Payment of Departing Employee’s Final Wages and Penalties for Failure to Pay Wages Upon Termination
As a plaintiff-side employment lawyer, one of the most common questions I encounter is about when an employee’s final wages are due after termination, and penalties associated with the late payment of wages. This entry in intended to provide some general guidance in this regard. Under California Labor Code §201, “If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.” (Emphasis added.) Similarly, an employee who is quitting his or her position must receive his/her final wages at the time of termination, so long as the employee provided the employer with at least 72 hours of notice regarding the intention to quit. Cal. Labor Code §202. Section 201 provides for an exception for certain seasonal workers, so long as wages of such workers are paid within 72 hours. However, if an employee who is not subject to a written contract for a definite period quits his or her employment without providing the employer with the required notice, the employee’s wages are due no later than 72 hours after termination. Id. An employee who quits without providing a 72-hour notice is entitled to receive payment by mail upon request, and designating a mailing address. But, according to Labor Code §202, “[t] he date of the mailing shall constitute the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.” An employer who willfully fails to pay any wages due to a terminated employee in accordance with the timeframe above may be assessed a waiting time penalty under Labor Code §203. The waiting time penalty is an amount equal to the employee’s daily rate of pay for each day the wages remain unpaid, up to a maximum of thirty (30) calendar days. Mamika v. Barca , 68 Cal.App4th 487 (3rd Dist. 1998). The definition of “willful” for purposes of Labor Code § 203 has been determined by the California courts and is summarized at Title 8, California Code of Regulations, § 13520: “A willful failure to pay wages within the meaning of Labor Code Section 203 occurs when an employer intentionally fails to pay wages to an employee when those wages are due.” No waiting time penalties would be imposed upon the employer if there is a “good faith dispute” concerning the amount of the wages that are due. According to Title 8, California Code of Regulations, § 13520, a “good faith dispute” that any wages are due occurs when an employer presents a defense, based in law or fact which, that if successful, would preclude any recovery on the part of the employee. However, even where there is a dispute, the employer must pay, without requiring a release, whatever wages are due and not in dispute. It is important to note that the above is a general overview of the law in this area and does not cover all of the exceptions and intricacies of the law. However, if a terminated employee is not given all of his or her wages upon termination, or within 72 hours, it is important to consult with an employment law attorney regarding the employee’s rights. These issues often resolve quickly with minimal efforts and expenses.