Vast Penalties For Failure To Pay Wages In A Timely Manner

Written by Galen T. Shimoda and Erika R. C. Sembrano

Payday is a part of virtually every working person’s life.  People look forward to payday.  People expect payment on payday.  Suffice it to say, payday is important. 

Long ago, the California Legislature recognized the importance of expecting a regular paycheck.  Labor Code section 204 provides that, save for some exceptions, all earned wages must be paid twice during each calendar month.  Labor Code section 204 becomes even more specific: work performed between the 1st and the 15th of the month must be paid between the 16th and 26th day, i.e. no later than ten (10) days after the 15th; and work performed between the 16th and the end of the month must be paid between the 1st and 10th day of the following month, i.e. no later than ten (10) days after the end of the month.  The purpose underlying Labor Code section 204 is for employers to maintain two (2) regular pay days each month.  The result is that employees will know when to expect payment for their hard-earned wages.

Despite this language, employers typically choose one (1) of three (3) different methods of payment to comply with Labor Code section 204: weekly, biweekly, or semi-monthly.  Thus, Labor Code section 204 further states that as long as wages are not paid more than seven (7) calendar days following the close of the payroll period, employers utilizing any one (1) of the three (3) methods above will not violate Labor Code section 204.  For example, if an employer pays its employees every two (2) weeks, some months may have three (3) paydays and another month may only have one (1).  However, if the employer provides employees’ paychecks within seven (7) days of the last day of the payroll period, the employer does not violate Labor Code section 204.  As another example, if an employer pays its employees on a weekly pay schedule, they must be paid no later than the regular payday as established by the employer.  These scenarios allow employers some leeway in terms of what pay schedule to implement, but nevertheless, employers must still provide payment for all earned wages in a timely manner.

One exception to this general rule is where employees are subject to a collective bargaining agreement, which can provide for a different pay arrangement than that delineated in Labor Code section 204.  Thus, employees can agree to receive their paychecks in a different manner, and this would be acceptable.  Another exception is that executive, administrative, and professional employees subject to the Fair Labor Standards Act (FLSA) may be paid once a month on or before the 26th day of the month during which the employees performed work.  For executive, administrative, and professional employees who are not covered by the FLSA or any other collective bargaining agreement, they can be paid within seven (7) days of the close of their monthly payroll period.

Ultimately, employees must be paid all earned wages in a timely manner.  Failure to do so subjects employers to staunch civil penalties recoverable by either the Labor Commissioner or by an employee acting on behalf of the Labor Commissioner.  Labor Code section 210 states that “every person who fails to pay the wages of each employee as provided in Section[] 204” will be subject to a civil penalty of $100 for the initial violation for each employee, and $200 for each subsequent violation (or willful or intentional violation) plus twenty-five percent (25%) of the amount unlawfully withheld.  Although Labor Code section 204 does not in and of itself create a private cause of action for employees to pursue in civil court, employees can look to the Private Attorneys General Act (PAGA) to act as private attorney generals and seek to recover the civil penalties as laid out in Labor Code section 210. 

Because of this, employees can obtain recompense if their employers fail to pay them all wages owed in a timely manner.  It is undisputed that hard-earned wages should not be withheld from hard-working employees.  For instance, if an employer does not pay an employee all overtime wages owed to the employee on payday, Labor Code sections 204 and 210 are likely implicated, allowing the employee to seek a remedy for not being paid all wages earned.  The same situation arises if an employer fails to pay for each hour an employee worked during the pay period.  Thus, if an employer violates Labor Code section 204, employees should seek penalties pursuant to Labor Code section 210. 

However, it is important to note that in order to seek civil penalties pursuant to Labor Code section 210, an employee must first exhaust his/her administrative remedies through the Labor and Workforce Development Agency (LWDA).  Also, such exhaustion must be done in a timely manner.

On another note, a violation of Labor Code section 204 can also be used as a basis for finding that the employer engaged in “unfair competition,” meaning that an employer engaged in unlawful practices that gave it an unfair advantage compared to other law-abiding employers by violating the law.

If you have any questions about the payment of your wages by your employer, you can contact our office to discuss your situation.

The Shimoda Law Corp. legal articles should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents of these articles are intended for general information purposes only, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.

Back to Articles