a severance package, pursuing a wrongful termination claim, or understanding your eligibility for unemployment benefits, we are here to provide knowledgeable guidance and advocacy.

👉Also Read: Navigating Layoffs: When to Consult an Employment Lawyer

Common Legal Issues and How Our California Employment Lawyers at Hershey Law will Fight for Your Rights

At Hershey Law, our dedicated California employment lawyers are committed to fighting for your rights in various common legal issues that employees face, whether with the parent company, subsidiary, or a government agency.

One of the most serious legal concerns following a termination is whether it was based on discrimination. California’s Fair Employment and Housing Act (FEHA) and federal civil rights laws make it unlawful for employers to terminate employees based on protected characteristics, including race, age, gender identity, national origin, disability, religion, or sexual orientation.

If you believe your firing was influenced by bias or prejudice—no matter how subtle—it’s critical to consult an employment attorney. Discriminatory terminations may not always be obvious, but patterns of unequal treatment, sudden discipline after reporting misconduct, or replacement by someone outside your protected class can serve as red flags.

Even under at-will employment, termination cannot violate these protections. If your employer has violated the Civil Rights Act or FEHA, you may have grounds for a wrongful termination lawsuit.

Discrimination and Wrongful Termination Claims

If you believe you have been discriminated against based on protected characteristics such as race, gender, religion, or disability, or if you have been wrongfully terminated in violation of California employment laws, our attorneys will meticulously investigate your case. We will gather evidence, including witness testimony, documentation of discriminatory actions, and performance evaluations to build a strong case. Hershey Law will advocate fiercely on your behalf, pursuing justice and seeking compensation for damages suffered due to unlawful employment practices.

Retaliation Claims in Layoff or Termination Scenarios

Employees who report harassment, wage violations, unsafe working conditions, or other unlawful conduct are legally protected from retaliation. If you were laid off shortly after reporting wrongdoing, this timing could be more than a coincidence—it might be illegal retaliation disguised as a business decision.

Retaliation claims can arise whether you’re part of a group layoff or individually terminated. Hershey Law can help investigate patterns of behavior, employer communications, and internal documentation to uncover whether your job loss was really about retaliation, not reorganization.

Employees who face retaliation for whistleblowing, reporting harassment or discrimination, or exercising their legal rights are protected under California law. Our employment lawyers at Hershey Law will navigate the complexities of retaliation claims, ensuring that your rights are protected throughout the legal process. We’ll strategize to demonstrate a causal connection between your protected activity and the adverse employment action, advocating for remedies that may include reinstatement, damages, and injunctive relief to halt retaliatory practices.

Layoffs That Hide Discrimination or Retaliation

In some cases, layoffs are used as a cover for illegal motives. Employers may strategically include whistleblowers or protected employees in a reduction-in-force to avoid direct retaliation claims. However, if your inclusion in a layoff appears targeted, or if similarly situated employees outside your protected class were retained, you may still have a viable discrimination or retaliation claim.

Layoff decisions must be consistent with company-wide practices and free from bias. Our attorneys will review internal communications, performance records, and WARN notices to determine if your layoff was lawful.

Breach of Contract Issues

If your employer has failed to honor contractual agreements regarding compensation, benefits, or terms of employment, Hershey Law will pursue legal remedies for breach of contract. Our attorneys will carefully review your employment contract and any related documents to assess your rights and obligations. We will pursue negotiations or litigation to enforce contractual terms and seek appropriate remedies to uphold your employment rights.

Many employment contracts include clauses about termination, notice periods, or severance pay. Understanding these clauses is critical. Our dedicated team at Hershey Law helps clients interpret and enforce their legal rights under these contracts.

Meanwhile, company policies and company rules dictate internal expectations for job performance, conduct, and progressive discipline. Reviewing these policies can help determine whether the termination or layoff was lawful.

Steps to Take if You Believe Your Rights Have Been Violated

If you suspect that your rights have been violated during workforce reductions, be prepared to take proactive steps to protect your legal interests. Document any incidents of discrimination, retaliation, or breach of contract, including dates, witnesses, and relevant communications. Contact Hershey Law immediately to schedule a confidential consultation with one of our experienced employment lawyers. We will provide personalized legal guidance, outline your options, and develop a strategic plan to assert your rights effectively.

Preventive Measures for Employees in California

To effectively prevent legal issues and protect your rights as an employee in California, proactive measures are crucial. Here are preventive steps recommended in consultation with Hershey Law attorneys:

Understanding Your Employment Contract and Company Policies

Reviewing and understanding your employment contract and company policies is essential. Hershey Law attorneys can help interpret complex legal language and ensure you comprehend your rights, obligations, and potential legal recourse in case of disputes or breaches.

