California law requires final paychecks within 72 hours, with penalties for delays, including daily wages up to 30 days. Employees can file complaints or sue employers to recover unpaid wages and penalties for late final paychecks.
By Brad Nakase, Attorney
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California law guarantees workers the right to receive their wages promptly (or, under specific conditions, within 72 hours) after they resign or leave their jobs.
While the vast majority of California employers are punctual when it comes to sending out final paychecks, there are those rare cases where employers decide to play the odds and just refuse to pay their former employees.
This breaks the law.
Businesses in California face fines if they fail to pay their former workers when they are due or if they refuse to pay them at all. If you’re reading this, it probably means you haven’t been paid for your work yet. If that’s true, know that you have certain rights in this situation. To understand these rights, it’s important to know about California’s final paycheck law.
Employers are required by law in the majority of states to pay out a terminated employee’s final paycheck by a certain date. Among these states, California has laws that are far more stringent than the average.
In contrast to the majority of states, California mandates that employers pay employees their last paycheck immediately upon termination or resignation, rather than waiting one or two weeks after the worker’s last day on the job.
There is a 72-hour grace period for employers in cases where an employee quits without notice and on the spot. If the employee gives 72 hours’ notice before quitting, the employer is required to have the last paycheck prepared for the employee’s last day.
California’s short deadline is not the sole tough rule in the final paycheck law.
Employees in California are further protected by the final paycheck law, which mandates that employers pay former workers back for any paid or vacation time that goes unused. This amount also needs to be paid by the due dates that were mentioned previously. Employers still face penalties if they pay employees for hours worked but do not account for unused vacation or PTO in their final paycheck. These penalties would have been the same if the employer had not paid the worker at all.
There are financial penalties for companies in California who do not pay their employees all that they are owed by the due date.
The penalty in the state of California is equal to the worker’s typical daily wage for every day that the final paycheck is overdue, with a maximum of thirty days applied to the penalty.
For example, a company would have to pay a former employee for 21 full days of work if they wait three weeks after the employee’s last day to pay them.
The employee’s everyday wage will serve as the basis for financial penalties. Commissions and overtime are factors in the employee’s regular schedule that determine how many hours an employer is required to pay.
In order to determine the appropriate amount of penalties for employees, the state follows these guidelines:
You have a right to compensation from your employer for each day you are made to wait for your payment. All of the days that you typically took off, including Saturdays and Sundays, are included in this.
There are consequences if your boss pays you less than what you are due.
For example, even if your employer paid you in full for your vacation and PTO when you left, they are still liable for any penalties that may have been accrued if they had paid you in installments.
No business wants to pay a worker who isn’t contributing to the company’s success, which is why these rules exist to safeguard workers. Everyone benefits as long as businesses in California follow the “last paycheck” law.
The laws of California spell out a number of “don’ts” concerning the last paychecks of employees. Many employers, particularly those who take offense at an employee’s abrupt resignation, resort to unfair practices in an effort to avoid paying the employee or take more money from them.
You need to know your rights to avoid signing documents or doing extra work to get the money that is rightfully yours.
Prior to issuing a final paycheck, the employer is unable to do the following:
You have two options if your employer is being uncooperative or refuses to pay you your final paycheck: either go to the California Division of Labor Standards Enforcement (DLSE) and lodge a complaint or sue your employer.
You can expect to get your last paycheck plus penalties equal to the number of days you were delayed, up to a maximum of 30 days, if you decide to sue and win.
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