Doing Business in California? Labor Laws Demand Prompt Payment

In a recent case issued by the California Supreme Court, the issue of when an employee’s final pay and leave benefits should be paid was addressed. This case was interesting because it was the state who was on defense as an employer, but the lesson is the same for anyone doing business in California, and a good reminder to help prevent similar, expensive legal actions.

If you are a company doing business in California, it is no surprise to you that there are myriad laws, rules, and regulations that govern how your business works. California is renowned as one of the most progressive and worker friendly states in the union, if not one of the most labor friendly in the world. California is also one of the most beautiful and desireable place in the world to live, and as a result, a lot of business is done here.

For those companies doing business in California, keeping up with all the legal aspects of being here can be daunting. Even the state itself as an employer can get it wrong and pay big consequences as a result. That is what happened in this labor lawsuit that made it all the way to the California Supreme Court.

What Happened in This Case

This case involved a state employee, who at the end of her career with the state entered into retirement. She worked with the state’s Department of Justice, and when she finished was still owed some money for work and unpaid leave. Now the rules on when and how a company should pay due sums of money to employees leaving work are very strict.

Under California’s Labor Code, section 201 et seq., an employer is required to pay out final wages to a terminated or leaving employee immediately. If the company fails to comply with these rules, and does not pay out due sums immediately, and willfully withholds the money, they can face stiff penalties. For starters, an employee who has left work could be entitled to 30 days of wages if they are not paid on time.

While this is a stiff penalty, it gets worse if it turns into a system-wide problem. If your company is not up to date on California’s labor laws, and has a practice of waiting for a time to pay wages to terminated or discharged employees, you could face a class action lawsuit. Such lawsuits take away resources that would otherwise be invested in the company, and most of that money will end up in the pockets of opposing attorneys who bring the suit.

That is what happened in this case. The woman’s claim was for a small amount of money, but once it became a class action suit, it put the state on the hook for what will likely end up being millions of dollars in fees and penalties. Few companies can afford to withstand such losses without real consequences hitting close to home.

Planning for the Future

A major part of your company’s success will lie in how you plan for the future. At The Royse Law Firm, our labor and employment law group will sit down with you and help you understand what steps your company needs to take to avoid troubles like those in this case. If you are already in trouble, we can help you mitigate your damages and take the fight to your opponents. Contact us today so we can become part of your company’s future.

Disclaimer: This blog and website are public sources of general information concerning our firm and its lawyers, as well as the information presented. They are intended, but not promised or guaranteed, to be correct, complete, and up-to-date as of the date posted. This blog and website are not intended to be, and are not, sources of legal opinion or advice. The materials, information, and communications on this blog and website do not apply to any particular person, entity, or situation, and do not apply to you or to your specific situation. You will need to consult with an attorney and/or other appropriate professional about your specific situation. Thank you.
Roger Royse

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
Read My Full Bio | Contact Me