Leaving a job can be a challenging and emotionally charged experience, whether you decide to quit or you get fired. Beyond the personal and professional implications, ensuring you receive all of your earned wages owed at termination is critical to protecting yourself during this transition.
California law recognizes the potential stress and uncertainty employees face when leaving a job by imposing strict requirements on all employers to pay all earned wages to an employee upon termination or resignation. These protections are designed to provide employees with the financial stability they need to move forward.
As an employment law litigator for over 30 years, Matt Ruggles has witnessed countless situations where employees are denied wages owed upon leaving a job including due to a sudden termination, a resignation, or the conclusion of a contract. From improperly withheld commissions to miscalculated vacation pay, Matt has seen it all. In the blog post below, Matt offers clear and practical advice to help employees understand their rights when it comes to final paychecks, ensuring they receive all of the compensation they are entitled to under California law.
What Are All of the Wages Owed at Termination?
Wages Due When You Are Fired Without Notice
When an employer terminates an employee without notice, they must pay all earned wages immediately on the day of termination. This includes all hours worked up to the termination date, as well as any unused vacation or paid time off (PTO) if offered by the employer.
Key Point: The final paycheck must be provided at the time of termination—no exceptions. Failure to do so ordinarily will result in waiting time penalties against the employer.
Other Payments Due at Termination in Addition to Final Wages Owed at Termination
In addition to your regular wages, employers must include any other payments you are entitled to upon termination. This may include:
- Unused vacation or PTO (treated as earned wages in California).
- Earned bonuses or incentives, as outlined in your employment agreement.
- Reimbursement for business expenses not yet paid.
Key Point: Review your final paycheck to ensure all forms of compensation are included.
Wages Due Upon Resignation with Notice
If you resign and provide at least 72 hours’ notice, your employer is required to provide your final wages, including accrued PTO, on your last working day. This ensures a smooth transition for both you and your employer.
Key Point: Always provide written notice of your resignation to create a clear record of your timeline.
Wages Due Upon Resignation Without Notice
If you resign without providing 72 hours’ notice, the employer has up to 72 hours from the time of your resignation to provide your final paycheck. Employers who fail to pay within this timeframe may face waiting time penalties.
Key Point: Document the date and time of your resignation and follow up if your wages are not paid within the required period.
Payment of Earned Commissions Post-Termination
Commissions earned before termination or resignation must be paid according to the terms of your commission agreement. Employers cannot withhold commissions simply because you are no longer employed, as long as the conditions for earning them were met. However, commissions that have been earned but not yet accrued for any particular reason can be paid post-termination. For instance, if the commission plan requires that a sale needs to “stick” (not returned) for at least 10 days before the commission payment accrues and is owed to the employee, a terminated employee is entitled to the commission payment post-termination so long as the employee has done everything necessary to earn the commission prior to termination.
Key Point: Review your commission agreement to confirm the payment schedule and eligibility criteria.
Payment of Waiting Time Penalties for Late Payment of Wages Owed at Termination
Under California law, employers who fail to pay final wages owed at termination on time may owe “waiting time” penalties. California Labor Code section 203 provides penalties equal to one day of the employee’s wages for each day payment is delayed, up to a maximum of 30 calendar days. Waiting time penalties are designed to encourage timely payment of final wages. Waiting time penalties are considered earned wages and an employee has a legal entitlement to the statutory penalties as soon the penalty accrues.
Key Point: If your employer delays your final paycheck, calculate the waiting time penalties owed and consider filing a claim with the California Labor Commissioner.
What Can I Do if My Employer Does Not Give Me All Wages Owed at Termination?
If your employer fails to pay you all the wages you are owed at termination, you have legal options to recover what you are entitled to. Here’s how to proceed:
Document the Issue
- The first step in addressing unpaid wages is to gather all relevant documentation. This includes:
- Pay stubs or wage statements that reflect what you were paid before termination.
- Any employment agreements or contracts, including commission agreements or bonus plans, to confirm what you are entitled to.
- Records of unused vacation or PTO balances, which should be paid out upon termination.
- Written communications with your employer, such as emails, texts, or letters, regarding your final paycheck or outstanding wages.
- Keeping detailed records will strengthen your case if you need to file a claim or pursue legal action.
File a Claim with the California Labor Commissioner
- If your employer has failed to pay your final wages owed at termination, you can file a claim with the California Labor Commissioner’s Office. The process involves:
- Completing and submitting a wage claim form, which can be done online or in person at a local office of the California Labor Commissioner.
- Providing supporting documentation, such as pay stubs, written agreements, or communication records.
- Participating in a settlement conference, where you and your employer will try to resolve the dispute.
- If the case is not settled, it may proceed to a hearing where a Deputy Labor Commissioner will make a binding decision.
- Filing a claim with the California Labor Commissioner is not a mandatory perquisite to filing a lawsuit; filing a claim with the Labor Commissioner is optional and normally is done in lieu of filing a lawsuit in court.
- Outcomes can include payment of owed wages, waiting time penalties, and interest.
Consult an Employment Attorney
- While filing a claim with the Labor Commissioner is an option, consulting with an experienced employment attorney can provide additional advantages, especially if:
- The amount of wages owed is substantial or complex (e.g., commissions, bonuses, or PTO).
- You suspect retaliation or wrongful termination was involved.
