Cal. Labor Code 2922 provides that an employer or employer may terminate an employment contract that does not have a specified termination date, "at will," i.e., at any time, for any reason, or for no reason at all (with some exceptions, of course).
A fixed term (e.g., three month) contract for anyone other than a very highly compensated executive is practically unheard of under California employment law (or for that matter, under the law anywhere in the USA). So, I'm not sure why your wife would enter into a contract with any specified future termination date, because it's simply not necessary, and it puts your wife at considerable disadvantage with any employee.
That said, if the employment contract that your wife made permits an early termination during the first month, without cause, then the contract controls, and your wife can terminate the employee immediately. Otherwise, she would be liable to the employee for the remaining wages under the contract -- though she can still terminate the employee immediately.
Hope this helps.
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