unpaid wages

State Penalized for Failing to Timely Pay Final Wages

Prompt payment of final wages. It’s not just a good idea. It’s the law. The State of California apparently didn’t get the memo on that one. The California Supreme Court had to tell the state that retiring employees are entitled to their final wages on their last day of employment. Labor Code sections 202 and 203, requires employers to make prompt payment of the final wages owed to employees who quit. Failure to timely pay final wages allows a court to impose statutory penalties. In McLean v. State of California, a retired deputy attorney general, sued the State of California on behalf of herself and a class of former state employees who did not timely receive their final wages when they quit or retired.

The state argued that sections 202 and 203 do not apply when employees retire. It also argued that McClean should have sued the state agency for which she worked instead of the State. The court concluded that:

Labor Code sections 202 and 203 apply when employees retire from their employment. We also conclude that McLean‟s decision to name the State of California as a defendant rather than the Department of Justice is not a basis for dismissing her suit.

When Are Final Wages Due?

For most California employees, final wages are due immediately upon termination (Labor Code section 201). It does not matter whether the employee is fired or laid off. If the employer is the moving party (i.e., the one to end the relationship) then it is a termination.

In contrast, California employees who quit their employment without notice must be paid within 72 hours of his last day of work(Labor Code section 202). There is an exception when an employee provides at least 72-hours notice. In that case, the final wages are due on the last day of employment.

There are some slightly different rules for:

Penalties for Failing to Timely Pay Final Wages

Employers willfully failing to timely pay final wages pay a penalty. (California Labor Code section 203). And don’t forget that “wages” includes accrued vacation or PTO (but not paid sick leave in most cases).

This “waiting time” penalty is calculated by multiplying the employee’s daily wage by the number of days until the employee is paid. There is a 30-day maximum on the waiting time penalties, but the penalty is imposed every day–not just every working day. There are a lot of cases where the penalty exceeds the actual wages owed. The penalties are almost mandatory unless an employer can show a good faith dispute that the wages were owed.

As the State of California just learned, employees must promptly receive their final wages. Employers cannot hold the wages hostage pending return of the employer’s keys or other equipment. If you have questions about California wage and hour issues, call an experienced employment attorney.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.