401(k) Termination and Death

What is the name of your state? GA

Our 401(k) plan is not company matched. You cannot withdraw or roll over to another non-company plan until termination or death; excluding Federal stipulations. The plan is not very good. Several of my employees have wanted to change plans but are not able to. They can stop the deductions but can not have access to their funds unless they terminated employment, or die.
Not even with a penalty.

Is this common?

It is not only common; it is the law.

Barring a clause in your contract that permits a loan (which is not required by law) or a hardship withdrawal as permitted under Federal guidelines, 401k monies cannot be accessed except at the termination of employment or by death. The government is not going to allow you easy access to pre-taxed money, penalty or not.