Show Them the Money! California Employer Responsibility for Payday, Overtime, and Wage Statements

by Jennifer A. Grady, Esq.

California employers are required to follow the following state and federal laws regarding paydays, final paychecks, overtime, and wage statements. As failure to do so can result in significant penalties, interest, and attorney’s fees, employers must ensure that they are in compliance with the applicable laws below.

I. PAYDAY

payday word circle marked on a calendar

Employees must be paid wages at least twice per calendar month on specific days, as established by company policy. Pursuant to California Labor Code § 207, the regular pay day schedule must be posted in a conspicuous/obvious place on a notice showing the time, day, and location of payment.

Wages earned between the 1st and 15th days of the month must be paid by the 26th day of the month during which the labor was performed. Wages earned between the 16th and the last day of the month must be paid by the 10th day of the following month. Labor Code § 204(a).

Although some employees are exempt from twice-monthly paydays, check with the California Labor Commissioner’s Office or a qualified employment attorney before making adjustments to your payday schedule. Salaries of executive, administrative, and professional employees of employers covered by the Fair Labor Standards Act may be paid once a month on or before the 26th day of the month during which the labor was performed if the entire month’s salaries, including the unearned portion between the date of payment and the last day of the month, are paid at that time. Labor Code § 204(a).

If your company uses an alternative payroll schedule (e.g. weekly, biweekly or semimonthly where the earning period is not between the 1st and 15th or the 16th and last day of the month), wages must be paid not more than seven calendar days following the close of the payroll period.

II. FINAL PAY CHECKS FOR TERMINATED EMPLOYEES

employee termination

An employee who is discharged or terminated from employment must be paid all of his or her wages, including accrued vacation and paid time off (PTO), immediately at the time of termination (that means on the same date as termination). Labor Code Sections 201 and 227.3.

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.

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.

III. PAYCHECKS FOR EMPLOYEES WHO VOLUNTARILY RESIGN

i QUITEIf an employee quits his or her employment and does not have an employment contract for a specific period of employment, his or her wages shall become due and payable not later than 72 hours after the notice of resignation, unless the employee has given 72 hours previous notice of his or her intention to quit, in which case the employee is entitled to his or her wages at the time of quitting.

An employee who quits without providing a 72-hour notice shall be entitled to receive payment by mail if he or she so requests and designates a mailing address. The date of the mailing shall constitute the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.

IV. OVERTIME

timeclock

If an employee has earned overtime wages, those wages must be paid no later than the payday for the next regular payroll period after the period in which the wages were earned. Labor Code § 204 (b)(1). For example, if an employee earns overtime during the pay period from the 1st to the 15th of the month, she must be paid those wages no later than the payday covering the period from the 16th to the end of the same month. If any such delay occurs, the employer must ensure that the overtime hours are recorded as a correction on the itemized statement of the next regular pay period, and include the dates of the pay period to which the correction applies.

Any corrections set out in a subsequently issued paystub shall state the inclusive dates of the pay period for which the employer is correcting its initial report of hours worked. Labor Code § 204 (b)(2).

V. WAGE STATEMENTS

Sample wage statement

Sample wage statement

A simple wage statement must be provided with paychecks at least twice a month, excluding executive, administrative and professional employees who can be paid once a month). This wage statement must include:

  1. Gross wages earned;
  2. Total hours worked (unless the employee is salaried and exempt);
  3. The number of commission units earned and the rate of such commissions (if applicable);
  4. All deductions;
  5. Net wages earned;
  6. Employee name and last four digits of SSN or EIN;
  7. Name and address of employer (legal entity); and
  8. Paid Sick Leave accruals (can be issued on a separate document on the same day as paycheck is issued).

For more on Paydays, pay periods, and the final wages visit the California Industrial Relations page. Labor Code § 226(e) provides that an employee is entitled to recover the greater of all actual damages, or fifty dollars ($50) for the initial pay period in which a violation occurs; AND one hundred dollars ($100) per employee for each violation in a subsequent pay period, not to exceed an aggregate penalty of four thousand dollars ($4,000); AND is entitled to an award of costs and reasonable attorney’s fees.

STILL HAVE QUESTIONS ON HOW THESE LAWS APPLY TO YOUR BUSINESS?

If you have questions about how these laws apply to your business, a licensed attorney can help you review your business and employment practices. The Grady Firm’s employment law department can update your business’ company policies/Employee Handbook, create new policies, prepare employment forms, and explain the detailed nuances of California employment and wage and hour law.  

 To schedule a complimentary 15-minute consultation with The Grady Firm’s employment law attorneys, call (323) 450-9010, or fill out a Contact Request Form.  

The Grady Firm has offices in Los Angeles, San Francisco, and San Diego, California, and serves employers throughout California.

*This article is for informational purposes only, and does not constitute legal advice or create an attorney-client relationship.

 

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About gradyfirm

The Grady Firm attorneys specialize in helping businesses grow and succeed through employment, business, immigration, and intellectual property law advising for clients in California. In addition, we help foreign entrepreneurs establish a US presence and obtain the appropriate visas for their owners and employees. WE PROVIDE THE FOLLOWING BUSINESS SOLUTIONS: BUSINESS ADVISING: Business formation, contract drafting, coaching/advising, succession planning, lease review, and contract negotiation. EMPLOYMENT LAW: We teach employers how to become compliant with California employment law, draft Employee Handbooks, and providing sexual harassment training. We also help resolve disputes between employers and employees regarding wage and hour, discrimination, and harassment issues. IMMIGRATION: We help build business work forces and reunite families by preparing visa, Green Card, and citizenship applications based on family relations, employment, and investment. INTELLECTUAL PROPERTY: trademarks, copyright The Grady Firm has offices in Beverly Hills and San Diego, California; and serves clients remotely from across the globe. Our attorneys are licensed to practice immigration law in all 50 states. Learn more about us at www.gradyfirm.com.

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