Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 65 IX. Waiting Time Penalties A. Generally Many class actions assert, on behalf of former employees, claims for “waiting time penalties“ under Labor Code section 203.311 Under California law, all wages due must be paid at the time of termination, unless the employee quits without notice, and then within seventy-two hours of termination.312 When a former employee’s wages are not timely paid, the employee’s wages continue, as a penalty: (i) while the former employee waits to get paid; (ii) until an action is commenced;313 or (iii) up to thirty days, whichever period is shorter. Thirty days of penalties means thirty consecutive paid days, including Saturdays, Sundays and holidays (typically equivalent to six weeks of pay), rather than simply one month’s pay. Each calendar day that passes before the employer pays all wages owed triggers an additional day of penalties at the employee’s regular daily rate, even if the employee is not normally scheduled to work on all of these days.314 (Where such penalties are grossly out of proportion to the unpaid wages upon which they are based, however, they could be found to violate due process under the U.S. Constitution).315 Courts have interpreted Section 203’s “until an action is commenced” language to mean the filing of a complaint with a state or federal court.316 Filing a wage claim with an administrative agency will not stop the accrual of waiting time penalties.317 At least one court has concluded that filing a lawsuit prior to termination precludes employees from asserting a claim under 311 The statute of limitations period on Lab. Code § 203 claims is three years, regardless of whether only penalties are sought or whether underlying wages are also sought in same action. Pineda v. Bank of America, 50 Cal. 4th 1389, 1401 (2010), overruling McCoy v. Superior Court, 157 Cal. App. 4th 225, 233 (2008). 312 Lab. Code § 203. 313 While many other types of penalties continue to accrue during the pendency of a lawsuit, waiting time penalties are cut off once a complaint is filed. Defendants should not overlook this limitation, as it can make a substantial difference in potential exposure in connection with class actions. 314 Mamika v. Barka, 68 Cal. App. 4th 487 (1998). The timing of payment of wages during employment under Lab. Code § 204 is extended to the next business day where the deadline falls on a weekend or holiday. Parsons v. Estenson, 86 Cal.App.5th 1260 (2022). Based on the reasoning of Parsons, employers may contend that, where the deadline for paying final wages under section 203 falls on a weekend or holiday, those wages are not actually due until the next business day thereafter. 315 See, e.g., Hale v. Morgan, 22 Cal. 3d 388, 405 (1978) (statutory penalties disproportionate to the underlying injury deprived the defendant of due process and were “constitutionally excessive”). 316 Triad Data Servs., Inc. v. Jackson, 153 Cal. App. 3d Supp. 1, 12–13 (1984); disapproved of on other grounds by Smith v. Rae-Venter Law Grp., 29 Cal. 4th 345 (2002). 317 Cuadra v. Millan, 17 Cal. 4th 855, 870 (1998); disapproved of on other grounds by Samuels v. Mix, 22 Cal. 4th 1 (1999).
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