As an employee you expect to get paid. So does the State of California. When it comes to your wages, the California Labor Code provides requirements for employers to ensure prompt and full payment of your earned wages. In California, employers are legally required to pay their employees’ wages and pay them on time.
Understanding California Employers’ Obligation to Pay Wages
Definitions
Before we discuss an employer’s obligations it’s important to understand a couple of key terms.
Wage – Payment for any labor performed by an employee. This includes, not only your salary or hourly rate, but also things such as vacation time, sick pay and even room & board.
Labor – Any work or services performed by an employee for an employer.
Employer Obligations
In California, you have a right to be paid under either contract law or the California Labor Code. While this article will focus on the California Labor Code, be aware, that a formal written contract – or even an oral agreement – is enough to create an obligation for an employer to pay you any wages earned.
The California Labor Code provides several rights employers must provide for their employees. These include things such as a minimum wage as well as overtime wages. However, the California Labor Code only applies to employees, not independent contractors. If you have unpaid wages in California and you have been classified as an independent contractor, you should seek the advice of a California Employment law attorney. It is illegal for an employer to classify an employee as an independent contractor simply to avoid paying wages in accordance with California laws.
The California Labor Code also instructs employers on how wages must be paid, what wages must be paid and when wages are due. A couple of important takeaways on these requirements:
- Employees are entitled to the unused portion of vacation time they have earned regardless of an employer’s requirements that a fixed period of work be completed before being given vacation time.
- The timing of when wages are due are largely based on whether the employee is terminated or if they resign.
Penalty for Final Unpaid Wages in California
If, after an employment ends, an employer willfully fails to timely pay all final wages a penalty can be enforced against them. The penalty is a full day wages (typically calculated by adding base wages, commissions, bonuses, and vacation pay that the employee earns in a year, dividing that sum by 52 weeks, and dividing that result by 40 hours) for each day payment of your wages has been delayed. This penalty can accumulate for up to 30 days, depending on when full payment has been made. This penalty also applies if an employer intentionally provides an employee with a check that cannot be cashed or deposited because of insufficient funds.
When determining if an employer’s action was willful, they are provided an exception if the employer has a good faith dispute about the employee’s claim of unpaid wages. This exception is provided to employers even if they do not ultimately win the dispute. Whether or not it will be considered a good faith dispute will be based on the legal and factual defenses presented by the employer.
Remedies for Employer’s Failure to Pay Wages
California employees are protected by both federal and state law. If your employer has wrongfully failed to pay your wages, you have the following options:
- Informal Resolution with the Employer
Ideally, the quickest way to resolve a dispute regarding unpaid wages is to attempt to resolve the matter informally with your employer. This could include anything from a conversation between you and your employer to a formal letter prepared by your attorney. It may be that taking these simple steps are all that is needed to resolve this issue.
- California Administrative Wage Claim
You can also file an administrative claim for unpaid wages and penalties. This type of claim is filed with California’s Division of Labor Standards Enforcement (DLSE). Filing an administrative claim is typically quicker and less complicated then filling a formal lawsuit. That being said, it still provides many of the same functions as a civil court, including: (1) a hearing; (2) issuing subpoenas; (3) compelling witnesses to testify; and (4) requiring employers to produce documents. Considering the similar functions and the broad protections provided by the California Labor Code, this is usually the best option if you cannot settle your claim informally with your employer.
- Wage Claim with Federal Agency
There is a similar option to the California Administrative Wage claim. An employee can file a wage claim with the Federal Labor Department’s Wage and Hour Division. A claim with the Labor Department would be brought under the Fair Labor Standards Act which controls workplace rules at the federal level. Typically, for California employees, this is not the best option as California’s Labor Code tends to provide broader protections. For instance, when it comes to wages, the California labor code provides greater overtime rights and a higher minimum wage.
- Civil Lawsuit
Another option is to file a civil lawsuit for the money you are owed from your employer. Lawsuits are a more formal option than filing an administrative claim. Generally, filing a lawsuit is going to be a more costly and complicated process. In addition, a civil lawsuit could be an incredibly time-consuming process. However, if you have several complex legal issues or a substantial amount of money on the line, your best option may be to bring your claim in civil court. Another reason you may want to file a civil lawsuit is to potentially recover attorney fees. The administrative options do not provide this particular remedy.
- Private Attorneys General Act (PAGA) Claim
This is a unique type of claim that is filed by an employee who is owed wages but continues to work for the employer. In a PAGA claim, an employer can be issued fines which are paid directly to the State of California. However, it can also result in employees being able to recover up to 25% of the penalties issued against their employer.
Conclusion
As with most employment law issues, the best option for you depends on your specific situation. In order to determine your best option, it is recommended that you seek the opinion of an experienced California labor and employment law attorney. They will be able to assist you in determining your best option and helping you navigate the entire process.