What are the rules regarding payment of final wages in the state of California?

In the state of California, there are two fundamental sets of rules that apply to the payment of final wages: rules that apply to voluntary separations and those that apply to involuntary separations.

Involuntary Terminations and Layoffs

An employee who is terminated or laid off must be paid all of his or her earned and unpaid wages, including accrued vacation, immediately at the time of termination. The place of the final wage payment for employees who are terminated or laid off is the place of termination.

Employee Resignations

An employee without a written employment contract for a specified period of time who gives notice of at least 72 hours prior to his or her intention to quit and who quits on the day given in the notice must be paid all of his or her earned and unpaid wages, including accrued vacation, at the time of quitting. An employee without a written employment contract for a specified period of time who quits without giving notice of at least 72 hours must be paid all of his or her wages, including accrued vacation, within 72 hours of quitting. The employee may request that his or her final wage payment be mailed to a designated address. The date of mailing is considered the date of payment.

For employees who quit without giving 72 hours' prior notice and who do not request that their final wages be mailed to them at a designated address, the place of final wage payment is at the office of the employer within the county in which the work was performed.

Special Cases

• Employees laid off by reason of the termination of seasonal employment in the curing, canning or drying of any variety of perishable fruit, fish or vegetables must be paid within 72 hours after the layoff. Payment must be made by mail to any such employee who so requests and designates a mailing address for that purpose.
• An employee engaged in the production or broadcasting of motion pictures is entitled to receive payment of wages earned and unpaid at the time of the termination by the next regular payday. Payment of wages may be mailed to the employee or made available to the employee at a location specified by the employer in the county where the employee was hired or performed labor. Payment is considered to have been made on the date that the employee's wages are mailed to the employee or made available to the employee at the location specified by the employer, whichever is earlier. In this situation, employment terminates when the employment relationship ends, whether by discharge, layoff, resignation, completion of employment for a specified term or otherwise.
• A laid-off employee engaged in the business of oil drilling must be paid within 24 hours after discharge, excluding Saturdays, Sundays and holidays.
• If employees are employed at a venue that hosts live theatrical or concert events and are enrolled in and routinely dispatched to employment through a hiring hall or other system of regular short-term employment established in accordance with a bona fide collective bargaining agreement, these employees and their employers may establish in their collective bargaining agreement the time limits for payment of wages to employees who are discharged or laid off.

Direct Deposits

Direct deposits that were previously authorized by the employee are immediately terminated when an employee quits or is discharged, and the payment of wages upon termination of employment as described above applies unless the employee has voluntarily authorized the direct deposit and provided that the employer complies with the provisions of Labor Code Section 213(d) relating to the payment of wages upon termination of employment.

Penalties

Employers should be aware that any employer that willfully fails to pay any wages due to a terminated employee (regardless of the reason for separation) in the prescribed time frame may be assessed a waiting time penalty, which is an amount equal to the employee's daily rate of pay for each day the wages remain unpaid, up to a maximum of 30 calendar days.

Unclaimed Wages

Employers that have uncashed checks on their books payable to employees whose employment has been terminated and all reasonable efforts to pay the wages have been made may send the non-negotiated checks with an explanation of the efforts to contact the employee to the nearest office of the Labor Commissioner. The Labor Commissioner will make further efforts to locate the employee to make payment of the wages and, if unsuccessful, the checks will be deposited into the State of California Unclaimed Wages Fund.

Sources: California Department of Industrial Relations: Division of Labor Standards Enforcement and California Labor Code 200-244.