California Labor Code 202 Overview & Example Scenarios
Legally reviewed by: Jessica Anvar Stotz, JD, MBA
California Labor Code 202 is a California labor law that describes when employees who are not hired for a definite period must be paid after quitting their job. If the employee gives a 72-hour notice before quitting, the unpaid wages must be paid immediately upon resignation. If no notice is given, the unpaid wages must be paid within 72 hours of the employee’s resignation.
California Labor Code 202 Explained in 90 Seconds
There are three key sections in California Labor Code 202. The first section says that when an employee who is not hired for a definite period through a written contract quits their employment, their unpaid wages must be paid within 72 hours. If the employee has given notice of their quitting 72 hours before, their unpaid wages must be paid immediately upon quitting. For employees who do not provide notice, employees are entitled to get their last paycheck in the mail if they request it.
Section two of California Labor Code 202 involves employers paying their employees for unused or left-over time off. Employers must include payment for this unused time off in the employee’s final paycheck. Alternatively, employees can choose to defer their unused time off to the next calendar year, putting the money from the unused time into a state retirement fund.
The third section of California Labor Code 202 describes three options an employee can consider for deferring their time off or receiving it as money. The first is to put the unpaid wages into a state retirement fund. Second, employees can split their final payment of unpaid wages and unused time off between receiving cash and deferring into a retirement fund. Finally, employees can elect to be paid all of their remaining unpaid wages in cash.
Understanding When Labor Code 202 Applies
California Labor Code 202 applies when an employee resigns from their position with or without notice. It does not apply to situations in which the employer discharges (fires) the employee; California Labor Code 201 covers that situation. When an employee resigns from their position, California Labor Code 202 applies. Depending on whether or not the employee provided notice, their final paycheck for unpaid wages will either be due immediately or within 72 hours.
If the employee provided notice 72 hours before their quitting, the paycheck is due immediately when they quit. If they did not, the final paycheck is due within 72 hours of the employee quitting. Otherwise, California Labor Code 202 still applies, so employees can defer their payments and instead put them into their retirement funds.
California Labor Code 202 does not apply to situations where employees are fired, only to those where employees willingly quit. Situations where employees are fired are governed by California Labor Code 201.
Getting Paid When You’re Fired
The key benefit California Labor Code 202 provides is that employers are required to pay their employees all unpaid wages immediately once the employee quits, if the employee has given notice 72 hours in advance. If no notice has been given, the employer still needs to pay all unpaid wages within 72 hours. Other items, like accrued vacation time and unpaid owed bonuses, must also be paid either immediately or within 72 hours depending on whether notice was given.
Getting Paid When You Quit
Whether or not an employee gives their employer notice of resignation affects when they are paid. Employees who provide notice 72 hours before quitting must receive their final paycheck on the day they stop working for their employer. Employees who do not provide such notice are entitled to their last paycheck within 72 hours of quitting.
The Importance of Notice (Especially When Quitting)
Providing notice of quitting to an employer is beneficial for an employee in a number of ways. For California Labor Code 202, 72 hours of notice secures that unpaid wages will be paid immediately when the employee quits. This allows for an employee to be more financially secure immediately after quitting their job. Additionally, providing notice of quitting to an employer maintains a positive relationship between them and the employee. In the future, the former employee may seek out a reference from their former employer, and providing notice of quitting helps keep the door for later positive communication open.
Exceptions to Immediate Payment (Rare Cases)
In rare cases, there are exceptions to the immediate payment rule found in California Labor Code 202. One of these does not appear in Labor Code 202 but rather in California Labor Code 201. This exception says that seasonal workers working in the canning, preservation, or drying industry dealing with goods like fruits, fish, and vegetables must receive their paycheck from their employer within 72 hours of being terminated.
What Happens If You Don’t Get Paid on Time?
