Late final paychecks in California can result in penalties under Labor Code 203, requiring employers to pay added daily wages. Workers may file claims or lawsuits when their final paycheck is withheld after they quit or are terminated.
By Brad Nakase, Attorney
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Employers are required to pay a penalty under California Labor Code Section 203 if they fail to pay their workers on time after they leave or are dismissed in accordance with CA Labor Code Sections 201 and 202. For each day that the employer is late with the last paycheck payment, this penalty requires them to pay an additional day’s salary. As soon as the payment is thirty days past due, the penalty ceases to be accrued.
The “waiting time fine” is the main sanction imposed by California Labor Code Section 203 on companies that fail to comply with California Labor Codes 201 & 202. Employers are encouraged to pay their workers who resign or get terminated on time by imposing this penalty. When an employee leaves, they are entitled to their paycheck right away as long as they give a notice of a minimum of 72 hours in advance. If the employer wrongfully delays paying such a worker, they are entitled to extra compensation under California Labor Code Section 203.
In the same way, if an employer fires an employee, they must get their last pay on the very day they leave. The penalty under CA Labor Code Section 203 would likewise apply to an employer who failed to make this payment on time.
Finally, the California Labor Code 203 Section penalty starts to count extra days of wages if a worker leaves without giving notice and the company does not give them their last payment within seventy-two hours.
Labor Codes 201 and 202 are parts of the California Labor Code to which Code 203 pertains. When an employee is fired and their employer is required to compensate them, Labor Code 201 applies. In a similar vein, Labor Code 202 addresses circumstances in which a person leaves their job, whether or not they give their employer notice.
(a) If a company willfully neglects to pay, without reduction or abatement, any wages of a dismissed or resigned employee in compliance with Sections 201, 201.3, 201.5, 201.6, 201.8, 201.9, 202, and 205.5, a penalty will start from the date of the due date until they are paid or until an action is taken in response; however, it will not beyond 30 days.
Employees who conceal or abscond in order to avoid payment, or who decline to accept payment when it is fully offered to them, which includes any penalties subsequently incurred under this section, are not eligible for any benefits under this provision for the period of time that they do so.
(b) A lawsuit may be brought for these fines at any point prior to the statute of limitations against a claim for the wages that give rise to the penalties.
The penalty established by California Labor Code Section 203 is quite simple to comprehend. An extra day’s wages are added to the employer’s liabilities for every day that the employee is not paid on time. For instance, if a worker earned $110 per day and the company was 3 days late with the final paycheck, the worker would get an extra $330 on top of the money that was already due.
The punishment established by CA Labor Code Section 203 is not applicable to employees in two specific circumstances. The first exception occurs when a worker deliberately withholds or otherwise prevents themselves from receiving payment from their employer. This would unjustly raise the fine and defeat its intent, which is to penalize the company for not paying the worker on schedule. Employees who expressly object to the payment of outstanding wages are the other exemption. Similar to the first exception, this distorts the penalty’s intent and would only contribute to unjustly exaggerating it.
If there are waiting time fines or their last paycheck, employees have two choices. The first course of action that an employee may take is to file a wage claim with the Division of Labor Standards Enforcement. There are numerous ways for employees to submit a claim: in person, via email, by mail, or via the internet.
The address and name of the business being sued, any other liable parties, and payment details, such as the number of hours labored, the number of breaks taken, and any supporting evidence, such as pay stubs, are all requested by the DLSE in order to properly handle the claim. In general, a worker’s claim can be handled more effectively with all the data available.
When an employer fails to pay unpaid wages & waiting time penalties, workers have other options besides bringing a claim: they can sue the company. Notably, unpaid salary claims usually have a one-year statute of limitations, which means that a claim filed after a year of the employer’s refusal to pay will cease to be enforceable.
In the event that they decide to file a lawsuit, workers should record the amount of time since they last received their paycheck. Knowing the waiting time penalty statute of limitations is essential to preserving an employee’s claim because it is the same as the statute of limitations regarding the first unearned wage case.
Scenario 1: Company postpones final payment after employee gives notification of quitting
Situation: A week prior to her resignation, a waitress gives her employer notice that she plans to leave. She does not receive payment for her outstanding salary after her last day of employment. The company hasn’t given her the last paycheck for 5 days.
Violation: A penalty under CA Labor Code Section 203 will be imposed on the employer for the excessive delay in sending the final paycheck.
The Protections of Labor Code Section 203: Due to its illegal delay in receiving the final salary, the business involved in this instance will be required to pay a penalty established under Labor Code 203.
Scenario 2: The employer fires the employee & postpones the last payment.
Situation: The company terminates a cashier. The cashier receives his last payment from the workplace 2 days after being sacked.
Violation: A penalty under CA Labor Code Section 203 will be imposed on the employer for illegally delaying the final paycheck.
The Protections of Labor Code 203: An employee’s last paycheck is due right away after they are fired by their employer. The employer is subject to the penalty under CA Labor Code 203 for delaying the final paycheck by two days. In this instance, the worker would be compensated for the delay with two extra days of pay.
Scenario 3: Employee Leaves with Notice and Runs Away from the Company
Scenario: Two weeks prior to her actual resignation, a nurse gives her employer notice that she is leaving. Following her resignation, she deliberately works to avoid receiving payment from her company by driving throughout the state and avoiding all communication. She gets her last payment ten days later when she gets home.
Violation: By concealing herself from her employer, the employee was unable to get the waiting time penalty.
The way Labor Code 203 Works: The fine is not applicable if an employee takes actions to conceal information from their employer or cause other obstacles that prevent them from receiving their last salary. The employee in this instance would not be penalized for the period she was hiding, since she evaded payment by hiding from her employer.
California has strong labor regulations that protect workers and give employers guidance. They cannot, however, defend workers who choose not to file complaints against their bosses. If your company has wrongfully postponed your last salary, your best bet for receiving fair compensation is to get legal counsel from an experienced lawyer.
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