PROMPT PAYMENT OF FINAL WAGES

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Prompt Payment of Final Wages

Employees must normally be paid not later than their regularly scheduled paydays. However, the employer must pay an employee who quits within 72 hours after their final day of work. If an employee is discharged, payment of wages must be made immediately.

Employees who are not paid their wages during the required time, may file a complaint with the Labor Commissioner or file a civil action. Labor Code Section 203 provides that employers who fail to pay final wages to their employees as required, may be assessed up to 30 days pay for the employer’s willful failure to pay the wages due. “Willfulness” does not require any evil purpose, but merely requires an intentional failure or refusal to pay the wages.

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Section 203 penalties are usually imposed in cases where an employee leaves employment and it is later determined they are owed wages in the form of unpaid overtime or other wages. Under such cases, the Labor Commissioner and courts routinely award Section 203 penalties, which in some cases may exceed the actual wages owed. For example, if an employee leaves employment and is still owed just one day’s pay, which the employer does not pay for 31 days, then the employer is subject to the employee’s daily wage continuing for 30 days. Further, “30 days” does not mean one month, but rather 30 days worth of wages.

Section 203 applies to all private employees, whether they are hourly employees or overtime-exempt employees. Assessment of the penalty is not automatic however. A good faith dispute that any wages are due may prevent imposition of the penalty.

In order for the penalty to apply, there must be a true employer-employee relationship and a quit or a discharge, which includes a layoff. “Wages” owed does not include expenses owed. In calculating the penalty, overtime wages are usually not considered unless it is regularly scheduled each week. Occasional overtime is not considered in the calculation of the daily pay rate for purposes of calculating the penalty. If the employee is part-time, the daily rate is calculated based on the part-time hours being used to calculate the daily rate.

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Employees must normally be paid not later than their regularly scheduled paydays.

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