As business lawyers, we are often asked questions about when an employee’s final paycheck is due and what penalties are assessed for a failure to comply with California’s final paycheck laws. Whether an employee is discharged or quits, an employee must receive timely payment of their wages in accordance with Labor Code Sections 201-203. This article addresses basic information employers must be aware of in order to be in compliance with such Labor Codes.
Understanding the Basics
1. Discharged Employee
An employee who is discharged must be paid all their wages, immediately at the time of termination.
2. 72 Hours’ Prior Notice
An employee without an employment contract for a definite period of time, who gives at least 72 hours prior notice of their intention to quit, must be paid all their wages at the time of quitting.
3. No 72 Hours’ Prior Notice
An employee who quits with less than 72 hours prior notice must be paid all their wages within 72 hours of quitting. This employee may request that their final paycheck be mailed to a designated address and the date of mailing will be considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.
What Must be Included in a Final Paycheck?
It’s important to note that all wages due in an employee’s final paycheck must include, amongst other things, accrued vacation, unpaid overtime, and unpaid meal and rest break premiums.
Penalties for a failure to comply with California’s final paycheck laws can add up quickly——and, at times, be more than the value of the employee’s final paycheck. An employer who willfully fails to pay any wages due to an employee who is discharged or quits within the time frames provided under Section 203, may be forced to a pay penalty from the date the wages were due up to a maximum of 30 days.
The penalty is calculated by multiplying the daily wage rate of the employee by the number of days it takes to provide the employee with their final paycheck, up to 30 days.
These penalties may be avoided if the employer can show that a good-faith dispute existed concerning whether any wages were due.
A “good-faith” dispute means that the employer’s defense, based on law or fact, if successful, would preclude any recovery on the part of the employee. However, even if there is a dispute, the employer must pay whatever wages are due and not in dispute.
In sum, it is imperative that employers are aware of the various ways employees must be paid their final paycheck to avoid substantial financial liability.
If you need assistance to further understand how this impacts your business, please contact us at email@example.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.