New Year Reminder: Employers Face Additional Penalties for Late Wage Payments During Employment
Published March 1, 2021
Last year, just before the world all but shut down, a seemingly innocuous change occurred in the Labor Code. Effective January 1, 2020, the Legislature amended Labor Code section 210 to provide employees with the right to bring their own claims against their employers for penalties related to untimely payment of wages pursuant to Labor Code sections 201.3, 204, 204b, 204.1, 204.2, 204.11, 205, 205.5, and 1197.5. With this change, employees are permitted to recover Labor Code section 210 penalties directly from employers who fail to pay them on their regular pay day, even during employment. Prior to this amendment, only the Labor Commissioner could recover these penalties.
In many ways, these penalties operate similarly to the waiting time penalties employers are accustomed to under Labor Code section 203 for the untimely payment of wages at separation of employment—if an employer fails to make a timely wage payment, the employee may recover those wages plus penalties. The calculation of Labor Code section 210 penalties is different, however, and amounts to $100 for the initial violation and $200 for each subsequent violation (or any willful or intentional violation) plus 25% of the amount unlawfully withheld. The penalty may be recovered either by the employee as a penalty pursuant to Labor Code section 98 or by the Labor Commissioner as a civil penalty through the issuance of a citation or pursuant to Labor Code section 98.3.
One bright spot in this amendment is the limitation it establishes related to the California’s Private Attorneys General Act (PAGA). Employees must choose between recovering Labor Code section 210 penalties or enforcing a civil penalty under PAGA, as they cannot recover both for the same violation.
As we continue into 2021, employers should ensure their payroll practices and systems are set up so as to ensure timely payment of wages during employment, in addition to the procedures set into place to ensure timely payment of wages at separation.