Five reminders about the timing and location requirements for providing final wages to employees in California:
- An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.
- An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting. An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
- An employee who quits without giving 72-hours’ notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.
- Final wage payments for employees terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, the final wages must be made available at the office of the employer within the county in which the work was performed.
- The Labor Commissioner takes the position that employers may not rely upon the employee’s prior authorization for direct deposit for final wage payment. The authorization by an employee for direct deposit is immediately terminated when and employee quits or is discharged, and the payment must be made as set forth above. However, the employee can voluntarily agree to accept payment of final wages by direct deposit, but this must be agreed to by the employee.
For any employer who willfully fails to pay any wages due a terminated employee can subject the employer to “waiting time penalties” under Labor Code section 203. Waiting time penalties accrue at an amount equal to the employee’s daily rate of pay for each day the wages are not paid, up to a maximum of 30 calendar days. The court in Mamika v. Barca (December 1998) explained that waiting time penalties continue to accrue on a daily basis:
Under this scheme, unpaid wages continue to accrue on a daily basis for up to a 30–day period. Penalties accrue not only on the days that the employee might have worked, but also on nonworkdays. (Cf. Iverson v. Superior Court (1985) 167 Cal.App.3d 544, 548, 213 Cal.Rptr. 399 [unless otherwise specified, “days” mean “calendar days”].)
The California Supreme Court ruled in Pineda v. Bank of America (November 2018) that the statute of limitations for recovering waiting time penalties under Labor Code section 203 is three years. California employers need to review the obligations to timely pay employees their final wages to reduce this potential liability in the form of waiting time penalties, which can add up to a significant amount, even for minimum wage earners.