Thanks for asking for me. Thank you for the language that I inquired about. That is invaluable to my analysis of the situation.
Fortunately, referring to the employee as a "consultant" does not make them an independent contractor under CA law, and the "contract" reads much more like a job description and initial wage offer than a true independent contractor agreement/contract, which would perhaps limit your actions as regards ***** *****
While it was certainly a mistake for the HR employee to give this to an employee which your company did not intend to retain as an independent contractor, I think in this case it is a matter of no foul, no harm.
The employee is still legally an employee, not an independent contractor and there is no specific need to jump through any hoops other than to let the temp agency know that you would like to end this employee's position with your company.
As legally you are not the employer, I don't see that a separation/release agreement between your company and the employee is necessary---and not knowing the contents of such an agreement, I would hesitate to suggest that it was appropriate anyway.
You may simply let the temp agency know that you would like to terminate the employee so that the agency can prepare the final paycheck and any final documentation that the agencies use with its employees and leave it at that. You are free to do an exit interview if that is a norm for your company, but again, as the employee is technically not your employee, it isn't necessary as part of the process.
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