Cal-Peculiarities: How California Employment Law is Different 2022 Edition

©2022 Seyfarth Shaw LLP  www.seyfarth.com 2022 Cal-Peculiarities | 209 long into a shift, and similarly reasoning that meal premium wages are “earned” in that they were due because of the employee’s efforts—the employee worked too long in the light of the meal-break requirements. It mattered not to the high court that its decision was deviating from existing law—established by lower California appellate decisions—that the Legislature over the years had not sought to change . 132 Payment of vacation pay upon termination. Unless otherwise provided by a collective bargaining agreement, the wages that the employer must pay a departing employee include all accrued, unused vacation pay. Vacation pay due at the time of termination must be calculated at the final rate of pay on the basis of daily accrual, even if accrual of vacation pay ordinarily has been calculated on an annual, monthly, or weekly basi s. 133 (See § 7.19.) Timing of payment. Many states permit employers to pay final wages in the regular payroll cycle. In California it’s different. California employers must pay a discharged employee in full on the day of discharg e. 134 An employee who quits must be paid not later than 72 hours of the notice of resignation, or earlier, at the time of quitting, if the employee has given at least 72 hours of notic e. 135 If an employer does not comply with these requirements, then the employee is entitled to waiting time penalties from the due date, in an amount of up to 30 days of’ wages. (See § 7.5.4). The California Supreme Court has decided that an employer owed waiting-time penalties to an employee who had not resigned , but rather had retired . At issue was whether Labor Code sections 202 and 203, which authorize a suit by an employee who “quits” employment, likewise authorize a suit by an employee who has retired. The high court answered in the affirmative, reasoning that employees retiring fall into the broader category of employees who have “quit” employment within the meaning of the general prompt payment rule of Sections 202(a) and 203 . 136 Payment by direct deposit. California law once “deemed terminated” the employee’s authorization of direct deposit if the employee was fired or quit. The Legislature reformed that annoying law, however, to permit employers to make the final payment of wages by the previously authorized method of direct deposit . 137 When is the day of discharge? Because of the severe waiting-time penalties imposed, employers must establish the day of discharge. The day of discharge is not necessarily the last day on which work is performed. In cases of suspected employee misconduct, many California employers suspend an employee without pay pending further investigation or deliberation regarding the decision whether to discharge the employee. This approach enables an employer to have the final paycheck ready on the day of discharge. If, however, the employer reaches its final decision to discharge, and releases the employee from employment, before the day of final pay, the employer would risk waiting-time penalties. When are temporary employees discharged? A “temporary employee” might be called to work for a fixed-term assignment, and then wait a few days before taking the next assignment. Is there a “discharge”—requiring immediate payment of all earned wages—every time a temporary assignment ends? In a case involving an individual hired for a one-day modeling job and then not promptly paid for her services, the Court of Appeal relied on the plain meaning of the statutory term “discharge” to hold that an employee whose temporary assignment simply runs its course has not been “discharged” and, therefore, cannot recover waiting-time penalties for lack of an immediate payment; rather, final payment can occur at some mutually agreed time or other reasonable tim e. 138 The California Supreme Court then swept this pro-employer ruling off the books and held that the employer’s obligation to pay all earned wages upon termination of employment is not limited to a situation where an employee is released from an ongoing employment relationship, but also applies upon completion of the specific job assignment or time duration for which the employee was hired . 139