Whether you resign your job or are terminated, you are owed your final paycheck. But not just that, you are owed it in full and in due time. If an employer fails to provide you with the correct amount and by a certain deadline, it may owe you in addition to the full amount, a waiting time penalty. This is a type of punishment for employers who fail to pay final wages when they should.
This law, though seemingly simple enough, is quite complex. Many clients we see have questions about it, and so here we provide answers to common questions, like:
- What is the waiting time penalty in California?
- What is owed to you in your final paycheck?
- When must the employer provide you with your final paycheck?
- Does the employer owe you any unused vacation leave or paid-time-off (PTO)?
- What's the waiting time penalty for unpaid final wages?
- How do you recover final wages and penalties in Los Angeles?
At Sirmabekian Law Firm, PC, we help our clients understand their rights and make informed decisions. If you have questions about your final wages, contact our office today to schedule an appointment to discuss them. The first visit is a one-time free initial consultation.
The waiting time penalty is governed by Labor Code 203, which states that
Should an employer willfully fail to pay any, without reduction or abatement, any wage of an employee who quits or is discharged, then the wage of that employee shall carry on at the same rate as a penalty starting from the due date until it is paid or until an action is commenced; but these wages shall not be continued for a period of more than 30 days. Any employee who secretes or chooses to absent themselves in order to avoid payment to them, or refuse to receive the payment when tendered, including penalties accrued, will then not be entitled to receive any benefit for the time where the employee avoids payment.
These penalties can be filed for at any point of time so long as it is before the expiration stated on the statute of limitations on an action for wages where the penalties arise from. The statute of limitations is three years from the date when the most recent violation took place.
A waiting time penalty, however, is not automatic simply because you file a lawsuit. The employer may have a good faith dispute that would prevent the issuance of the penalty. Further, you must have had a true employer-employee relationship, meaning (1) you must have been paid wages within the meaning of the law; and (2) the relationship ended upon you quitting or the employer discharging or laying you off.
The employer must pay you your final wages in full. All forms of compensation must be included in the final paycheck, including:
- any hourly pay for all hours worked
- a fixed salary
- any overtime pay
- wages in the form of room, board, or clothing
- tips or gratuities
- piece-rate payments
- a payment that varies from project to project
- vested retirement contributions, and
- earned and unused paid time off or vacation time.
A few notes about vacation time, sick leave, and paid time off:
- If your vacation time is part of a company-wide policy to “use it or lose it,” you still earned that vacation time and m must be paid the vacation time you earned.
- If your company offers paid time off (PTO) as opposed to specific vacation and sick days, then you earned this time – the company cannot claim that part of those days is for sick leave and, thus, will not pay you for it.
If you are terminated or resign a position before your first year is up and your employment contract provided for two weeks of vacation time, you should be paid the vacation time in proportion to your time at the job except for any time you already took.
The timing of your final paycheck depends on whether you quit or were terminated.
Generally, if you are terminated, all unpaid wages earned up to and including the day you are discharged must be paid on the day you are discharged. There are some minor exceptions to this rule, like for:
- seasonal workers
- some employees in the movie/entertainment industry
- oil drillers
- employees of live theatrical or concert events
- employees with collective bargaining agreements
- temp employees.
Most of the above-listed employees must be paid their final wages within 24 and up to 72 hours after termination.
If you resigned, payment of final wages depends on the notice you provide the employer. When a person gives notice within a minimum of 72 hours, then final wages must be paid on your last day of employment. If you quit without notice or give less than 72 hours of notice, then the employer has 72 hours to pay the final wages to you.
Keep in mind that regardless of whether or not you were terminated or you resigned, an employer cannot condition the final paycheck with a release of liability or a waiver of rights. If you had to sign one of these documents for payment of final wages, the document is null and void.
The waiting time penalty is not a set fee but one that must be calculated. The waiting time penalty is a full day of wages for each day payment is delayed and can accrue up to 30 days after discharge until final wages are fully paid.
To calculate the value of the penalty, your daily wage rate is determined and then is multiplied by the number of days’ payment is delayed up to 30 days. Daily wage rates include base wages, commissions, bonuses, and vacation pay.
For example, if your daily wage rate is $125 and the company delayed the final payment for 5 days, the value of the waiting time penalty is $625.
There are three basic ways to resolve and recover final wages with your employer. The first means may simply be to discuss the unpaid wages with the former employer. If that fails, then you can file a wage claim for unpaid wages and penalties through the Labor Commissioner’s Office or file a lawsuit. There are benefits and drawbacks to both.
The best path for you depends on the facts and circumstances of your case. An experienced employment law attorney at Sirmabekian Law Firm, PC, can listen to your story and provide guidance on the best options for you. Contact our office today either online or at 818-473-5003.
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