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Don’t Pay That Waiting Time Penalty!

Published by on September 11, 2014

California strongly favors the prompt payment of wages due to an employee.  The California Labor Code codifies this principle in Section 202, which provides in pertinent part that an employee who “quits his or her employment, his or her wages become due and payable not later than 72 hours thereafter, unless the employee has given […]

California strongly favors the prompt payment of wages due to an employee.  The California Labor Code codifies this principle in Section 202, which provides in pertinent part that an employee who “quits his or her employment, his or her wages become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of her or her intention to quit, in which case the employee is entitled to his or her wages at the time of quitting.”  If an employer willfully fails to pay the employee’s wages who is discharged or who quits, the wages of the employee continue to run as a penalty from the due date at the same rate until paid but not for more than 30 days.  This penalty is commonly referred to as a “waiting time penalty.”

Some employers thought that this provision did not apply to an employee who retires because Section 202 referred to only employees who were discharged or who quit.  The California Court of Appeal, in McLean v. State (Cal. Ct. App., Aug. 19, 2014) 14 Cal. Daily Op. Serv. 9707, cleared up this confusion and held that all employees who quit, whether to retire or for a different reason, fall within section 202.

Laconic Lookout: To ensure compliance with Labor Code § 202 and avoid waiting time penalties, employers should pay employees their wages when they end their employment regardless of the reason for the separation.

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