Tip of the Day: A Final Paycheck Must be Timely to Avoid Costly Waiting Time Penalties
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- Published on Thursday, 02 February 2012 20:38
In California, public policy favors the full and prompt payment of all wages due an employee at the end of an employment relationship. Thus, to ensure that employers comply with the laws governing the payment of final wages, the Legislature enacted Labor Code Section 203. It provides for the assessment of a penalty against the employer when there is a willful failure to pay the employee wages owed at the end of the employment relationship. The term "willful" as used in Labor Code Section 203, and as defined by the courts, does not require anything blameworthy or an evil intent, but only that the person knows what he or she is doing, is a free agent, and fails to perform a required act. Thus, the waiting time penalty will apply when the final pay is not paid according to the law, and ignorance of the law will not provide a means of avoiding the penalty.
The penalty will be assessed if the employer does not comply with the following time frames: 1) when an employee voluntarily quits his job, the final paycheck must be given to the employee within 72 hours (calendar days not working days) of when the employee actually stops working, unless the employee provides at least 72 hours advanced notice, in which case the final paycheck must be provided to the employee at the time of quitting (i.e. the last day of work); 2) if the employee is discharged, with or without cause, the employee must be paid immediately. Additionally, the final paycheck must include all wages owed, including vacation pay and other wages as defined in Labor Code Section 200, or the waiting time penalty will be assessed, even if the employee was given some of his or her wages timely.
The penalty is calculated based upon the number of calendar days that the paycheck is late, whether or not the employee was scheduled to work those days, and includes weekends and holidays, times the employee’s daily rate of pay, for up to a maximum of 30 days. Payment of the wages or the commencement of an action (i.e. filing a complaint in court) stops the penalty from accruing. However, filing a claim with the Division of Labor Standards Enforcement (DLSE) is not considered commencement of an action, and does not stop the penalty from accruing. Note: The waiting time penalty is not wages, thus, no deductions are taken from the penalty payment. Read More.