- Your employer has a history of disputes with employees or is likely to contest your claim aggressively.
- An attorney can assess your case, negotiate on your behalf, and advise you on the best legal strategy to recover your wages.
Consider Filing a Lawsuit to Obtain Wages Owed at Termination
- If other methods do not resolve the issue, you may need to file a lawsuit against your employer. The steps typically include:
- Consulting an attorney to evaluate the strength of your case and determine damages, including waiting time penalties and unpaid wages.
- Filing a complaint in the appropriate court.
- Engaging in discovery, where evidence is exchanged between you and your employer.
- Attempting mediation or settlement discussions to resolve the case before trial.
- Proceeding to trial if necessary, where a judge or jury will decide your case.
- Lawsuits can be time-intensive, frustrating, and very long, but they are often the most effective way to recover significant amounts of unpaid wages.
Understand the Timeline for Resolution of Wages Owed at Termination
- The time it takes to resolve a wage dispute can vary depending on the method used:
- Filing with the Labor Commissioner: Claims before the California Labor Commissioner normally take 12 to 18 months to resolve.
- Negotiating with an attorney: Settlements can often be reached within weeks or months if both parties are cooperative.
- Filing a lawsuit: Lawsuits can take one to three years or more, depending on the court’s schedule and whether the case goes to trial.
- Understanding the timeline helps set realistic expectations and allows you to plan your next steps while the dispute is resolved.
Frequently Asked Questions About Unpaid Final Wages
What should I do if my employer doesn’t pay my final wages owed at termination on time?
- Start by documenting the issue, including keeping a record of all communications with your employer and any unpaid amounts. You can then file a wage claim with the California Labor Commissioner or consult an employment attorney for assistance.
When is my employer required to pay my final wages owed at termination?
- If you are terminated or laid off, your employer must pay all final wages, including any accrued PTO/vacation time, on your last day of work. If you resign and give at least 72 hours’ notice, you must be paid on your last working day. Without notice, your employer has 72 hours to issue your final paycheck.
What counts as “final wages owed at termination”?
- Final wages include all unpaid wages for hours worked, overtime, accrued vacation or paid time off (PTO), earned commissions, and bonuses that were agreed upon and earned before termination or resignation.
Does my employer have to pay me for unused vacation or PTO?
- Yes, California law considers unused vacation or PTO as earned wages. Employers must pay out any accrued vacation or PTO upon termination or resignation.
Can I recover penalties if my employer delays my final paycheck?
- Yes, pursuant to California Labor Code section 203, you may be entitled to waiting time penalties. These penalties are equal to your daily wage for each day your paycheck is delayed, up to 30 days.
Do I have to be employed to receive commissions or bonuses I earned?
- No, if you met the criteria for earning commissions or bonuses while employed, your employer must pay them even if the payout date occurs after your termination or resignation. However, if a bonus expressly requires that you are employed when the bonus is paid (a “retention” clause), you may not be able to recover an unpaid bonus if you no longer are employed. Retention clauses are legal in California.
What if my employer claims they don’t owe me anything?
- If you believe you are owed wages, gather evidence such as pay stubs, employment agreements, and records of hours worked. File a claim with the California Labor Commissioner or consult an attorney to evaluate your case.
Can my employer deduct money from my final paycheck?
- Employers are limited in what they can deduct from final paychecks. Permissible deductions typically include taxes and agreed-upon deductions, but not penalties, damages, or unreturned equipment costs without prior consent. An employer must have an express written agreement with the employee at the time of termination to make any additional deductions, even if the employee previously agreed that additional deductions can be made from the final paycheck.
What happens if my employer declares bankruptcy or shuts down?
- Employees are considered creditors in bankruptcy cases and may file claims for unpaid wages. An attorney can help navigate this process to ensure you receive priority in recovering what you’re owed.
How long do I have to file a claim for unpaid wages?
- In California, the statute of limitations for wage claims is generally three years. However, waiting time penalties must be pursued within one year.
What is the process for filing a wage claim with the California Labor Commissioner?
- File a claim online or in person, provide supporting documents, and attend a settlement conference. If no settlement is reached, the case may proceed to a hearing.
Can I sue my employer for unpaid final wages?
- Yes, you can file a lawsuit for unpaid wages, penalties, and damages. Consult an employment attorney to determine if this is the best option for your case.
What if I signed a severance agreement—can I still recover unpaid wages?
- A severance agreement typically does not waive your right to unpaid wages unless it explicitly states so. In fact, California law prohibits any agreement that purports to waive any undisputed claim for unpaid wages. Have an attorney review your severance agreement to confirm your rights.
Will I get fired if I complain about unpaid wages?
- Retaliation for complaining about unpaid wages is illegal under California law. If you are retaliated against, you may have an additional claim for wrongful termination or retaliation.
Contact the Ruggles Law Firm at 916-758-8058 to Evaluate Your Potential Lawsuit
Matt Ruggles has a thorough understanding of California employment laws and decades of practical experience litigating employment law claims in California state and federal courts. Using all of his knowledge and experience, Matt and his team can quickly evaluate your potential claim and give you realistic advice on what you can expect if you sue your former employer.
Contact the Ruggles Law Firm at 916-758-8058 for a free, no-obligation consultation.
Blog posts are not legal advice and are for information purposes only. Contact the Ruggles Law Firm for consideration of your individual circumstances.
