California Labor Code 202: Final Paycheck Rules When Employees Quit

California Labor Code 202 requires employers to pay final wages on time when employees resign, with timing based on notice given. Workers may also claim unused vacation pay, request retirement fund deposits, or seek penalties for delayed payments.

By Douglas Wade, Attorney

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Table of Contents

1. Introduction

2. An Overview of California Labor Code 202 in Ninety Seconds

3. Comprehending When to Use Labor Code 202

4. Receiving Compensation After Being Fired

5. Receiving Compensation after Quitting

6. The Value of Giving Notice, Particularly When Resigning

7. Rare Situations in Which Immediate Payment Is Not Required

8. What Takes Place If You Are Not Paid on Schedule?

9. How to Recover Your Last Paycheck or Penalties for Waiting Time

10. Sample Situations

11. Important Lessons Learned and Advice

Introduction

A California labor statute known as California Labor Code 202 specifies when workers who are not recruited for a specific amount of time must be compensated after leaving their position. Unpaid salaries must be paid right away upon quitting if the worker offers 72 hours’ notice before leaving. The unpaid salary must be reimbursed within 72 hours after the employee’s resignation if no advance notification is given.

An Overview of California Labor Code 202 in Ninety Seconds

The California Labor Code 202 is divided into three main sections. The first provision stipulates that unpaid wages have to be paid within seventy-two hours of an employee quitting their job if they were not recruited for a specific duration under a signed contract. Unpaid wages have to be paid to the employee right away following their resignation if they gave 72 hours’ notice. Employees who fail to give notice have the right, upon request, to receive their final payment in the mail.

Employers are required to compensate their workers for any unused or underutilized vacation time under Section 2 of California Labor Code 202. The employee’s last paycheck has to contain compensation for this underutilized time off. As a substitute, workers may decide to transfer any unused vacation time to the following year and deposit the funds into the state’s retirement system.

Three alternatives are outlined in the third part of California Labor Code 202 for employees who wish to postpone or receive their paid time off. Putting the unpaid salaries into the government’s retirement fund is the first option. Second, workers can choose to receive cash or defer their last payout of unpaid wages & unused vacation time to their retirement fund. Lastly, workers have the option to receive cash payment for all outstanding salaries.

Comprehending When to Use Labor Code 202

When a worker leaves their job, whether voluntarily or involuntarily, California Labor Code 202 is applicable. It is not applicable when an employee is fired by their employer; that is covered under California Labor Code 201. When a worker leaves their job, California Labor Code 202 is applicable. The employee’s last payment for unpaid wages is going to be payable either right away or within 72 hours, contingent upon whether or not they gave notice.

When an employee quits, their payment is due right away if they gave notice 72 hours in advance. The last paycheck must be paid 72 hours after the employee quits if they didn’t. If not, California Labor Code 202 still governs, allowing workers to postpone payments and instead contribute them towards their retirement accounts.

Only circumstances where employees voluntarily resign are covered under California Labor Code 202; terminations are not. Employee terminations are governed under California Labor Code 201.

Receiving Compensation After Being Fired

The main advantage of California Labor Code 202 is that, if an employee resigns with 72 hours’ notice, employers must pay all outstanding wages that have not yet been paid. The employer is still required to pay all overdue payments within 72 hours, even if no notification has been made. Depending on whether or not notice was given, other items, such as accumulated vacation days and unpaid incentives, must be compensated as well, either right away or within 72 hours.

Receiving Compensation after Quitting

The time of payment depends on whether they notify their employer of their intention to leave. Employees who give 72 hours’ notice before leaving their job are required to get their last pay on the day that they leave. Workers who fail to give this kind of notice have the right to their last salary within seventy-two hours of leaving.

The Value of Giving Notice, Particularly When Resigning

An employee benefits from giving their company notice of their resignation in a variety of ways. According to California Labor Code 202, giving a 72-hour notice guarantees that any outstanding pay will be paid right away upon their resignation. This enables a worker to have greater financial stability right away after leaving their position. Furthermore, giving an employer notification of a resignation preserves the goodwill between the two parties. Giving notice of resignation assists in maintaining the possibility of future constructive communication in the event that the former employee requests a recommendation from their previous employer.

