1703 - Timely Payment of Wages
- Employee Relations Officers
- Personnel Officers
- Personnel Transactions Supervisors
- Informs the appointing authority of their responsibility to pay wages in a timely manner.
- Provides information on waiting time penalties.
- Provides penalty information for untimely payment of wages and failure to provide proper notice to employees of shift change premiums for Bargaining Units (BUs) 12 and 13.
This policy covers timely payment of wages for regular pay, wages due to an employee upon separation from the state, and provides penalty information for failure to pay wages.
The appointing authority is responsible for ensuring employees’ wages are paid timely and in accordance with the applicable Memorandum of Understanding (MOU), as well as government and state labor laws.
Most state employees are paid monthly for the 12 pay periods in the year. Pay day for full-time and part-time employees is typically the last day of the month or the first day of the next month. Intermittent employees are typically paid within ten working days after the end of the pay period, however no later than the date stated in the applicable MOU. Employees who are compensated on a biweekly basis should be compensated at two-week intervals no later than the second Thursday after the close of the pay period.
When an employee receives no warrant on payday, the appointing authority shall issue a salary advance to the employee consistent with departmental policy and the applicable MOU.
When an employee is separated from state service for non-voluntary reasons (e.g., layoff, medical reasons, or due to an adverse action), the wages earned must be paid immediately at the place of release. This includes the cash-out of accumulated compensable leave benefits, including but not limited to, vacation, annual leave, holiday leave, and compensating time off (CTO).
When an employee voluntarily resigns from their employment with the state, their wages, including accumulated compensable leave credits, must be paid no later than 72 hours from the date of separation. However, if the employee provides the employer at least 72 hours’ notice of their impending separation from state service, they are entitled to their wages and accumulated compensable leave credits at the time of separation. The employer must make payment to the employee who resigns at the departmental office within the county that they work.
If an employee requests final payment of their wages by mail, the date of mailing shall constitute the date of payment for the purpose of the requirement to provide payment within 72 hours of the notice of resignation.
The 72 hours is a continuous period that includes weekends and holidays. For example, if an employee resigns without prior notice on a Friday at 5:00 p.m., the employer has until 5:00 p.m. the following Monday to deliver wages due.
In case of a dispute over wages, the employer shall pay, without condition and within the time set by Article I, sections 200-244 of the California Constitution, all wages known to be owed to the employee. If, after an investigation and hearing, the Labor Commissioner deems the employee’s claim for wages to be valid, the claim is due and payable within 10 days after receipt of notice by the employer that such wages are due. An employer who willfully fails to pay wages due within 10 days shall, in addition to any other applicable penalty, pay treble the amount of any damages accruing to the employee as a direct and foreseeable consequence of such failure to pay.
If a department discovers an overpayment following the payment of final wages, the department can pursue repayment through the usual process.
Waiting Time Penalty
To ensure that employers comply with the laws governing the payment of wages when an employment relationship ends, the Legislature enacted Labor Code section 203 which provides for the assessment of a penalty against the employer when there is a willful failure to pay wages due the employee at conclusion of the employment relationship. Assessment of the waiting time penalty does not require showing that the employer intended the action, but rather that the employer knows what it is doing, that the action occurred and is within the employer’s control, and that the employer fails to perform a required act.
Assessment of the penalty is not automatic. A "good faith dispute" that any wages are due will prevent imposition of the penalty. A good faith dispute that any wages are due occurs when an employer presents a defense, based in law or fact which, if successful, would precluded any recover on the part of the employee. The fact that a defense is ultimately unsuccessful will not preclude a finding that a good faith dispute did exist. Defenses presented which, under all the circumstances, are unsupported by any evidence, are unreasonable, or are presented in bad faith, will precluded a finding of a “good faith dispute”.
