Timely Payment of Wages After Employee Resignation to Avoid Penalties

Question:
What are the penalties for failing to pay wages timely when an employee quits?

Short Answer:
When an employee, not having a written contract for a definite period quits his or her employment, his or her wages shall become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of his or her intention to quit, in which case wages are due at the time of quitting. If wages are not paid timely, the employer may face penalties based on the employee's daily rate of pay, calculated by multiplying the daily wage by the number of days the employee remains unpaid, up to a maximum of 30 days.

Legal Authority:

California Labor Code Section 202(a) provides:

“If an employee not having a written contract for a definite period quits his or her employment, his or her wages shall become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of his or her intention to quit, in which case the employee is entitled to his or her wages at the time of quitting. Notwithstanding any other law, an employee who quits without providing a 72-hour notice shall be entitled to receive payment by mail if he or she so requests and designates a mailing address. The date of the mailing shall constitute the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.”

California Labor Code Section 203(a) provides:

“If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.6, 201.8, 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. An employee who secretes or absents themselves to avoid payment to them, or who refuses to receive the payment when fully tendered to them, including any penalty then accrued under this section, is not entitled to any benefit under this section for the time during which the employee so avoids payment.”

Conclusion

Failing to pay final wages promptly when an employee quits can result in significant financial penalties for employers. Adhering to the timelines set forth in Labor Code Sections 202 and 203 are crucial to maintaining compliance and avoiding unnecessary disputes. Employers should implement procedures to ensure final wages are processed accurately and within the required timeframes, regardless of whether an employee provides advance notice of their resignation.

DISCLAIMER

This entry does not give specific legal advice about your specific legal problem. No text or graphic contained in this entry is to be or should be used or relied upon as legal advice. This entry does not create an attorney-client relationship. If you want specific legal advice about your particular legal issues, or if you want to create an attorney-client relationship, you need to retain the Law Offices of Ron A. Stormoen by a signed written retainer agreement.