The Waiting Time Penalty in California
Waiting penalties are in place to ensure employees are paid all of their wages at the time of employment termination. Here’s everything you need to know about California Labor Code 203: waiting time penalty.
Typically, waiting time penalties are equivalent to the amount of money the employee would earn for 30 days of work. For example, if an employee earned $30 an hour and worked 8 hours a day, they would receive $7,200 if their employer failed to compensate them for 30 or more days.
When do waiting time penalties apply?
There must be an established employer-employee relationship, and a discharge of the employee, whether it be a layoff or a resignation, for the penalty to apply. The grounds for the waiting time penalty are an employer’s willful failure to pay their employee’s wages at the end of their employment relationship. It is important to note that this penalty applies to all wages earned, but not expenses. Section 202(a) of the California Labor Code defines “wages” as the money or other value that an employee receives as compensation for the labor they perform at their job. Wages can exist in the form of hourly pay, a fixed salary, piece-rate compensation, commissions, and paid time off. Wages of other value may include the space, clothes, or other benefits an employee receives as part of their compensation.
Criteria for the waiting time penalty does not consider the intentions of the employer, but rather, that they were aware of their requirement to pay the employee their wages at the time of their termination/resignation and that they failed to do so within the proper time frame. However, receiving the penalty does not happen right away. There can be instances of a “good faith dispute,” where the employer presents a defense of their actions/lack thereof. If the defense is successful, then the employee may not receive any recovery. Alternatively, if the employer’s defense is unsuccessful and there is no evidence to support their conclusion, which is more likely, there will be no finding of a good faith dispute and the waiting time penalty will apply.
Bounced Checks
If an employer’s check bounces back, it could mean that there are insufficient funds, the employer no longer has an account with the bank that the check was issued from, or any other reason that prevents the employee from cashing or depositing their final wages check. Per the California Labor Code 203 Section 1, employers who pay with checks that bounce will face a penalty of additional wages for every day that the check remains insufficient. This penalty will apply to the rate of pay the employee was earning at the time that the check bounced. If the employer can prove that their action was unintentional and pays the employee their proper final wages, they can be excused from the penalty.
More Information on the 30-day Rule
The waiting time penalty is calculated by taking the employee’s daily pay rate, and multiplying their wage by the number of days that they have not been paid by their employer. This calculated number maxes out after 30 days of no pay. It is important to note that the employee does not continue to receive their wage for 30 days after they leave their job, but rather, that they are entitled to up to 30 days’ worth of compensated wages if the waiting time penalty applies. The 30-day timeframe includes weekends, holidays, and any other days the employee would not be working. However, once the employee is paid fully, the accumulation of the penalty fines ceases.
Additional Information to Keep in Mind
Once an employee files a complaint with the court, the legal process begins. An employee’s filing with the Division of Labor Standards Enforcement does not initiate the legal process, nor does it stop the penalty from accumulating. Finally, since the waiting time penalty is not the same as wages earned while working, but rather representative of them, no deductions are taken from penalty compensations.
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