California has the reputation of being a progressive state, with higher wages, stronger protections for employees, and more acceptance of unions and collective bargaining.
While this is true to an extent, California still has fairly strict laws concerning how to pay employees, and these laws must be balanced with various federal mandates.
Federal and State Law: The Interplay
California employers have to be aware of the overlap between the federal and state statutes concerning compensation of California workers. The Fair Labor Standards Act1 (FLSA) are the federal rules, while California law is contained in the California Labor Code and Wages Orders from the Industrial Welfare Commission.2
While it is true that California state laws are generally more protective than Federal laws, the rule of thumb is that employers are required to follow the rules that give employees the most rights.
However, something important that all employers and employees must note is that, even if state and Federal laws are similar in substance, they can be significantly different when it comes to the procedure of suing under each.
Under the FLSA, the statute of limitations is two years, unless it appears there is a willful violation.3 In California, however, a four-year period applies if the contract is in writing, while a two-year statute exists for oral contracts.
If it’s based on a right created by a statute, then a three-year period applies.4 Therefore, in order to be safe, it is best to file your suit within two years of the incident, particularly if you are unsure which limitation applies.
Basic Compensation Law
Employees who are not exempt from overtime must be paid at least twice a month on dates which the employer can designate in advance.5 These dates must be regular, and they should post a notice that shows the day, time and payment of location.6
Employers, of course, can opt to pay wages more frequently. However, any wages that are earned between the 1st and 15th of any month must be paid by the 26th of the same month at the very latest, and for work done in the last half of the month, employees should get compensated no later than the 10th day of the following month.
Employers have to pay their employees even if they do not submit their timecard on time, although the wages will be limited to what they reasonably know you are due. If payday falls on a holiday, then the employer is entitled to pay their employees on the following business day.
In the event the employee is terminated, they are entitled to their paycheck simultaneously when the decision to terminate them is announced.7 This includes accrued and unused vacation and other benefits. On the other hand, if the employee quits or resigns, they must be paid within 72 hours of quitting work, unless they gave at least 72 hours’ notice before actually quitting, in which case, they should be paid on their last day of work.8
If there are special terms or computations required to determine how much the employee is owed, then if they are laid off, they must be paid by the next regular payday.9 There are also special rules for those engaged with seasonal work, such as curing or drying any fruit, fish or vegetables. If these employees are terminated or laid off, they are owed wages within 72 hours.
Rights and Remedies
In any event, if the employer intentionally fails to pay on time as required by law, then they are subject to a ‘waiting time’ penalty, where the employees’ wages accumulate daily until the check is ready – for up to 30 days. If there is some sort of dispute in good faith that concerns the amount of wages that are due, then there are no waiting time penalties.
So, if the employer can present a defense that, if successful, means the employee would not get the wages they are seeking, then they will not be penalized for their failure to pay the full amount. No matter what, though, the employer must pay the employee any wages that are not in dispute.10
- 29 USC §§ 201-219
- 8 Cal.C.Regs §§11010 et seq.
- 29 U.S. Code § 255.
- Labor Code § 1194.2.
- Labor Code §207.
- Labor Code §213(d).
- Labor Code §201.
- Labor Code §201.5.
- Labor Code §206.