Keeping Detailed Records of Performance and Communications

Maintaining meticulous records of your performance reviews, communications with supervisors or HR, and any incidents of concern is vital. Hershey Law’s legal team can provide guidance on what documentation is critical and how it can support your case in the event of disputes or legal claims.

Knowing Your Rights and Staying Informed about Employment Law

Remaining informed about your rights under California employment law is empowering. Hershey Law lawyers can keep you updated on changes in legislation that may affect your workplace rights, ensuring you are prepared to address any issues that arise.

By partnering with Hershey Law, you gain access to experienced employment attorneys who can provide proactive legal advice, guide you through preventive measures, and advocate for your rights effectively if disputes arise. This proactive approach helps safeguard your interests and promotes a fair and respectful workplace environment.

👉Also Read: Understanding Tech Layoffs in California: Your Legal Rights and Options

What to Watch for in a Severance Agreement

Before signing a severance agreement, employees should understand every clause. These agreements often include non-disparagement clauses, non-compete terms (where enforceable), and waivers of future legal claims. Signing without legal review could mean giving up your right to pursue a wrongful termination or wage claim.

Ask yourself:

• Does the agreement waive your rights under federal or California employment law?
• Are you being asked to release claims under the Civil Rights Act, FEHA, or the WARN Act?
• Does the severance pay adequately reflect your years of service and legal leverage?

Let Hershey Law evaluate whether the severance package is fair—or negotiate a better one on your behalf.

Severance Pay and Negotiating a Fair Package

Although California law doesn’t require severance pay, many employers offer a severance package to minimize risk or as part of company policy. These packages may include:

• Continuation of salary for a set period
• Healthcare coverage extension
• Release of claims agreements (often in exchange for waiving your right to sue)

Consult with an employment lawyer before signing anything. You may be giving up valuable legal rights.

WARN and Cal-WARN: When Employers Must Provide Notice

Under the federal WARN Act, companies with 100+ full-time employees must provide 60-day notice before conducting a mass layoff. California’s Cal-WARN law is even broader, covering employers with just 75+ employees.

If you weren’t given proper notice, the impacted employee may be entitled to:

• 60 days of back pay
• Continued benefits
• Legal damages

Unemployment Benefits: Who Qualifies?

If you’re laid off or terminated without cause, you’re typically eligible for unemployment benefits, as long as you:

• Are actively engaged in a job search or job hunt
• Weren’t fired for gross misconduct
• Meet earnings requirements and other conditions

Apply promptly through your local unemployment office and prepare to provide documentation.

Common Legal Issues Hershey Law Helps Resolve

Wrongful Termination

If you were let go due to discrimination or for exercising legal rights, our attorneys will evaluate your claim and pursue justice. You have protections under both California employment law and federal law.

Retaliation and Protected Activities

Employers are forbidden from punishing employees who report wrongdoing, refuse illegal tasks, or stand up for others. If you’ve suffered retaliation, we’ll build your case.

Breach of Employment Contracts

If your employment contract was violated—whether regarding compensation, duration, or termination clauses—our firm will take legal steps to hold the company accountable.

Severance Disputes

We’ll help you review your severance package, ensure it’s fair, and protect your legal rights from being waived unnecessarily.

Company Property and Final Paychecks

You’re entitled to your final paycheck promptly, and you must return any company property (e.g., laptops, keycards). If this doesn’t happen, or if deductions are made unfairly, we’ll take action.

How to Strengthen Your Legal Position After Termination

The moments following a layoff or termination are critical. To preserve your legal rights, you should:

• Document every conversation or email regarding your termination or layoff
• Save performance evaluations, disciplinary records, and offer letters
• Avoid signing agreements under pressure or without legal advice
• Refrain from posting about your employer on social media during this time

Get Strong Legal Representation from Our California Employment Lawyer for Layoffs

At Hershey Law, we lead California in defending employee rights with a track record of success. Whether you are facing layoffs, terminations, or other workplace challenges, our dedicated team is here to fight for you.

• Leading Employee Law Firm: Hershey Law stands as California’s #1 advocate for employee rights, representing clients statewide in individual and class action lawsuits.
• Proactive Legal Advocacy: Our fearless approach ensures nothing obstructs justice, confronting corporate challenges head-on with transparency and determination.
• Exceptional Client Experience: Experience interactive, informative, and transparent legal counsel from a boutique firm dedicated to your rights and workplace justice.

Discover why employees across Los Angeles and California rely on Hershey Law for comprehensive legal representation. To schedule your free consultation, call us at 310-929-2190 or contact us online.

Originally Posted on July 24, 2024 | Updated June 5, 2025