Employers often provide required notice periods so that they're not caught by surprise when one decides to leave. However, once an employee gives notice, it can create an awkward situation for the remainder of the team; plus, as an employer, you don't necessarily want a "lame duck" employee sniffing around your trade secrets.

Because laws can change frequently--especially regarding employee issues (and ESPECIALLY in California, which has the reputation for being very worker-friendly), it's best to consult directly with a California attorney familiar with the employment laws. You have a very specific situation that requires direct legal advice.