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Waiting
time penalty
Public policy
in California has long favored the full and prompt payment of
wages due an employee. To ensure that employers comply with
the laws governing the payment of wages when an employment relationship
ends, the Legislature enacted Labor
Code Section 203 which provides for the assessment of a
penalty against the employer when there is a willful
failure to pay wages due the employee at conclusion of the
employment relationship. Assessment of the waiting time penalty
does not require that the employer intended the action or anything
blameworthy, but rather that the employer knows what he is doing,
that the action occurred and is within the employer’s control,
and that the employer fails to perform a required act.
Assessment of the penalty
is not automatic however, as a "good
faith dispute" that any wages are due will prevent imposition
of the penalty.
In order for the penalty
to apply, there must be a true employer-employee relationship
and a quit or a discharge, which includes a layoff.
The penalty applies to the
willful failure to pay "any wages," which refers to the definition
of "wages"
in Labor
Code Section 200. Thus, all compensation must be considered
in determining if all wages due were paid as prescribed by law.
"Wages" does not include expenses. In calculating the penalty,
overtime wages are considered only if overtime is regularly
scheduled each week. Occasional or infrequent overtime is not
considered in the calculation of the daily rate of pay for purposes
of computing the penalty.
The penalty is measured
at the employee’s daily rate of pay and is calculated by multiplying
the daily wage by the number of days that the employee was not
paid, up to a maximum of 30 days. This does not mean that the
wages continue for a 30-day period, but that the employee may
be entitled to up to 30 actual days’ worth of wages. The 30-day
period is calendar days, and includes weekends and holidays
and any other days that the employee would not normally work.
Payment of the wages or the commencement of an action stops
the penalty from accruing. Filing a complaint in court commences
an action. An employee’s filing a claim with the Division of
Labor Standards Enforcement (DLSE) is not considered the filing
of an action, and does not stop the penalty from accruing.
The waiting time penalty
is not wages, thus, no deductions are taken from the penalty
payment.
Note: If the answer
to any of the questions below states that the employee is entitled
to the waiting time penalty, it is assumed that all of the conditions
for imposition of the penalty exist and there is no good
faith dispute that any wages are due
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Q-1.
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Seven
days ago I gave my employer notice that I was quitting
on Friday, which I did. I did not receive my final paycheck
on that day, and on the following Monday called my former
employer to find out when I would be paid. He informed
me that my check was available and that I could come in
and pick it up, and I told him I would do so. I purposely
did not pickup my check until 10 days later, which was
13 days after I quit. Am I entitled to the waiting time
penalty? |
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Ans.
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Yes,
you are entitled to the waiting time penalty in the amount
of three days' wages. In this situation, since you gave
your employer at least 72 hours prior notice that you
were quitting and quit on the date you said you would,
the employer's obligation is to pay you all of your unpaid
wages at the time of quitting. Labor
Code Section 202 Since tender of payment of the final
wages stops the penalty from accruing (in this case "tender
of payment" is your former employer's informing you on
the Monday following your quit that your check was available,
and your telling him that you would pickup it up), you
are entitled to only three days' wages worth of penalty.
You are not entitled to 13 days' wages worth of penalty
because you purposely avoided picking up your check for
ten days after you were informed it was available. Labor
Code Section 203 provides that "An employee who
secretes or absents himself or herself to avoid payment
to him or her, or who refuses to receive the payment when
fully tendered to him or her...is not entitled to any
benefit...for the time during which he or she so avoids
payment..." |
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Q-2.
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On
Monday of last week I informed my employer in writing
that Friday of that week would be my last day of work
as I was quitting. On Friday as I was leaving work I asked
my employer for my check. He told me he didn’t have my
check and that I would have to wait until the end of the
payroll period when the payroll service prepared the semimonthly
payroll checks. I asked if he would call me so I could
come pickup my check, and he told me "no," he’d just mail
it when he got it. Fifteen days after the day I quit I
received my check in the mail. The envelope was postmarked
three days prior to that date. Am I entitled to the waiting
time penalty, and if so, in what amount? |
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Ans.
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Yes,
you are entitled to a waiting time penalty in the amount
of 15 days’ wages. Under Labor
Code Section 202, when an employee not having a written
contact for a definite period quits his or her employment
and gives 72 hours prior notice of his or her intention
to quit, and quits on the day given in the notice, the
employee is entitled to his or her wages at the time of
quitting. Since you gave at least 72 hours prior notice
of your intention to quit, quit on the day given in the
notice, and did not receive your wages until 15 days later,
you are entitled to a waiting time penalty in the amount
of 15 days wages; the number of days between the date
you were required to be paid and the date you were paid.
