California Labor Code § 203 requires employers to pay a waiting time penalty when they fail to provide final paychecks to employees who are terminated or who quit. The penalty is equal to the employee’s daily wage for each day the final paycheck goes unpaid, up to 30 days.
The full text of the statute reads as follows:
203. (a) If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.6, 201.8, 201.9, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.
An employee who secretes or absents themselves to avoid payment to them, or who refuses to receive the payment when fully tendered to them, including any penalty then accrued under this section, is not entitled to any benefit under this section for the time during which the employee so avoids payment.
(b) Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.
Legal analysis
Under California Labor Code 203 LC, employers who willfully fail to hand over a final paycheck are assessed a “waiting time penalty.” This penalty is equal to the employee’s daily rate of pay for each day the wages remain unpaid (up to 30 days).
|
Lateness with final paycheck |
Waiting time penalty |
| One to 30 days | Daily rate of pay multiplied by the number of days late |
| 31 days or longer | Daily rate of pay multiplied by 30 |
Note that former employees who purposely avoid receiving their final paycheck are not entitled to a waiting time penalty.1 Former employees who are entitled to waiting time penalties must file suit within three years in order to recover them.2
When employees quit without giving notice, employers have 72 hours to give them their final paycheck. When quitting employees give at least 72 hours of notice, then employers have to provide the final paycheck no later than their last workday. If the employees are fired or laid off, employers are required to provide final paychecks at the time of termination.3
California Labor Code 203 LC imposes a waiting time penalty on employers who fail to hand over a final paycheck to terminated or quitting employees.
Frequently asked questions
What is the purpose of California Labor Code § 203?
California Labor Code § 203 requires employers to pay all earned wages to an employee immediately upon termination (or within 72 hours if the employee resigns without 72 hours notice). The purpose is to ensure that employees receive their final pay promptly.
Can employees waive out of California Labor Code § 203?
No, employees cannot waive their rights to receive their final pay within the timeframe specified by LC 203. Any agreement to waive this right would be considered void and unenforceable.
However, if an employer is late in paying, the burden lies on the employee to ask for the final paycheck and, if necessary, to file a wage claim.
Can an employee be fired for pointing out they did not receive their final paycheck?
No, an employer cannot legally fire an employee for pointing out an LC 203 violation. Such an action would be considered retaliation and is prohibited under California law.
What if the employer did not willfully withhold a final paycheck?
Even if an employer did not willfully violate LC 203, they may still be liable for waiting time penalties. However, if the employer can demonstrate that the violation was due to a good faith dispute over the amount of wages owed, the penalties may not apply.
How do employees get their final paycheck if it is being withheld?
If an employer does not give an employee a final paycheck as required by LC 203, they can file a wage claim with the California Labor Commissioner’s Office. Alternatively, they may file a lawsuit against the employer in court to recover the unpaid wages and waiting time penalties.
See our related article, What happens if my employer in California pays me late?
Legal References
- California Labor Code 203 LC – Penalty for willful failure to pay wages to discharged or quitting employee; Time for filing suit for penalties. See also: Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc. (Cal. App. 3d Dist., 2002), 102 Cal. App. 4th 765, 125 Cal. Rptr. 2d 804; Diaz v. Grill Concepts Services, Inc. (Cal. App. 2d Dist., 2018), 233 Cal. Rptr. 3d 524, 23 Cal. App. 5th 859.
- Pineda v. Bank of America (2010) 50 Cal.4th 1389.
- LC 202.