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Use Caution When Laying off Employees Without a Return to Work Date

March 31, 2020 Articles

Employers who have laid off workers in recent weeks due to the shelter-in-place orders should be aware of little-known requirements regarding final paychecks. 

Even if employees are being furloughed with the expectation of returning to work in the near future, employers must pay out accrued vacation or paid time off with the final paycheck unless they are scheduled to return to work within 10 days or by the end of the pay period. Failure to pay out accrued vacation can result in up to 30 days of waiting time penalties.

Employees who have accrued paid time off are better off taking that payout as a lump sum rather than using it during a shut down because currently the California Employment Development Department has waived the normal one-week waiting period for unemployment benefits. Thus, employees who are laid off can begin collecting unemployment immediately. By contrast, employees who are using accrued paid time off will not be eligible for benefits during the paid leave period.

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