Under these circumstances, the day you received the wages,
and not the day they were mailed, is the date of payment
and the day when the penalty stops accruing. |
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Q-3.
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I
quit my job last week without giving 72 hours prior notice.
On my last day of work I confirmed my current address
with my employer and requested that she mail me my final
wages. I received my wages in the mail six days after
I quit. The envelope was postmarked two days after I quit.
Am I entitled to the waiting time penalty, and if so,
in what amount? |
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Ans.
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You are not entitled to
any waiting time penalty. Since you quit without giving
at least 72 hours prior notice, the employer is obligated
to pay you all of your unpaid wages not later than 72
hours (three days) after the date you quit. Labor
Code Section 202 However, Section 202 also
provides that when an employee quits without providing
a 72-hour notice, he or she is entitled to receive payment
of the final wages by mail if he or she so requests
and designates a mailing address. In such a circumstance,
the date of mailing constitutes the date of payment
for purposes of the requirement to provide payment within
72 hours of the quit.
In your situation, since you confirmed your current
address, requested payment by mail, and your final wages
were mailed within 72 hours after you quit, payment
was made in compliance with the law and thus, no penalty
can be assessed notwithstanding the fact that you did
not actually receive such payment until six days after
you quit.
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Q-4.
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If
I quit my job without giving 72 hours prior notice and
am not paid all of the wages due me within 72 hours after
the time I quit, must I return to my former employer’s
place of business 72 hours after quitting and demand my
wages in order for the waiting time penalty to apply? |
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Ans.
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The
answer is "yes," as the general rule is that if you quit
without giving at least 72 hours prior notice of your
intention to quit, you must return to your former employer’s
place of business 72 hours after quitting and demand the
wages that are due you in order for the waiting time penalty
to apply. However, there are instances if the employer
prevents you from returning for your wages, or the employer
informs you that the wages will not be available even
if you do return, whereby the penalty may apply. Such
situations are handled on a case-by-case basis. |
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Q-5.
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If
I quit my job without giving 72 hours prior notice and
am not paid all of the wages due me within 72 hours after
the time I quit, instead of returning to my former employer’s
place of business 72 hours after quitting and demanding
my wages, can I just telephone, mail, email, or fax my
demand after the 72 hour period and still be eligible
for the waiting time penalty? |
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Ans.
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No,
the waiting time penalty does not accrue to an employee
who fails to return to the place of his or her former
employment 72 hours after quitting, unless, of course,
the employee has given at least 72 hours prior notice
of intention to quit, in which event the wages are due
at the time of quitting. Telephoning, mailing, emailing,
or faxing your demand for your wages is not the equivalent
of physically returning and asking for them, and does
not meet the standard required by law. Labor
Code Section 208 The general rule is that if
you quit without giving at least 72 hours prior notice
of your intention to quit, you must return to your former
employer’s place of business 72 hours after quitting and
demand the wages that are due you in order for the waiting
time penalty to apply. |
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Q-6.
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I
was discharged from my employment two weeks ago. At that
time I was paid all of my wages, but did not get reimbursed
for any of my business related expenses until 10 days
later. Am I entitled to the waiting time penalty, and
if so, in what amount? |
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Ans.
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No,
you are not entitled to the waiting time penalty. The
waiting time penalty is assessed only when an employer
willfully fails to pay an employee in accordance with
Labor
Code Sections 201, 201.5, 202, or 202.5,
any wages
of an employee who quits or is discharged. As you were
paid all of your wages in accordance with the law and
the reimbursement for business expenses is not wages,
the waiting time penalty does not apply to your situation. |
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Q-7.
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I
was discharged from my job two weeks ago. At that time
I was paid the wages for all of the hours that I had worked,
but was not paid for my 15 days of earned, accrued and
unused vacation until 10 days later. Am I entitled to
the waiting time penalty, and if so, in what amount? |
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Ans.
