In California, employees are entitled to their last paycheck almost immediately. For employees who are terminated, the final paycheck must be paid on the final day of work. Employees who quit must receive their final paycheck within 72 hours of giving notice of their last day. According to the California last paycheck law, final paychecks must include all of the wages and cash value of benefits owed to the employee.
Employee Wage and Paycheck Rights in California
California Labor Code 204 mandates that employers pay their employees twice a month on designated paydays, with some exceptions. Additionally, overtime wages must be paid by the second regular payday after the overtime is worked.
When an employment contract between an employer and employee ends, a final paycheck must be paid within a certain period of time. According to California Labor Code 202, final paychecks must be paid:
- Within 72 hours of giving notice of their last day for employees who quit
- On the last day of work for fired, laid off, or terminated employees
Typically, what will happen is a human resources (HR) will hand the employee a check or hold a meeting with the employee to inform them that they are being let go. If the paycheck is not ready during the employee’s last day, it should be mailed to him or her within 72 hours.
Under the California final paycheck law, the final paycheck must include not just unpaid final wages but also unused accrued vacation time at the final rate of pay (Labor Code § 227.3). All employees must receive a written notice of their rate of pay when they begin working, as well as written notice of any changes made to this rate within 7 days (Labor Code § 2810.5).
Penalty for Failure to Pay Full Wages on Time
Employers who willfully withhold their employees final paychecks with total unpaid wages will be penalized by having to pay an additional “waiting time penalty.” According to California Labor Code 203, this penalty is equal to the employee’s daily wage for each day that the paycheck goes unpaid, up to 30 days.
California Labor Code 210 also incentivizes employers from making regular paychecks to their employees on time by making them subject to late fees. First-time violations for late paychecks are $100, however, intentional late payments or any subsequent late payments carry a penalty of $200 plus 25% of the amount of the wages withheld.
In California, your employer generally cannot deduct wages from your final paycheck, including accrued vacation time. There are some exceptions. Standard deductions can be made for state and federal taxes or court-ordered child support payments. The cost of damaged or lost equipment may only be deducted if it was due to “gross negligence.” It is important to keep in mind that California law requires that final paychecks include: all wages, all business expenses, any commission payments owed on top of base pay, and cash value of all benefits, including vacation, sick days, and paid time off.
Based on the Labor Code 203, a willful failure to pay wages is when an employer intentionally fails to pay wages to an employee when those wages are already due. However, a good faith dispute that any wages are due will preclude the imposition of waiting time penalties under Section 203.Examples of good faith disputes include: a clerical error causing the employer to believe you were already paid, or a mistake of law, such as the employment agreement being ambiguous as to the date or amount the employer had to pay.
An employer cannot entirely withhold an employee’s wage, but they can lawfully withhold amounts from an employee's wages only if:
- when required or empowered to do so by state or federal law
- when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions, or other deductions not amounting to a rebate on the employee's wages or;
- when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement.
Yes, meal or rest period premium wages that are not timely paid are also covered under the Labor Code 210 penalties. The Labor Code 210 imposes a penalty for failure to pay the wages prescribed by section 204 and certain other statutes. Additionally, the California Supreme Court held that premium pay for missed- meal breaks or rest breaks is indeed wages subject to the Labor Code’s timely payment and reporting requirements, and it can support Section 203 waiting time penalties and Labor Code Section 226 wage statement penalties where the relevant conditions for imposing penalties are met.
If you believe that your employer has failed to pay all your final wages by the necessary date then you should contact an employment attorney as soon as possible.
Contact an Employment Law Attorney for Help
If you did not receive your final paycheck within the necessary time period from your last day of work following a termination, you may be entitled to receive additional compensation from your employer. An employment law attorney at Shegerian & Associates may be able to review your case for free and pursue maximum compensation on your behalf.