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.

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. "

    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.

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.

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 (1� 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.

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.

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.

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.

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:

$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)

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.