California Labor Law – End of Employment

Whether an employee decides to resign to accept a more lucrative position or an employer decides to terminate an employee for poor performance, the employee must receive timely payment of his or her final wages. What constitutes timely payment depends on whether the employee resigns or is terminated. And failing to timely pay an employee’s final wages can result in significant monetary penalties against the employer. In this post, I will discuss the when, where, and how employees must be paid their final wages at the end of their employment.

Every California employer must timely pay final wages to its employees

The timing requirement for paying an employee’s final wages varies based on whether the employee quits or is fired. Under California Labor Code section 201, when an employee is discharged (or fired), the employee’s earned and unpaid wages become due and payable immediately. In addition to wages, any earned but unused vacation time must also be paid. The employee may also be entitled to a pro rata share of a promised bonus, depending on the reason for discharge.

On the other hand, an employee who quits must be paid within 72 hours of his or her quitting. But – and this is where we often see violations, particularly at hearings with the California Labor Commissioner – if the employee provides 72 or more hours previous notice of his or her intention to quit, then the employee is entitled to all wages at the time of quitting. (Cal. Lab. Code § 202.)

If employers do not follow the California requirements for proper payment of final wages, they may be subject to severe monetary penalties

Along with the basic timing requirements, there are also some other, unique rights and responsibilities an employer has in paying employees after their separation of employment. According to a little known statute of the California Labor Code, an employer may pay an employee’s final wages via direct deposit, so long as the employee has authorized payment in such manner. (Lab. Code § 213). This usually applies in situations where the employee regularly receives payment of wages through direct deposit. And if applicable, this may be a very effective to ensure that an employee is timely paid.

Who knew the old adage, “Location! Location! Location!” also applied to rules governing where an employee must be paid his or her final wages. Under California Labor Code section 208 , employees who are fired by their employer must be paid “at the place of discharge” and employees who quit must be paid at the office or “agency of the employer in the county where the employee has been performing labor.” So, an employer’s simply mailing an employee a check is not always the proper method of paying final wages.

Failing to timely pay employees their wages within the required time can lead to significant penalties to the employer. For each day after final wages are due but not paid, the employee continues to accrue – and is entitled to – his regular wages, for up to 30 days. (Cal. Lab. Code § 203.) These are commonly referred to as “waiting time” penalties.

YASH LAW GROUP prosecutes and defends wage and hour cases involving claims of untimely wages. Accordingly, we offer a unique and thorough perspective of this area of law. To learn more about how our Orange County, California law office can help, please contact us to schedule a free consultation.