If an employer fails to pay an employee’s last paycheck on time, a penalty provided by California Labor Code 203 is applied. This penalty is determined by the employee’s daily wage rate and applies as if the employee was still working. For example, an employer that pays an employee four days late on the final paycheck will have to pay as if the employee had worked four days. After 30 days without payment, this penalty stops growing. There is an exception to this penalty: an employee cannot actively avoid being paid in order to artificially increase the penalty amount.
How to Claim Your Final Paycheck or Waiting Time Penalties
Employees can claim their final paychecks or penalties for waiting time in two main ways. First, they can submit a claim online, by email, by mail, or in person to the Division of Labor Standards Enforcement, or DLSE. It’s helpful to include details such as the address and name of the business the claim is against, as well as information about other liable individuals, like managers, and payment details, like hours worked, breaks taken, and pay stubs. This will help the claim proceed more efficiently.
A worker’s second avenue for redress regarding an unpaid final paycheck is to file a lawsuit against their employer. It is extremely important for employees to take note of when they were refused their final paycheck and compare it to when they plan to sue. A statute of limitations of one year generally applies to unpaid wage claims; therefore, an employee will not be entitled to compensation for unpaid wages if a claim is not filed within one year of the employer’s refusal to pay.
Example Scenarios
Example 1: Employee Provides Notice of Quitting and is Paid Late
- Scenario: An employee who works at a car wash informs her employer that she will be quitting in two weeks. Two weeks later, she quits, but her employer does not give her the last paycheck for her unpaid wages.
- Violation: Improper delay in final paycheck due to notice being given.
- How Labor Code 202 Protects: When employees give at least 72 hours of notice prior to leaving their employment, their employer must have the final paycheck ready for them on the day the employee officially stops working.
Example 2: Employee Does Not Provide Notice, Employer Improperly Delays Payment
- Scenario: A fast-food restaurant employee does not provide notice of quitting. His employer does not pay him his final paycheck until 96 hours after the employee has quit.
- Violation: Penalty imposed for improper delay in final paycheck for an employee who did not provide notice.
- How Labor Code 202 Protects: When an employee does not provide notice of their quitting, employers have 72 hours to give them their final paycheck of unpaid wages. If an employer waits longer than this period, a penalty is imposed on them by CA Labor Code 203. In this case, the employee would be owed an extra day of wages for the delay.
Example 3: Employee Decides to Defer Unpaid Hours, Employer Refuses
- Scenario: An accountant at a business gives notice that he will be leaving the company soon. He elects to have his unpaid wages and bonuses deferred to the next calendar year and put into one of his state retirement funds. His employer refuses to do so and presents him with a paycheck for his unearned wages and bonuses after his final day.
- Violation: Employer improperly refused to defer the unpaid wages.
- How Labor Code 202 Protects: Employers are required to put the unearned wages and bonuses of an employee into their state retirement fund if the employee elects to do so. They cannot force an employee to take any particular form of final paycheck, whether it be a lump sum, split between retirement funds and cash, or all deferred to a retirement fund.
Key Takeaways and Tips
The most important takeaway regarding CA Labor Code 202 is the importance of providing notice and understanding what providing notice does for an employee. When an employee provides 72 or more hours of notice before quitting, they become entitled to their final paycheck with any unpaid wages as soon as they quit. This means they get their paycheck faster than if they did not provide notice, in which case the employer can wait up to 72 hours to pay. Employees should also be aware of their options regarding deferring the unpaid wages and putting them into state retirement funds.
Resources for Employees and Employers
- California Code, Labor Code – LAB §202
- 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
If you have reason to believe you have a claim for lost or withheld wages, or for improperly delayed wages, you should speak with a reputable attorney today. LawLinq can connect you with an attorney who can represent you properly, ensuring that you get the compensation you need and deserve. These outstanding attorneys are highly qualified in the field of labor law and can address the specific issue you are having. Being represented by a strong advocate for your rights as an employee is vital in bringing a successful claim: contact us today so you can get the representation you deserve.