Rare Situations in Which Immediate Payment Is Not Required

California Labor Code 202 contains unusual exceptions to the quick payment rule. One of these is found in California Labor Code 201 rather than Labor Code 202. According to this exception, seasonal employees who work with commodities like fruits, vegetables, and fish in the canning, drying, or preservation industries must get paid by their company within seventy-two hours of being let go.

What Takes Place If You Are Not Paid on Schedule?

California Labor Code 203 imposes a penalty on employers who fail to pay their employees’ most recent paychecks on time. This penalty is applied as though the employee had not left, and it is based on the worker’s daily wage rate. For instance, a company must pay an employee as though they had labored four days if they are paid 4 days late on the last paycheck. When 30 days pass without payment, the penalty ceases to increase. This penalty has an exception: a worker cannot purposefully fail to get paid to fictitiously raise the amount of the penalty.

How to Recover Your Last Paycheck or Penalties for Waiting Time

Employees have two primary options for claiming their last paychecks or waiting time fines. The first is to file a claim with the Division of Labor Standards Enforcement in person, by post, email, or online. Incorporating information regarding other accountable parties, such as supervisors, and payment information, such as hours labored, breaks utilized, and pay stubs, is beneficial. Additional information may include the name and address of the company that the complaint is against. The claim will move forward more quickly as a result.

The second option available to an employee who has not received their last payment is to sue their company. Employees should make a note of the time they were denied their last paycheck so they can contrast it with the date they want to file a lawsuit. If a claim is not made within the first year of the business’s refusal to pay, the worker will not be eligible for reimbursement for unpaid wages because unpaid wage claims often have a one-year statute of limitations.

Sample Situations

Example 1: Employee Provides Notification of Resignation. Receives Payment After the Due Date

Situation: One of the employees at a car wash informs her employer that she will be leaving within two weeks. The company failed to pay her the last check with the remaining salaries at the time of her exit.

Violation: Notice was given, which caused an improper delay in the final salary.

The Protections of Labor Code 202: Employees who give their employer a minimum of 72 hours’ notice before quitting must have their last paycheck available on the day they formally leave their job.

Example 2: The employer unjustly delays payment while the employee fails to provide notice.

Situation: A worker at a fast-food establishment fails to give notice that they are leaving. It takes his company 96 hours following the employee’s departure to give him his last paycheck.

Violation: An employee who failed to give notice faces an award for the illegal delay in their final paycheck.

The Protections of Labor Code 202: Employers have seventy-two hours to give a worker their last salary of unpaid wages if they fail to give notice of their resignation. CA Labor Code 203 imposes a penalty on employers who wait more than this time frame. The extra one-day salary would be paid to the worker.

Example 3: The employee requests his supervisor to postpone unpaid hours, and his supervisor refuses.

Situation: A bookkeeper in an organization announces/informs that he is quitting shortly. He chooses to have his bonuses and unpaid pay transferred to one of his government retirement plans and postponed until the following year. After his last day, his company declines to do so and gives him a payment for his unearned bonuses and earnings.

Violation: The employer wrongfully declined to postpone the unpaid pay.

How Labor Code 202 safeguards: If a worker chooses to use the state’s retirement fund, employers must contribute their unearned salaries and bonuses. A lump sum, a split between cash and retirement funds, or all of the money transferred to a retirement account are all examples of last paychecks that they cannot compel an employee to accept.

Important Lessons Learned and Advice

The significance of giving notice and knowing what notice accomplishes for an employee are the most important takeaways to be gained from CA Labor Code 202. An employee is entitled to their last payment, plus any unpaid wages, as soon as they leave if they give seventy-two hours or more’s notification before leaving.

This implies they receive their money sooner than if they failed to give notification, in which event the employer may postpone payment for a maximum of 72 hours. Workers should also understand their choices for deferring and depositing the unpaid earnings into state retirement accounts.

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California Labor Code 202: Final Paycheck Rules When Employees Quit

Introduction

An Overview of California Labor Code 202 in Ninety Seconds

Comprehending When to Use Labor Code 202

Receiving Compensation After Being Fired

Receiving Compensation after Quitting

The Value of Giving Notice, Particularly When Resigning

Rare Situations in Which Immediate Payment Is Not Required

What Takes Place If You Are Not Paid on Schedule?

How to Recover Your Last Paycheck or Penalties for Waiting Time

Sample Situations

Important Lessons Learned and Advice

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