In order for the penalty to apply, there must be a true employer-employee relationship and a quit or a termination, which includes a layoff. The penalty applies to the willful failure to pay "any wages," which refers to the definition of "wages" in Labor Code section 200. Thus, all compensation must be considered in determining if all wages due were paid as prescribed by law. Wages do not include expenses. In calculating the penalty, overtime wages are considered only if overtime is regularly scheduled each week. Occasional or infrequent overtime is not considered in the calculation of the daily rate of pay for purposes of computing the penalty.
The penalty is measured at the employee’s daily rate of pay and is calculated by multiplying the daily wage by the number of days that the employee was not paid, up to a maximum of 30 days. This does not mean that the wages continue for a 30-day period, but that the employee may be entitled to up to 30 actual days’ worth of wages. The 30-day period is calendar days, and includes weekends and holidays and any other days that the employee would not normally work. Payment of the wages or the commencement of an action stops the penalty from accruing. Filing a complaint in court commences an action. An employee’s filing a claim with the Division of Labor Standards Enforcement is not considered the filing of an action, and does not stop the penalty from accruing.
The waiting time penalty is not wages, thus, no deductions are taken from the penalty payment.
To assist in the timely issuance of separation pay, departments can key separation transactions with a future pay period effective date. Additional information can be found in the State Controller’s Office (SCO), Personnel Letter 01-001.
Each department needs to carefully examine internal processes being used to process payment of wages and make any necessary changes to comply with labor laws and MOUs.
A full listing of labor codes applicable to the state as an employer is provided below.
Untimely Payment of Wages – BUs 12 and 13
For employees in bargaining unit 12 and 13, a penalty for the untimely payment of regular wages shall be paid when: (1) there are errors or delays in processing payroll documents; (2) the employee does not receive a check on payday; and (3) a salary advance is not issued within three workdays after payday for an amount close to the actual net pay (gross salary less deductions) in accordance with departmental policy.
Therefore, when a revolving fund check is not issued within three workdays, the employer will pay to the employee five (5) percent of the employee's base pay for that period, for each workday beyond the three-day grace period.
The above provision does not apply to those employees who are on non-industrial disability insurance leave, industrial disability leave, or who are receiving worker's compensation payments. The request for payment shall be made through the claims process and departments may refer to the State Administrative Manual for guidelines on processing payments as a claim.
When the employer fails to provide timely notice of a shift change as defined in the agreement, a premium payment may be required. Both short and temporary shift changes are defined as a change in the hours of work in a day and/or the days of work in a week. The following chart outlines the notice requirements and the premium penalty payments due employees for failure to provide timely notice of a shift change as defined in the MOU, by type of shift change.
Type of Shift Change: Short shift change of less than 10 days
BU 12 – Article 7.4a (1)
BU 13 – Article 14.6a
Notice requirement is at least 24 hours prior to shift change.
The premium to be paid for failure to provide proper notice is one and one-half times the regular rate of pay for the entire first shift.
Type of Shift Change: Temporary shift change of 10 to 30 days
BU 12 – Article 7.4a (2)
BU 13 – Article 14.6b
Notice requirement is at least 3 working days prior to shift change.
The premium to be paid for failure to provide proper notice is one and one-half times the regular rate of pay for all hours worked on the temporary shift prior to passage of the three-day notice period.
The request for payment of a short shift change and a temporary shift change as described above shall be made as a pay differential.
- Department of Industrial Relations – Waiting Time Penalty: Frequently Asked Questions
- PML 2000-021: PML 2000-021 - 3/30/2000 - Untimely Payment of Wages; Shift Changes/Premium Pay; Bargaining Units 12 and 13
- PML 2000-071: PML 2000-071 - 12/13/2000 - Labor Code Applicable to State Employees
- PML 2001-035: PML 2001-035 - 9/14/2001 - Follow-up to PML 2000-071 - Labor Code Applicable to State Employees (Timely Payment of Wages Upon Separation)
- Pay Differential 200: Short Shift Change – Units 12 and 13
- SCO Personnel Letter 01-001: Timely Issuance of Separation Pay – 01/19/01
Personnel Services Branch
Personnel Program Consultant, Personnel Services Branch
Chief, Personnel Management Division