What Is California’s Final Paycheck Law?

Navigating the end of an employment relationship can be challenging, with emotions and stresses running high. However, the importance of adhering to legal obligations regarding final paychecks cannot be overstated. California’s legislature has put stringent measures in place to protect employees and ensure they are fairly compensated without undue delay when their employment ends. This is intended to safeguard workers’ rights and set clear expectations for employers.

Knowing these laws helps protect workers by guaranteeing timely payment of earned wages at the conclusion of their work relationship with an employer.

Prompt Payment is Required For an Employee’s Final Paycheck

Under California employment law, employees are owed their final paychecks in a timely manner. Those who resign must receive their check within 72 hours after giving notice. However, if an employee gives 72 hours’ notice of their resignation, the employer must pay them their final paycheck at the time of quitting. For employers who are fired or laid-off, they should be given the payment on the day of termination without any delay.

Section 201. If an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.

Section 202. If an employee not having a written contract for a definite period quits his employment, his wages shall become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of his intention to quit, in which case the employee is entitled to his wages at the time of quitting.

This paycheck must include all accrued wages and company-related expenses owed to them. Additionally, the value of earned but unused benefits such as paid time off or vacation days must be covered in this last payment.

Employees who are terminated and do not receive their final payment on their last day of work may be eligible for waiting time penalties. This means they could potentially collect additional wages for each delayed day until the final paycheck is received. The same applies to employees who resign but don’t get their final earnings within 72 hours.

Late Paycheck Penalties For Employers

When California employers fail to provide an employee their paycheck within the specified time frame, they can be subject to a waiting time penalty. For each day after the employee is no longer at the job and the wages remain late and unpaid, the employer may owe the affected employee their daily rate of pay as a penalty, up to 30 days

(a) If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.6, 201.8, 201.9, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.

This isn’t limited to just paycheck amounts either; employees can also claim interest on unpaid wages and recover reasonable costs for attorney’s fees associated with court actions taken against their employer.

When Employers are Permitted to Withhold a Final paycheck

Employers may withhold a final paycheck only if there’s a “good faith dispute” about the amount due. This means that they must have reasonable grounds to contest the wage amount you claim. Good faith disputes could involve:

Mistakes of Fact: Situations where clerical errors might have resulted in an employer believing wages were already paid.

Mistakes of Law: Ambiguities in your employment contract or misunderstandings about legal obligations could lead employers to believe you aren’t owed when you are claiming

In such cases, if it turns out an employer mistakenly withheld wages based on erroneous information or interpretation, they may not be penalized for the delay if it was done in good faith. However, once clarified, prompt payment must follow.

In scenarios where there is a good faith dispute over certain wages owed, the employer remains obligated to pay any wages that are undisputed immediately.

CA Labor Code § 206 (2017)  

(a) In case of a dispute over wages, the employer shall pay, without condition and within the time set by this article, all wages, or parts thereof, conceded by him to be due, leaving to the employee all remedies he might otherwise be entitled to as to any balance claimed.

How to Recover Unpaid Wages and Penalties 

Recovering unpaid wages and associated penalties involves a clear strategy. Here are some important steps you should take if you believe your employer owes you a final paycheck

Understand Your Rights: Knowing the laws surrounding wage payment after employment termination in California provides the foundation upon which you can address owed compensation.

Keep Records: Documentation serves as strong evidence; collect anything related to your job terms and ending such as work records, employment agreements, letters of termination or resignation, and paystubs.

Note Missed Payments: Make an accurate list of all earnings you have not yet received. These missed payments can include regular wages, overtime pay, bonuses that are paid irregularly, and accrued benefits like vacation pay you expected in your final paycheck but did not receive.

Reach Out to Your Employer: Direct communication with your employer can sometimes resolve issues without further action. If the absence of payment may have resulted from an innocent oversight or administrative error, letting them know about the discrepancy and requesting prompt payment can be effective. Document your communication, noting details like when you made contact, who you spoke to, and what was discussed.

If these efforts do not lead to you receiving your final paycheck, further regal action may be necessary.

Contact a Lawyer: If preliminary attempts to secure payment fail, seeking legal counsel becomes crucial. A San Diego employment attorney specializing in labor law can offer advice on how to proceed and represent you in dealing with your employer.

File a Wage Claim: With the assistance of your lawyer, you may decide to file a wage claim with the California Labor Commissioner’s Office or the Division of Labor Standards Enforcement (DLSE).

Upon reviewing your claim, the DLSE may arrange a preliminary conference to discuss the details of your complaint, or they might also schedule an official hearing before deciding whether you’re entitled to unpaid wages and penalties

Throughout this legal process, representation by an employment can dramatically improve your chances of securing what is owed to you.

Follow Up: Maintain communication with both the DLSE and your attorney regarding updates or next steps in your wage claim process. Staying involved and informed is essential in ensuring that your case progresses properly, and you are aware of any required actions on your behalf.

Dealing with unpaid wages can be a lengthy and frustrating experience, but you don’t have to face it alone. An attorney’s expertise can guide you through the intricate process of recovering what is due, making this challenge more manageable. For support in your wage claim case, contact the attorneys at Browne Employment Lawyers today to schedule a free consultation.