unpaid wages

Waiting Time Penalty Lesson

When an employee quits without notice, there is a myriad of considerations and consequences for an employer. Finding a replacement and keeping the business running smoothly is at the top of many employers’ minds. However, one of the most urgent tasks for an employer when someone unexpectedly quits should be compensating that employee. No matter how abrupt or disruptive an employee’s resignation is, California law requires compensation for all unpaid wages within 72 hours of resignation. That includes accrued vacation time. If an employer fails to comply, they are required by law to pay “waiting time” penalties, equivalent to the worker’s daily wage, for up to 30 days. A new court case, Nishiki v. Danko Meredith P.C., sheds more light on what specific obligations an employer has when an employee quits.

When Does the Clock Start Ticking for Waiting Time Penalties?

In Nishiki, the employee resigned by email on a Friday night, after the close of business. The Court held that it would be unreasonable and unduly burdensome on the employer to start the statutory 72-hour clock at 6:38 on a Friday night. According to the Court, in the pursuit of justice the law must be interpreted in a reasonable, common sense way that does not allow for unjust applications of the law. Employers don’t have to constantly check their email at all hours of the night or over the weekend to ensure compliance. The 72-hour clock starts when it can be reasonably assumed the employer received the resignation. This leaves a reasonable period for the employer to calculate and pay final wages.

Are Waiting Time Penalties Appropriate for Honest Mistakes?

Oh, what a difference a few dollars can make. In Nishiki, the employer made a clerical error, shortchanging the employee by $80. The employee argued this error, and the delay in correcting the error warranted waiting time penalties. The employer argued the error was not “willful,” and therefore did not owe penalties. The Court held the prolonged delay in correcting that error violated the Labor Code and awarded penalties. Employers should make every effort they can to comply with the law and correct any mistakes or errors as quickly as possible.

Attorney’s Fees Can Vastly Outweigh Wage or Waiting Time Penalty Claim

The Nishiki court awarded $2,250 in waiting time penalties. The court also directed the employer to pay $86,160 in attorneys’ fees. This should serve as a warning for employers and employees alike. Appealing Labor Commissioner decisions or lower court rulings in wage claims can be dangerous. The law discourages frivolous appeals. The appealing party must pay the other side’s attorneys’ fees if the appeal is unsuccessful. Fighting over relatively small amount may not be worth the risk of paying the other side’s fees.

Original article by JT Keane. Edited by Robert E. Nuddleman of the Nuddleman Law Firm, P.C.

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The Nuddleman Law Firm, P.C. represents employers and employees in a wide range of employment law matters. Much of his practice focuses on wage and hour issues, such as unpaid overtime, meal and rest break violations, designing or enforcing commission plans, and other wage-related claims. He also advises employers on how to avoid harassment and wrongful termination claims, and represents employees who have been victims of unlawful discrimination, retaliation or harassment. The Nuddleman Law Firm, P.C. helps employers develop good employment policies, and helps employers and employees with disability accommodation issues.

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