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Yes,
you are entitled to the waiting time penalty in the amount
of 10 days’ wages. The waiting time penalty is assessed
only when an employer willfully fails to pay in accordance
with Labor
Code Sections 201, 201.5, 202, or 202.5,
any wages
of an employee who quits or is discharged. Under California
law, earned vacation time is considered wages; and under
Labor
Code Section 227.3, unless otherwise provided by a
collective
bargaining agreement, whenever an employment relationship
ends for any reason whatsoever and the employee has not
used all of his or her earned and accrued vacation, the
employer must pay the employee at his or her final rate
of pay for all such earned, accrued and unused
vacation. In your situation, since your former employer
was obligated to pay you all of your wages at the time
you were discharged, including your 15 days of vacation
wages, and did not do so, you are entitled to the waiting
time penalty in the amount of 10 days wages, the number
of days between the date you were discharged and the date
you received all of your final wages, i.e., the 15 days
vacation pay. |
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Q-8.
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How
is the daily rate of pay calculated and the waiting time
penalty computed? |
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Ans.
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The following are examples
of calculations of the daily rate of pay and computations
of the waiting time penalty. In each instance, these
examples assume all of the conditions for imposition
of the penalty exist and that there is no good
faith dispute that any wages are due.
- A security guard is
discharged on Friday, July 12, 2002, and not paid
all of her earned wages due until Monday, July 22,
2002, ten days later. She regularly worked 35 hours
per week, Monday through Friday, and was making $8.00
per hour at the time of her termination.
Daily Rate of Pay
Calculation
35 hours/week ¸
5 days/week = 7 hours/day
7 hours/day x $8.00/hour
= $56.00/day (daily rate of pay)
Waiting Time Penalty
Calculation
10 days, the number
of days between the date the employer was obligated
to pay the employee, July 12, 2002, and July 22,
2002, the date she is paid all of her wages. (See
Labor
Code Section 201, discharge of employee; immediate
payment)
10 days x $56.00/day
= $560.00 waiting time penalty.
- A salesclerk is discharged
on Friday, May 3, 2002, and not paid all of his earned
wages due until Friday, June 14, 2002, 42 days later.
He regularly worked 40 hours per week, Tuesday through
Saturday, but during the last week of his employment
he worked four hours of overtime. At the time of his
termination, the employee was earning $10.00 per hour.
Daily Rate of Pay
Calculation
40 hours/week ¸
5 days/week = 8 hours/day
8 hours/day x $10.00/hour
= $80.00/day (daily rate of pay)
This example shows
that occasional or infrequent overtime is not
included in calculating the daily rate of pay
for purposes of determining the amount of the
waiting time penalty.
Waiting Time Penalty
Calculation
30 days. Although
the employee was not paid all of his wages due
until June 14, 2002, 42 days after the date the
employer was obligated to pay him, the maximum
penalty allowed under the law, is 30 days’ wages.
Labor
Code Section 203
30 days x $80.00/day
= $2,400.00 waiting time penalty.
This example shows
that the maximum penalty allowed under the law
is 30 days’ wages.
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A fry cook voluntarily
quit her job on Tuesday, July 2, 2002, without giving
notice to her employer. She regularly worked 45
hours per week, Monday through Friday, and was making
$10.00 per hour when she quit. She is paid all of
her earned wages due on Friday, July 12, 2002, 10
days after she quit.
Daily Rate of Pay
Calculation
45 hours/week ¸
5 days/week = 9 hours/day
8 hours/day x $10.00
per hour = $80.00
1 hour/day overtime
x $15.00/hour (1½ x $10.00) = $15.00
$80.00 + $15.00
= $95.00 daily rate of pay
This example shows
that regularly scheduled overtime is included
in calculating the daily rate of pay for purposes
of determining the amount of the waiting time
penalty.
Waiting Time Penalty
Calculation
7 days. The employee
is entitled to only seven days’ wages as the penalty
because the employer has 72 hour (3 days, which
in this example would be until July 5) to pay
terminal wages when an employee quits without
giving at least 72 hours prior notice of his or
her intention to quit. (See Labor
Code Section 202, quitting employee; payment
within 72 hours)
7 days x $95.00/day
= $665.00 waiting time penalty.
This example shows
that the employer has 72 hours to pay terminal
wages when no notice or less than 72 hours prior
notice of intention to quit is given.
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A part-time file clerk
voluntarily quit his job on Friday, March 15, 2002.
On Friday, March 8, 2002, he gave his employer notice
that he was quitting on the 15th of that
month (more than 72 hours notice). He regularly
worked two days per week, four hours per day. He
was making $7.50 per hour when he quit. He is paid
all of his earned wages due on Friday, April 5,
2002.
