California Labor Code 201 Overview and Example Scenarios
Legally reviewed by: Jessica Anvar Stotz, JD, MBA
California Labor Code 201 is a state labor law that says employees must be given earned and unpaid wages when they are fired by their employer immediately.
It also describes the payment of such wages for employees terminated because of seasonal employment in the business of curing, canning, or drying fruit, fish, or vegetables. Finally, it describes how an employee can delay the payment of time off into the next calendar year and where that payment can then go.
California Labor Code 201 Explained in 90 Seconds
California Labor Code 201 has three main sections. The first section states that when an employer discharges an employee, the unearned and unpaid wages at the time of the discharge are due and payable immediately. This means that when an employer fires an employee, they must immediately give them their final paycheck.
For employees working in seasonal employment, such as in canning, drying, or curing of perishable goods like fruits, fish, and vegetables, this payment can take place within a reasonable time. This reasonable time is based on how much time the employer needs to calculate and pay the wages, but can’t be more than 72 hours. Finally, if an employee has requested that their payment be sent by mail, the employer must mail it to them.
The second section of California Labor Code 201 deals with unused time off the employee is entitled to based on previous overtime work. When such unused time off exists, the employer is required to include it in the final paycheck the employee receives. Employees can also elect to have their unused time off deferred to the following calendar year and put into their state retirement funds.
The third section of California Labor Code 201 is similar to the second section and describes the three different options an employee has for deferring their unused time off.
The first option is to have the entire remaining payment be contributed to a retirement fund (either the employee’s 401(k), 403(b), or 457 plan). The second option allows the employee to split the payment of the unused time off between the retirement funds and actual cash payment. The final option allows the employee to receive all of the money as a cash payment in the form of a lump sum.
When Does California Labor Code 201 Apply?
There are two main scenarios in which California Labor Code 201 applies. They are when an employee is discharged from their job, and when an employee quits their job themselves.
When an employee is discharged from their job, their employer must immediately give them their final paycheck. If the employee has any remaining unused vacation, annual leave, or holiday leave (or general time off), that must also be included in the final payment. Alternatively, the employee can elect to have their unused time off payment deferred to the next calendar year and put into their retirement funds instead.
When an employee quits their job and provides notice, the employer must also pay them their final paycheck immediately. The rest of California Labor Code 201 also applies, meaning employees can still elect to defer their unused time off payments and put them into their retirement funds. If an employee quits without notice, the employer has a reasonable time to calculate and pay the wages, which cannot exceed 72 hours.
How Quickly Do I Get Paid When I’m Fired (Discharged)?
Under California Labor Code 201, employers must pay all earned and unpaid wages immediately upon discharge (or firing) of their employee. These wages include everything unpaid up to the moment of termination, any accrued vacation time or unused time off, and any other bonuses the employee is still owed.
How Quickly Do I Get Paid When I Quit?
When an employee quits, when they get paid depends on whether or not they gave notice of their quitting to their employer. If notice is given by the employee, the employee’s final paycheck must be given at the time of quitting. For example, if an employee puts in their two weeks, they must receive their final paycheck at the end of those two weeks.
If an employee does not give notice of their quitting, the employer has 72 hours to pay them their final wages. This includes the payment of unused time off, unless the employee has elected to defer them into their retirement funds.
Exceptions to Immediate Payment
There is one exception to the immediate payment rule of California Labor Code 201. If an employee is a seasonal worker working in an industry that cans, preserves, or dries perishable goods like fish, fruits, and vegetables, they must receive their paycheck within 72 hours of discharge. For these employees, employers do not need to pay them immediately upon termination.
What Happens If My Employer Doesn’t Pay Me on Time?
If your employer does not pay your final paycheck on time, they are subject to a penalty created by California Labor Code 203. This penalty is equal to the employee’s wages and builds at the same rate as if the employee had been working.
For example, an employer that provides the final paycheck three days late is penalized by three additional days of wages for that employee. This penalty stops building at 30 days late. If an employee purposefully avoids being paid, they cannot benefit from these penalty payments.
How Do I Claim Final Paycheck or Waiting Time Penalties?
Employees have two options for pursuing their unpaid final paycheck and waiting time penalties. The first option is to file a wage claim with the Division of Labor Standards Enforcement, or DLSE.
These wage claims can be filed online, by email, by mail, or in person. The DLSE will require some information from the employee in order to effectively process a claim.
This information includes the address and name of the company or individual the claim is being filed against, other responsible parties like managers or supervisors, and payment information like hours worked, breaks taken, and pay stubs. The more information an employee can provide, the more effectively their claim can generally be addressed.
Alternatively, an employee can sue their employer in court for failing to pay their unearned wages. In filing a lawsuit, employees should pay special attention to how long it has been since their employer refused to provide the final paycheck.
Generally speaking, unpaid wage claims have a statute of limitations period of one year. This means that if a claim for unpaid wages is not brought within a year after the employer refuses to pay, the employee can no longer bring the claim.
Example Scenarios
Example 1: Employee Fired and Final Paycheck Delayed
- Scenario: An employee working at a fast-food restaurant is fired from his job and does not receive his final paycheck until five days later.
- Violation: Unreasonable delay in final payment under California Labor Code 201.
- How Labor Code 201 Protects: Employers are required to pay employees that they fire immediately upon firing them, unless the employee works in a seasonal industry. A five-day delay in payment would create a penalty equal to five days of wages that the employer would need to pay the discharged employee, on top of the other unpaid wages and unused time off if the employee does not elect for them to be deferred to his retirement funds.
Example 2: Seasonal Employee Fired and Unpaid
- Scenario: A seasonally-hired employee working in a fish drying plant is fired after the fish season ends. The employer claims it takes 80 hours to process and provide the final payment, and does not pay the discharged employee until 80 hours after they are fired.
- Violation: Unreasonable delay in payment for seasonal workers under California Labor Code 201.
- How Labor Code 201 Protects: Labor Code 201 states that in the case of seasonally-hired employees, the employer must provide the final paycheck within a reasonable time that cannot exceed 72 hours. The eight additional hours in this case would likely count as a penalty in the form of an extra day of wages for the employee.
Example 3: Employee is Fired and Unpaid Bonus is Withheld
- Scenario: A bank employee is fired. The bank recently created a bonus program that the employee was participating in, but the bank refuses to pay the employee for the bonuses he had earned up to the point of being fired.
- Violation: Employer refusing to pay unpaid bonuses at employee termination.
- How Labor Code 201 Protects: Labor Code 201 states that employers must pay terminated employees all of their unpaid wages, including unpaid owed bonuses. An employee in this situation could file a Wage Claim with the FLSE to receive their deserved bonus.
Resources for Employers and Employees
- California Code, Labor Code – LAB §201
- California Code, Labor Code – LAB § 203
- California Department of Industrial Regulations
- California Department of Industrial Regulations: How to File a Wage Claim
- California Department of Industrial Regulations: Required Documentation for a Wage Claim
- California Department of Industrial Regulations: Waiting Time Penalty
Connect With an Attorney
California’s labor laws are powerful, but they can only protect employees who take action against employers who act wrongly. If you believe you have a wage claim against your employer, seeking legal advice from an experienced attorney is your best option for receiving the compensation you deserve. LawLinq can assist you in finding a highly qualified and experienced employment attorney.
Contact us by calling (855) 997-2588 or by filling out an online form today! At Law Linq we will connect with you an experienced and qualified attorney specific to your needs.
