Waiting Time Penalties under California Labor Code section 203, The Law Regarding “On-Duty” Meal Periods in California. At issue for the appellate court was whether employees who are entitled to a meal period premium under Labor Code § 226.7 may also recover derivative penalties under Labor Code § 203 (waiting time penalties) and § 226 (inaccurate wage statements). Waiting-Time Penalty for Nonpayment of Wages (Lab. § 203. 1, 5 [employers can exercise “control over vacation schedules by either making monetary payments in lieu of time off for vacation time accumulated in excess of an announced limit or announcing a level beyond which additional vacation time would no longer accrue.”].↥, See DLSE Opinion Letter 1993.08.18 (Opens in new window) (Aug. 18, 1993.↥, Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774.↥, Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1103.↥, Labor Code, § 227.3; Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774, 779 [finding that employer’s requirement of employment on an anniversary date cannot prevent right to vacation pay from vesting].↥, Labor Code, § 206.5, subd. The greatest risk of not being paid comes when an employee is discharged. When an employee resigns or is terminated, the employee has earned, at minimum, a proportional share of vacation time based on the time worked. It can’t be taken away simply because you didn’t spend it.⁠43, Put simply, although many employers claim that they have a “use it or lose it” policy with respect to vacation time, that is not a legal policy in California. First, only workers who receive “wages” are covered by the waiting time penalty.⁠8 So, if an employee believes they have been underpaid in their final paycheck, the first question they need to ask is whether the amount they were required to be paid is a “wage” within the meaning of the law. California Labor Code section 203 provides for a penalty equal to one day of wages at your standard hourly rate for each day the employer falls beyond the deadline, up to a maximum of thirty days. These are known as “waiting-time” penalties, and they can often exceed the amount the you were owed in … Pineda, a former bank employee, sought to recover 203 penalties because he received his last paycheck four days late. California Labor Code Section 203 provides for penalties to workers who are not paid all wages due at the time of their termination, or within 72 hours of their resignation. The waiting time penalty applies if the employer intentionally pays final wages with a check that cannot be cashed or deposited because it is not supported by sufficient funds or because it is drawn on a bank where the employer no longer has an account. Defenses presented which, under all the circumstances, are unsupported by any evidence, are unreasonable, or are presented in bad faith, will preclude a finding of a ‘good faith dispute. '”], quotations omitted.↥, Labor Code, § 227.2 [“[A]n employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination.”].↥, Boothby v. Atlas Mechanical, Inc. (1992) 6 Cal.App.4th 1595, 1601 [“A ‘use it or lose it’ vacation policy provides for forfeiture of vested vacation pay if not used within a designated time, while a ‘no additional accrual’ vacation policy prevents an employee from earning vacation over a certain limit. 45, 51.↥, Labor Code, § 213, subd. The timing of an employee’s final paycheck depends on whether they are fired or they quit. (a) [“If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.9, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days. § 340 (a). (a) [applying only to the failure to pay “any wages of an employee”].↥, Labor Code, § 200, subd. Labor Code section 226 imposes pena… (a); see McLean v. State of California (2016) 1 Cal.5th 615, 619 [“An ’employer’ that ‘willfully fails to pay’ in accordance with sections 201 and 202 ‘any wages of an employee who is discharged or who quits’ is subject to so-called waiting-time penalties of up to 30 days’ wages.”].↥, See Labor Code, § 203, subd. Section 203 of California Labor Code establishes that if an employer willfully fails to pay wages to an employee as due, without the abatement or reduction, in accordance with Labor Code section 201, the wages of the affected employee shall continue as a penalty from the due date at the same rate until paid, up to a maximum of 30 calendar days. Accordingly, if a worker normally earned $25 per hour, and worked 8 hours per day, his … '”].↥, Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 946 [“[I]f an employer fails to pay wages in the amount, time, or manner required by contract or statute, the employee may seek administrative relief by filing a wage claim with the commissioner or, in the alternative, may seek judicial relief by filing an ordinary civil action for breach of contract and/or for the wages prescribed by statute.”].↥. There are a few exceptions to the vacation accrual rule. . It incentivizes employers to pay wages in a timely manner.⁠47, The waiting time penalty consists of a full day of wages for each day that payment is delayed.⁠48 The penalty continues to accrue for as much as 30 days after discharge, depending on when payment is fully satisfied.⁠49. 3d 1013, 1029 [“this Court holds that a mistake of law⁠—⁠even when made in good faith⁠—⁠does not prevent Defendant’s conduct from knowingly and intentionally failing to comply with subdivision (a).”].↥, See Cal. (a) [“Defenses presented which, under all the circumstances, are unsupported by any evidence, are unreasonable, or are presented in bad faith, will preclude a finding of a ‘good faith dispute. These penalties are paid to the terminated employees in amounts based on their wages. The fact that a defense is ultimately unsuccessful will not preclude a finding that a good faith dispute did exist. S170758 (Cal. Code Regs., tit. Under the California Labor Code, you must pay all wages due at the time of an involuntary termination. Penalties accrue not only on the days that the employee might have worked, but also on nonworkdays.”].↥, Mamika v. Barca (1998) 68 Cal.App.4th 487, 493 [“[T]he critical computation required by section 203 is the calculation of a daily wage rate, which can then be multiplied by the number of days of nonpayment, up to 30 days.”].↥, Drumm v. Morningstar, Inc. (N.D. Cal. (a).) Under California Labor Code sections 201 and 202, an employer is required to pay an employee his/her final wages in full and in accordance with the following schedule: The court also considered the purpose of the statute, which is to enact a substantial penalty on an employer that delays in cutting the final paycheck. The penalty is one day’s wages for every day you are late, up to 30 days (Labor Code section 203). As with other forms wages, employers may not withhold vacation pay to pressure workers to sign a release waiving claims or creating a contract.⁠45 Vacation time must be paid when a person is terminated or resigns, and the employer cannot delay payment to pressure an employee to sign a release of any kind. Labor Code section 203 imposes waiting time penalties of one day’s wages for each day, up to 30 days, that an employer willfully fails to pay wages at the end of employment. Our consultations are free and confidential. In general, an employee who is fired must be paid all unpaid wages that have been earned up to and including the date of termination. 1, 5 [the law “does not require that an employer include a paid vacation as a portion of his employees’ compensation”].↥, Labor Code, § 227.3 [“Unless otherwise provided by a collective⁠—⁠bargaining agreement, whenever a contract of employment or employer policy provides for paid vacations, and an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages at his final rate in accordance with such contract of employment or employer policy respecting eligibility or time served; provided, however, that an employment contract or employer policy shall not provide for forfeiture of vested vacation time upon termination.”]; see Suastez v. Plastic Dress-Up Co. (1982) 31 Cal.3d 774, 779 [“‘Many tribunals have taken the view that vacation pay is simply an alternate form of wages, earned at the time of other wages, but whose receipt is delayed. The employee is entitled to one week of extra wages at the time of termination. The right to a paid vacation vests or accrues when the employee performs the work that entitles the employee to a paid vacation.⁠36. A cap policy may state that once an employee accrues a fixed number of days, vacation time will stop accruing until the employee uses some of their vacation time.⁠40, There is no specific number of days that constitute a permissible cap, but employers should keep in mind that the California Labor Commission is sometimes strict about whether such caps are reasonable.⁠41, A “use it or lose it” policy is one that requires employees to use their earned benefits within a specific period or else they expire. 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