Daily Rate of Pay
Calculation
4 hours/day x $7.50/hour
= $30.00/day (daily rate of pay)
Waiting Time Penalty
Calculation
21 days, the number
of days from the date the employer was obligated
to pay the employee, March 15, 2002, until April
5, 2002, the date he was paid all of his wages.
21 days x $30.00/day
= $630.00 waiting time penalty.
This example shows
that the waiting time penalty applies to employees
regardless of whether they are part-time or full-time,
and that when an employee gives at least 72 hours
prior notice of intention to quit, and quits on
the date given in the notice, the employer’s obligation
to pay all of the wages due is the date that the
employee quits.
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A commission salesperson
working for an appliance dealer is discharged on
May 10, 2002. She is not paid her earned commission
wages due until May 25, 2002, the regular payday.
She regularly worked 40 hours per week, five days
per week. For the last three full months of her
employment, on average she earned $3,000.00 per
month. As of the date of her discharge, May 10,
2002, all commissions since the end of the previous
pay period had been earned and were calculable by
the employer on that date. At the time of her discharge,
the employee did not know the amount of commissions
she had earned since her last pay period.
Daily Rate of
Pay Calculation
$3,000.00/month
x 12 months/year = $36,000.00/year
$36,000.00/year
¸ 52 weeks/year = $692.31/week
$692.31/week ¸ 5
days = $138.46/day (daily rate of pay)
Waiting Time
Penalty Calculation
15 days, the number
of days from the date the employer is obligated
to pay the employee, May 10, 2002, until May 25,
2002, the date she is paid all of her wages.
15 days x $138.46/day
= $2,076.90 waiting time penalty.
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A salesperson is paid
a fixed salary of $2,500.00 per month and a commission
of 10% of sales she makes each month. She quits
her job on March 15, 2002 after providing more than
72 hours notice of her intention to quit. She quits
on the day given in her notice. For the past three
months she has averaged $1,500.00 in commission
wages each month. She regularly worked 40 hours
per week, five days per week. She is paid her salary
wages on March 15, 2002, the day she quits; however,
she is not paid her commission wages until April
1, 2002, the regular payday for commissions. All
commission wages were earned prior to March 15,
2002, and were calculable by the employer on that
date.
Daily Rate of
Pay Calculation
$2,500.00 base salary/month
+ $1,500.00 average commissions/month = $4,000.00
average wages/month.
$4,000.00 average
wages/month x 12 months/year = $48,000.00/year
$48,000.00/year
¸ 52 weeks/year = $923.08/week
$923.08/week ¸ 5
days/week = $184.62/day (daily rate of pay)
This example shows
how the daily rate of pay is calculated when two
different types of wages are earned.
Waiting Time Penalty
Calculation
17 days, the number
of days from the date the employer is obligated
to pay the employee, March 15, 2002, until April
1, 2002, the date she is paid all of her wages.
17 days x $184.62/day
= $3,138.54 waiting time penalty.
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Q-9.
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Is
overtime included in calculating the daily rate of pay
for purposes of computing the waiting time penalty? |
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Ans.
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It
depends. Regularly scheduled overtime is included in calculating
the daily rate of pay for purposes of computing the waiting
time penalty. On the other hand, occasional or infrequent
overtime is not included in the calculation of the daily
rate of pay for purposes of computing the waiting time
penalty. |
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Q-10.
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I
understand that if I am discharged from my job, or quit,
and my employer willfully fails to pay me my final wages
and there is not a good faith dispute that any wages are
due, that I am entitled to a waiting time penalty of up
to 30 days’ wages. If my employer pays me 15 days after
my final wages are due, am I entitled to the full 30 days’
wages of penalty? |
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Ans.
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No,
payment of wages or the commencement of an action stops
the penalty from accruing. Filing in court commences an
action. Filing a wage claim with the Labor Commissioner’s
office (DLSE) is not considered an action and does not
prevent the waiting time penalty from continuing to accrue. |
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Q-11.
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I
was discharged last week and not paid all my wages. At
the time I was discharged my former employer informed
me that he could not pay me because he didn’t have the
money. Will this be a valid defense to my claim for the
waiting time penalty? |
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Ans.
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No, it will not be a valid
defense. Inability to pay is not a defense to the failure
to timely pay wages under Labor
Code Sections 201, 201.5, 202, and 202.5, and does
not relieve the employer from liability of the waiting
time penalty under Labor
Code Section 203.
