California law gives employers only a short time to give employees their final paychecks after they quit or are fired. If an employer misses the deadline, the employee is entitled to a waiting time penalty of one day's pay for each day the employer is late, up to 30 days.
Most states have laws dictating when employees must get their final paychecks. In some states, including California, the time limit depends on whether the employee quit or was fired.
Reason for Separation
|Final Paycheck Due|
Employee laid off or fired
|On employee's last day|
|Employee quit with notice||On employee's last day|
|Employee quit without notice||Within 72 hours|
California's law is the strictest in the nation. An employee who is fired (or laid off) is entitled to a final paycheck immediately, meaning at the time of termination or layoff.
The rules are slightly different when the employee quits. If an employee quits without giving advance notice, the employer must provide the final paycheck within 72 hours. However, if an employee quits and gives at least 72 hours' notice, the employee is entitled to the final paycheck immediately, meaning on his or her last day.
California protects employees by requiring that employers include all accrued, unused vacation or PTO in the employee's final pay. This amount must also be paid by the time limits set out above.
Not all states require employers to cash out unused vacation, and some require a payout only if the employer has adopted a policy requiring it. California is different: California employees are entitled to all of their unused vacation or PTO on termination, regardless of the employer's policy.
Waiting time penalties are imposed on employers who fail to pay final wages when they are due. The penalty is the employee's average daily wage for each day the employer is late, up to a maximum of 30 days.
For example, an employer that waits two weeks before providing a fired employee's final paycheck would be liable for 14 days of wages as a waiting time penalty.
Waiting time penalties are calculated based on the employee's regular rate of pay, including regularly worked overtime and commissions.
Here are some of the rules that apply when calculating the rate of pay:
If an employee works five days a week, eight hours a day, the employee's waiting time penalty is eight times the employee's hourly rate for each day the employer is late. For example, if an employee earns $15 an hour, the employee would be entitled to $120 for each day the employer is late providing a final paycheck.
For regular part-time workers, the penalty is based on a usual day's work. For example, if an employee works four hours a day, five days a week, and earns $20 an hour, the employee would be entitled to $80 a day as a waiting time penalty.
Overtime is included only if it is regularly scheduled. Sporadic or infrequent overtime is not included in the employee's wages. If an employee occasionally worked an extra hour or two, for example, that would be disregarded in calculating waiting time penalties. If, however, the employee typically worked 50 hours a week, the employee's penalty would be based on a ten-hour day and would include the overtime premium. For example, if the employee's hourly wage was $20 an hour, the employee would be entitled to a waiting time penalty of $220: eight hours at $20, plus two hours at the time and a half overtime premium ($30).
Even if your employer gives you a final paycheck, on time, you may still be entitled to a waiting time penalty if you don't receive all of your compensation. For example, if an employer pays you half of your final paycheck on time, then pays you the rest on the company's regular payday two weeks later, you are entitled to two weeks of waiting time penalties.
The same is true if your final paycheck doesn't include all of your accrued vacation time. The amount of the waiting time penalty doesn't depend on whether or not the employer paid you any of what you are owed. The penalty applies in full whenever you are still owed compensation after the deadline passes.
There is one exception to the waiting time rule. If you and your employer have a good faith dispute about whether you are owed money, the employer may not have to pay waiting time penalties.
If you don't receive your final paycheck on time, or you receive only part of what you are owed, you have two options: You can file a complaint with the California Division of Labor Standards Enforcement (DLSE) or you can file a lawsuit against your employer.
If you win, you'll be entitled to the money you are still owed plus waiting time penalties for up to 30 days.
If your employer is illegally withholding pay from you, has docked your pay for an illegal reason, or committing any other wage and hour violation, consider contacting a California employment lawyer to explore your legal options.