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As long as your wife is not treating your friend's wife any different due to discrimination based on a protected characteristic, there is nothing illegal that is occurring.
While her behavior is definitely not desirable, not pleasant, and certainly doesn't seem to make for a congenial work environment, your friend's wife would not have any cause of action against your wife or you for her actions.
As an at-will employee, you can terminate your friend's wife at any time for any reason with or without any prior notice.
This stems from the employment at-will doctrine, which is codified in California Labor Code Section 2922, and states: "An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month."
Due to your friend's wife comments, she can be terminated for misconduct connected to work due to her physically threatening comments against your wife, so you would also not have to worry about paying her unemployment benefits.
Additionally, there is probably a sufficient amount of evidence for your wife to get a restraining order against your friend's wife.
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Thanks and best of luck!