Other reasons commonly given by employers for not making
a timely payment under Labor Code Sections 201, 201.5,
202 and 202.5 that do not relieve the employer of liability
from imposition of the waiting time penalty are:
- Payroll checks are
only paid on regular paydays, and that is when you
will receive your wages.
- Our payroll department
is out-of-state and cannot get us a check in time.
- You still owe us money
for the goods you purchased, and we are not going
to pay you your wages until you pay us.
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Q-12.
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Does
the waiting time penalty apply to part-time and temporary
employees, or just to full-time employees. |
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Ans.
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The
waiting time penalty applies to all employees regardless
of status, exempt, nonexempt, full-time, part-time, temporary,
probationary, or otherwise. The penalty does not apply
to independent contractors or volunteers, as they are
not "employees." |
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Q-13.
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When
computing the amount of penalty, do you count only the
days I might have worked during the period for which the
penalty accrues, or do you also include all non-workdays? |
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Ans.
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All
non-workdays are included. When computing the penalty
you count all of the calendar days for which the penalty
accrues, including weekends, non-workdays (e.g., days
off), and holidays. |
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Q-14.
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I
am a salaried employee. For purposes of determining the
waiting time, is one month’s salary the same as 30 days’
wages? |
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Ans.
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No, one month’s salary
does not equate to 30-days wages. A salaried employee
working five days per week will on average work 21.6
days per month (52 weeks/year ¸ 12 months/year x 5 days/week)
in earning his or her full salary. However, since the
waiting time penalty is calculated using a daily rate
of pay, and can be up to 30 days’ wages, the maximum
penalty will always exceed a person’s monthly salary.
For example, assume that the maximum penalty of 30 days’
wages is appropriate for a salaried employee who was
making $2,500.00 per month at the time the employment
relationship ended. In such a situation, the penalty
would be $3,461.54, computed as follows:
$2,500.00/month x 12 months/year
= $30,000.00/year
$30,000.00/year ¸ 52 weeks/year
= $576.92/week
$576.92 ¸ 5 days/week
= $115.38/day (daily rate of pay)
$115.38/day x 30 days = $3,461.54
(waiting time penalty) |
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Q-15.
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My
employer failed to pay me my final wages within the time
period prescribed by law and I believe I am entitled to
the waiting time penalty. What can I do? |
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Ans.
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You
can either file
a wage claim with the Division of Labor Standards
Enforcement (the Labor Commissioner's Office), or bring
an action in court against your former employer to recover
the wages if they are still due you, and to claim the
waiting time penalty. |
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Q-16.
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What
is the procedure that is followed after I file a wage
claim? |
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Ans.
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After your claim is completed
and filed with a local office of the Division of Labor
Standards Enforcement (DLSE), it will be assigned to
a Deputy Labor Commissioner who will determine, based
upon the circumstances of the claim and information
presented, how best to proceed. Initial action taken
regarding the claim can be referral to a conference
or hearing, or dismissal of the claim.
If the decision
is to hold a conference, the parties will be notified
by mail of the date, time and place of the conference.
The purpose of the conference is to determine the validity
of the claim, and to see if the claim can be resolved
without a hearing. If the claim is not resolved at the
conference, the next step usually is to refer the matter
to a hearing or dismiss it for lack of evidence.
At the hearing the
parties and witnesses testify under oath, and the proceeding
is recorded. After the hearing, an Order, Decision,
or Award (ODA) of the Labor Commissioner will be served
on the parties.
Either party may
appeal the ODA to a civil court of competent jurisdiction.
The court will set the matter for trial, with each party
having the opportunity to present evidence and witnesses.
The evidence and testimony presented at the Labor Commissioner’s
hearing will not be the basis for the court’s decision.
In the case of an appeal by the employer, DLSE may represent
an employee who is financially unable to afford counsel
in the court proceeding.
See the Policies
and Procedures of Wage Claim Processing pamphlet
for more detail on the wage claim process procedure.
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Q-17.
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What
can I do if I prevail at the hearing and the employer
doesn’t pay or appeal the Order, Decision, or Award? |
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Ans.
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When
the Order, Decision, or Award (ODA) is in the employee's
favor and there is no appeal, and the employer does not
pay the ODA, the Division of Labor Standards Enforcement
(DLSE) will have the court enter the ODA as a judgment
against the employer. This judgment has the same force
and effect as any other money judgment entered by the
court. Consequently, you may either try to collect the
judgment yourself or you can assign it to DLSE. |
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