Everyone who has a job expects to be paid. Under federal and California law, it is against the law for employers to not pay their employees on time. And the amount paid must be the full amount the employer owes.
Unfortunately, sometimes employers don’t live up to their legal obligations. When that happens, unpaid wage disputes can arise. This article explains the law in California when it comes to late and unpaid wages.
California law defines wages as all amounts paid for labor performed by any type of employee.1
A wage can be a fixed amount that the parties have agreed to in advance, or it can be an amount that the employee earns at a later time—like an hourly rate, a commission, or other method of calculation.2
An employee’s wages also include other benefits to which an employee is entitled as a part of his or her compensation.3
California Law Requires Prompt Payment of Wages
The payment of wages in California is controlled by the Labor Code. The Labor Code expresses a strong public policy that all wages by paid promptly.4
There are also specific timing requirements for paying the final wages to employees who have been discharged or who have quit.7 When an employee is discharged, California law requires that any wages earned and unpaid at that time are due and payable immediately.8
An employee who quits (and is not under a written employment contract for a definite period) is entitled to his or her wages no later than 72 hours after leaving. But if the employee has notified their employer of their decision to quit at least 72 hours beforehand, the employee is entitled to his or her wages at the time they quit.9
Employers violate California law if they fail to comply with these requirements and can face penalties.
Penalties for the Failure to Pay Wages on Time
California law provides for important penalties when an employer willfully fails to pay an employee’s wages as required by the Labor Code.
Specifically, a delayed payment can result in a penalty of up to 30 days of the employee’s wages.10 These are called waiting-time penalties. The unpaid wages accrue on a daily basis, not just for the days that the employee might have worked—but also on non-workdays.
Additionally, an employer may be subject to a civil penalty for unpaid wages. For the employer’s first violation, there is a penalty of $100 for each failure to pay each employee.11
For every subsequent violation or for any willful or intentional violation, the penalty is $200 for each failure to pay each employee, plus 25% of the amount unlawfully withheld.12
Filing a Claim
California law provides a claims process for employees and a former employees to enforce their wage rights. The claim must be filed with the California Labor Commissioner’s Office, Division of Labor Standards Enforcement (referred to as the “DLSE,” for short).
Typically, the DLSE will schedule a settlement conference to hear the claim and attempt to reach a settlement with the employer and employee for the unpaid wages.13
It can be helpful to consult with an employment attorney prior to doing this.
What Can Be Obtained
Employees and a former employees can file an individual wage claim to recover any and all of the following:
- Unpaid wages, along with overtime, commissions, and bonuses;
- A final paycheck that wasn’t received;
- Unused vacation hours that weren’t paid upon termination; and
- Unpaid or non-reimbursed business expenses.
An employee or former employee may also be entitled to:
- Liquidated damages for the employer’s failure to pay a minimum wage for each hour worked;
- The waiting time penalties discussed above for the failure to receive final wages timely upon separation of employment; and
- Other penalties for inadequate recordkeeping and banking issues.
Plus, as of July 1, 2015, an employee or former employee can seek sick leave pay for time accrued and used but for which the employee wasn’t paid.
What to Prepare
To assist with the DLSE’s investigation, the employee should provide as much information as possible. This includes: the legal name, location, and form of the employer (i.e., the method type of entity the employer does business as, such as a sole proprietorship, partnership, or corporation).
Employees should also have a copy of any records they have of the hours and dates they worked that support their claim. These records can include any paychecks or pay stubs they received showing the wages they were paid during the claim period, as well as copies of any dishonored (or “bounced”) paychecks.
In addition, a copy of employment documents received from the employer after January 1, 2012, that indicates the employee’s basic employment information—like their rate of pay; any overtime rate of pay; whether they were paid by the hour, shift, day, week, salary, piece, commission, or otherwise; and their regular paydays.
Employer’s Recordkeeping Duties
Along with employers’ legal responsibility to pay employees and former employees for unpaid wages, they must also maintain accurate employee time and payroll records. Employers are required to provide employees with itemized wage statements each time they are paid (or at least semimonthly).14
An employee isn’t required to keep his or her own time records or to retain all of the documents mentioned above. But employees who wish to pursue a claim for unpaid wages can help their case by keeping as much evidence as possible.
It’s also important to note that California’s law prohibits an employer and employee from agreeing to work around the protections described in this article.15 That kind of agreement is unlawful, even if it is voluntary on the part of both parties.
The courts in California have held that any agreement that prospectively waives an employee’s rights under to receive all of his or her earned but late or unpaid wages are illegal and unenforceable.16
An employee or former employee must file his or her claim for violations of minimum wage, overtime, illegal deductions from pay, or unpaid reimbursements within three years. If the claim is based on a written contract, the action must be brought within four years.
If these times lapse, the employee might be unable to obtain the wages they are owed. So it is important to act quickly.
Contact the employment attorneys at Smith & Lo to help you recoup the unpaid ages that you are due: (310) 997-2409.
Labor Code, § 200, subd. (a) [“‘Wages’ includes all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.”].
Labor Code, § 200, subd. (a).
Wise v. Southern Pac. Co. (1970) 1 Cal.3d 600, 607 [“in an action for wrongful discharge, and pursuant to the present day concept of employer-employee relations, the term ‘wages’ should be deemed to include not only the periodic monetary earnings of the employee but also the other benefits to which he is entitled as a part of his compensation.”].
Zaremba v. Miller (1980) 113 Cal.App.3d Supp. 1, 6 [“Labor Code provisions express a strong public policy for prompt payment of laborers that may not be undercut by any industry habit or custom to the contrary.”].
The original law on prompt payment applied only to private employers, but in 2000, the state legislature changed the Labor Code so that these provisions applied to employees directly employed by the State of California. However, the law exempts employees directly employed by any county, incorporated city, or town, or other municipal corporation. (Labor Code, § 220, subd. (b).)
Labor Code, § 204, subd. (a).
Labor Code, §§ 201, 202.
Labor Code, § 201, subd. (a) [“If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.”].
Labor Code, § 202, subd. (a) [“If an employee not having a written contract for a definite period quits his or her employment, his or her wages shall become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of his or her intention to quit, in which case the employee is entitled to his or her wages at the time of quitting.”].
Labor Code, § 203, subd. (a); see McLean v. State of California (2016) 1 Cal.5th 615, 619 [“An ’employer’ that ‘willfully fails to pay’ in accordance with sections 201 and 202 ‘any wages of an employee who is discharged or who quits’ is subject to so-called waiting-time penalties of up to 30 days’ wages.”].
Labor Code § 210, subd. (a)(1).
Labor Code § 210, subd. (a)(2).
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Labor Code, § 226.
Labor Code, § 219.
DiGiacinto v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629, 637.