California Final Paycheck Law
When it comes to employment, receiving timely compensation is crucial for financial stability. However, there are instances where employers may delay issuing final paychecks to their former employees. In such cases, employees may be entitled to more than just their last pay cycle’s earnings.
Understanding the final paycheck laws in California is essential for both employees and employers to ensure compliance and protect workers’ rights.
Resignation or Termination?
Under California employment law, employees who leave their jobs, whether by resignation or termination, are entitled to receive their final paycheck. The timeframe for issuing the final paycheck depends on the circumstances:
Resignation:
If an employee resigns without providing prior notice, their employer must issue the final paycheck within 72 hours of their last working day.
Termination:
In the case of termination, the employer must pay all outstanding wages, including unpaid salaries, bonuses, commissions, accrued vacation, and expense reimbursements, on the same day as the termination.
It’s important to note that the final paycheck should also include the employee’s unpaid benefits, such as paid vacation days. Failure to comply with the final paycheck law can result in penalties for employers.
Penalties for Late Payment of Final Paychecks
If an employer fails to issue the final paycheck on time, the affected employee may be eligible to seek damages for each day the wages remain unpaid. The penalties for late payment of final paychecks in California are as follows:
Waiting Time Fine:
Employers may be subject to a waiting time fine, which is eight times the employee’s hourly wage if they work 40 hours per week. For example, if an employee earns $20 per hour, they would be owed $160 for each day their final paycheck is delayed by the employer.
Part-Time Employees:
For part-time employees, the penalty is based on their daily hours according to a specific formula.
Overtime:
Employers may also face penalties for delayed payment of overtime wages if they were routinely planned as part of the employee’s work schedule.
It’s worth noting that even if an employee eventually receives their final paycheck after the deadline, the employer may still be liable for waiting time penalties if the employee did not receive all their money immediately.
Withholding Part of an Employee’s Final Check
Under California law, employers can withhold specific amounts from an employee’s final paycheck under certain circumstances. These include:
Mandatory Deductions:
Employers can deduct amounts required by federal or state legislation, such as income taxes or court-ordered garnishments.
Authorized Deductions:
Deductions for insurance costs, medical fees, or other expenses are permitted if explicitly allowed in writing by the employee and do not constitute a rebate or reduction of the employee’s pay.
Salary Agreements:
Deductions to pay for a pension or health insurance as agreed upon in the employee’s salary agreement may also be permitted.
However, employers are not allowed to deduct amounts from an employee’s wages for cash deficits, broken or lost company property, or losses resulting from negligence. Such losses are considered part of owning a business and should not be deducted from an employee’s wages.
Frequently Asked Questions about Final Paychecks
When is an employer required to pay final wages after termination?
Employees who are terminated must receive their final unpaid wages immediately upon termination, regardless of whether they were fired or laid off.
If an employee quits or resigns without providing prior notice, the employer generally has 72 hours to make the final payment available. However, if the employee gives at least 72 hours’ notice, the final wages must be made available on the last day of work.
What happens to unused vacation pay if I am laid off or fired?
In addition to unpaid wages, employees are entitled to receive payment for their unused vacation time immediately at the time of termination.
Employers are not allowed to forfeit vested vacation time upon termination. If an employer provides paid vacation time, the employee should be paid for their unused vacation days at their final rate of pay.
Can I sue my employer for not paying unpaid wages in California?
If an employer fails to make final payment available upon termination, employees have the right to file a lawsuit to recover their unpaid wages and other damages provided by law.
Employers may be liable for waiting time penalties if they willfully fail to make final wages available. However, a “good faith dispute” regarding the amount of wages due may provide a defense for employers.
How much can I sue for if my employer does not pay me on time?
In a lawsuit to recover unpaid wages, employees can seek their unpaid wages plus interest, waiting time penalties, reasonable attorney’s fees, and court costs.
If the employer’s violation of labor laws was not due to a good-faith error, employees may be eligible for liquidated damages, which can be double the amount of unpaid wages plus interest.
Can a final paycheck be direct deposit in California?
If an employee has previously authorized direct deposit, their final paycheck may be issued through direct deposit. Otherwise, it will be issued as a paper check.
Can my final paycheck be mailed in California?
If an employee wants their final paycheck to be mailed, they must request it and provide their mailing address.
The date of mailing is considered the date of payment, even if it takes several days for the employee to receive the check. First-class mail is typically used for mailing final paychecks.
Conclusion
Understanding California’s final paycheck laws is crucial for both employees and employers. Employees have the right to receive their final paychecks promptly upon termination or resignation. Employers must comply with the timeline for issuing final paychecks and include all unpaid wages, benefits, and authorized deductions. Failure to comply with these laws can result in penalties for employers. If you have concerns about your final paycheck, it is advisable to consult with an employment attorney to understand your rights and explore legal options.
Consulting a Los Angeles employment attorney will provide you with the necessary guidance and support to navigate the legal process effectively. Remember, time is of the essence, so seek legal advice promptly to maximize your chances of a successful outcome.
Call Setyan Law at (213)-618-3655 for a consultation.
