Do they get unemployment?

A client asked recently “What are the consequences of telling an employee who resigns and gives notice that you don’t need the notice and the employee can leave immediately?” Interesting question and the answer can be found in the California Unemployment Insurance Regulations (22 Cal. Code Regs. § 1256-1).  Well, at least part of the answer.

The regulations specify that an employee’s entitlement to benefits is determined first and foremost by a determination of who is the “moving party.” The moving party is the party that makes the decision and makes the separation happen. If an employee voluntarily resigns, the employee is the moving party and not entitled to benefits in most cases. If the employer discharges an employee, the employer is the moving party and the employee is entitled to benefits unless the discharge was justified by significant misconduct by the employee. Poor performance is not “misconduct” according to the regulations. It needs to be something serious like theft.

When an employee resigns and gives an effective date (last day of employment) in the future we typically call it a “notice period.” If the employee continues to work and is paid during the notice period, the employee is the moving party and is not entitled to benefits. However, the regulations specify that if the employer cuts off the notice period and does not pay the employee through to the end of the notice period, the employer becomes the moving party.

Back to the client’s question. What happens if the employer states; “We don’t need you to stay. We will make today your last day.” and does not pay out the notice period? Then the employer is the moving party and the employee gets unemployment. But, what if the employer states; “If you are giving notice because you think you have to or that we will be mad if you don’t, you don’t need to worry about that. You can make this your last day if you want.” The decision remains the employee’s and if the employee decides to eliminate the notice period, the employee remains the moving party and is not entitled to benefits. Keep in mind that if the employer stated; “We don’t need you to stay. We can agree that today will be your last day.” the separation will likely be deemed by “mutual agreement” and the employee will get unemployment.

As you can see, how the separation of employment is characterized really matters. Consequently, the way the communications are phrased also really matter.