Waiting Time Penalties Law
Overview
In California when an employee's employment ends there are strict laws for when they must be paid.
The timing of the payment, and what must be paid, is discussed in detail at our final paycheck page.
If any amount of pay is late, just one dollar, even by one day, then California waiting time penalties apply.
Waiting time penalties go until full payment is made, up to thirty days.
The daily calculation includes holidays and weekends.
Example: An employee is terminated on Friday and given her final paycheck on Monday. She has three days of waiting time penalties.
Statute of Limitations
The waiting time penalties statute of limitations is three years.
Some courts had held it was one year, but recently the California Supreme Court held it was three years.
Example: An employee terminated on Friday is paid everything owed on Monday. She has three years to sue for the three days of penalties. The statute of limitations begins when a cause of action accrues, which is when she is not paid her final wages on time. That means three years from her termination date.
Employees Pay Nothing to Hire an Attorney
Note that a claim for waiting time penalties includes recovery of attorney fees.
Example: An employee paid all her wages, but late, and only being owed penalties, can sue for waiting time penalties only and her attorney can collect all fees incurred in the lawsuit.
Calculating the Penalty
The amount of the daily penalty is the employee's average daily pay. This includes all forms of pay: hourly, commission, and piece-meal rates if applicable.
Example: An employee paid $10 an hour for an eight hour day, plus making on average $50 a day in commissions, earns $130 per day. If her final paycheck is ten days late then she is owed $1300 in waiting time penalties.
Practical Tips
Note: many employers will refuse to pay a waiting time penalty if they are late paying wages. This is especially true of companies based out of state and not familiar with the California waiting time penalties law. Since the recovery of attorney's fees is in addition to the amount of waiting time penalties there is no cost to the employee in hiring an attorney.
The California law at-issue is Labor Code section 203.
Employer defenses:
An employer is not responsible for penalties if an employees tries to avoid being paid.
If there is a good faith dispute about wages being owed then an employer can try to avoid paying penalties.
Waiting time penalties only apply to employees. They do not apply to independent contractors.
Penalties only apply to wages - not the reimbursement of employee expenses.
The amount of penalties accruing stops when a lawsuit is filed.
Waiting time penalties are taxable. Taxes must be paid, but since it is a penalty and not a wage, wage deductions such as FICA are not deducted from the payment.
There is no excuse or defense for an employer by claiming an employee has to wait until the next regular payroll period to be paid.
Related:
California Final Paycheck Law
