In the recently certified class action against Apple for wage and hour law violations, one of the plaintiffs’ allegations is that employees who quit or were dismissed weren’t given final paychecks in a timely manner as required by law. This is such an avoidable problem for employers! California has stringent requirements on the manner and time for payment of an employee’s final wages—all employers need to do is follow them.
The rules on payment of final wages vary depending on the circumstances of the employee’s departure.
Employees who are fired: If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately at the place of discharge. Lab C §§201(a), 208. There’s an exception for employees in “seasonal employment in the curing, canning, or drying of any variety of perishable fruit, fish or vegetables,” who may be paid within 72 hours. Lab C §201.
Employees who are laid off: The California Labor Commissioner takes the position that an employee who is laid off without a specific return date within the normal pay period has been effectively terminated and must immediately be paid all wages due and payable. If there’s a return date within the pay period, the wages may be paid at the next regular pay day. 2002 Division of Labor Standards Enforcement Policies and Interpretations Manual §3.2.2 (rev 2009). The Labor Commissioner also takes the position that the sale of a business effectively terminates the company’s employees, all of whom must be paid any earned wages, along with any accrued vacation. DLSE Manual §126.96.36.199.
Employees who quit: If the employee doesn’t have a written employment contract for a definite period of time (e.g., a contract for 1 year of employment) and voluntarily quits his or her job, the payment of final wages depends on the timing of the resignation (Lab C §202):
If the employee gave at least 72 hours’ prior notice of his or her intention to quit, the employee must be paid his or final wages on the final day of employment.
If the employee gave less than 72 hours’ prior notice of his or her intention to quit, the final wages are due 72 hours after notice of the resignation was provided.
An employee who quits with less than 72 hours’ notice must physically return to the office or agency of the employer in the county in which the work was performed to recover his or her final wages unless the employee requested payment by mail and provided a mailing address for his or her final paycheck. DLSE Manual §3.7. See Lab C §208.
The best way to ensure that these rules are followed is to incorporate them into employer policies. A policy addressing the payment of final wages should contain the following four statements:
An employee who is terminated involuntarily will be provided with a final paycheck at the time of termination.
An employee who provides at least 72 hours’ notice of his or her resignation will be provided with a final paycheck on the last day of work.
The final paycheck of an employee who resigns with less than 72 hours’ notice will be made available at the employee’s regular workplace within 72 hours of the employee’s last day of work, unless the employee requests in writing that the paycheck be mailed.
Final paychecks will include payment for wages owed, including any accrued but unused vacation time, minus any authorized or required deductions.
For help in counseling your clients about compliance with complex wage and hour rules, turn to CEB’s award-winning California Wage and Hour: Law and Litigation. Also check out CEB’s On Demand programs Essential Employment Law Issues: Wage and Hour and Wage and Hour Damage Calculations—an Overview.
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