Employee Termination During the COVID-19 Crisis

Many employers are facing difficult decisions with the current crises arising out of the COVID-19 pandemic. Non-essential businesses and services are being shut down and scaled back. Various stay-at-home orders have issued, resulting in severe decreases in foot-traffic, sales, inquiries, and cashflow. As a result, many business owners are being forced to cut back on their payroll expenses (i.e., strategic layoffs) or to even close their doors completely. But what are the risks of employee terminations in these uncertain times?


First, the general rule in California is that, yes, you can terminate any employee at any time if they are an “at-will” employee. So, the first order of business is to determine whether an employee is at-will. A useful question to ask yourself is whether any particular employee has an employment contract with the company, e.g., the company agreed to provide employment for a period of time, the company agreed to only terminate the employee “for cause,” or some other promise that makes the employment or termination of the employment contingent on the occurrence or non-occurrence of some fact.


Most employers do not enter into these types of employment agreements unless absolutely necessary, for example, where the employee possesses some unique talent, role or special value. Please take note, however, that such agreements can be created orally, so take special care not to inadvertently or recklessly make promises to an employee you will later regret. Inadvertent employment contracts may also lurk inside your employee’s manual.


Where you are confident that no such agreement exists, you can consider the employee at will. If you are at all unsure, consult with competent legal counsel. We can help!


Castleton Law Group
(626) 810-9300
17800 Castleton Street, Suite 630, City of Industry, California 91748