Waiting Time Penalties

Oftentimes employers take advantage of their employees and fail to pay them their final paycheck when they are fired or voluntarily leave their Company. California Labor Code § 203 provides for an assessment of a penalty against an employer when there is a willful non-payment of wages due to the employee at the conclusion of their employee relationship.

The waiting time penalty is measured at the employee’s daily rate of pay and is calculated by multiplying the daily wage by the number of days that the employee was not paid, up to a maximum of 30 days. The 30-day period is calendar days, and includes weekends and holidays and any other days that the employee would not normally work.

Payment of the wages or the commencement of an action stops the penalty from accruing. Filing a complaint in court commences an action. An employee’s filing a claim with the Division of Labor Standards Enforcement ("DLSE") is not considered the filing of an action, and does not stop the penalty from accruing.

What most people do not realize is that this penalty also applies to non-payment of accrued and unused vacation. Under California law, earned vacation time is considered wages; and under Labor Code Section § 227.3, whenever an employment relationship ends for any reason whatsoever and the employee has not used all of his or her earned and accrued vacation, the employer must pay the employee at his or her final rate of pay for all such earned, accrued and unused vacation.

Many times employers, particularly small businesses, will claim that they do not have enough money to pay their employee. This is not a defense! Inability to pay is not a defense to the failure to timely pay wages under Labor Code Sections § 201, § 201.5, § 202, and § 202.5, and does not relieve the employer from liability of the waiting time penalty under Labor Code Section § 203.

In a case I brought before the labor board an employer claimed that the employee owed the employer money for a previous deal she was overcompensated for. This also is not a valid defense. Other reasons commonly given by employers for not making a timely payment under Labor Code Sections 201, 201.5, 202 and 202.5 that do not relieve the employer of liability from imposition of the waiting time penalty are: Payroll checks are only paid on regular paydays, payroll department is out-of-state and that the employee owes the employer for goods or services.

If you feel that you were not given you final paycheck on time, you may be entitled to waiting time penalties. Please feel free to contact Aziz Legal by phone or email at (408) 203-4627 or abid@azizlegal.com.

This article is merely informational and is not intended to be used as legal advice. Use of any information from this article is for general information only and does not represent personal legal or tax advice, either express or implied. Readers are encouraged to consult Aziz Legal, or another attorney, for any specific legal matters.