A few federal laws regulate wage payments, including the Fair Labor Standards Act (FLSA), the Davis-Bacon Act and the Service Contract Act. California law likewise enforces state wage payment requirements. However, when federal and state laws are different, the law that is more favorable to the employee will apply.
The Division of Labor Standards Enforcement (DLSE), part of the California Department of Industrial Relations, imposes wage payment requirements throughout the state.
California law requires companies to pay incomes in legal United States currency with money, check, direct deposit (needs voluntary employee authorization), pay card (such as a pre-paid debit card) or any other methods of payment that pose no cost to the employee.
Frequency of Payment
Employers should pay employee wages at minimum two times each month, on established, regular paydays.
Employers can pay earnings at earlier days or at more regular periods.
Frequency-of-payment regulations do not apply to all types of incomes. Overtime salaries should be paid by the following regular payday and earnings paid due to layoff, temporary work, employee resignation and commissions may be paid at different times.
In addition, specific staff members are exempt, including:
- Salaried executive, administrative staff members covered by the FLSA (might be paid monthly, on or prior to the 26th day of the month throughout which the labor was carried out if the whole month’s wages, consisting of the unearned part in between the date of payment and the last day of the month, are paid at that time).
- Employees covered by a legitimate collective bargaining agreement.
- Employees paid on a weekly basis.
Regular Pay Day Notice
California law requires employers to post a notice, notably and in a location where employees often go by and can see it, indicating the date, time, and place of payment (if applicable). Failure to post this notice will be considered prima facie evidence of a wage payment violation.
Companies need to pay an undisputed quantity according to the requirements explained above if a disagreement develops over the income amount due to an employee. An employee that accepts undisputed wages does not waive any right to pursue collecting the portion that is disputed.
It will provide a notification to the employer if the DLSE identifies any salaries are owed to the employee. Employers should pay those salaries within 10 days of getting an alert. Employers that are able but willfully fail to pay these wages within the 10-day period might be needed to pay three times the quantity of any damages, in addition to any other applicable penalty.
Last Payment of Wages
Unless a valid collective bargaining agreement is applicable, the table listed below details the requirements for paying an employee’s last wages.
|Discharge||At the time of discharge|
|Resignation*||At least 72 hours’ notice: at the time of resignation|
No notice: no longer than 72 hours after resignation
*Does not consist of contracts to work for a definite term
|Any Reason||Employment in motion picture production or broadcasting|
By the next routine payday
When computing an employee’s last salaries, employers need to include any unused vacation time and other vested employment benefits. In general, an employee’s last wages may be paid by mail, if the employee demands it and offers a mailing address. Payments that are sent by mail need to be postmarked within the necessary payment period.
Withholdings and Deductions
Employers may not withhold an employee’s earnings (in whole or in part) unless the withholding or deduction is authorized (by law or by the employee) in writing.
Typical deductions authorized by law include of taxes, union dues, FICA contributions, garnishments, and court-ordered deductions (such as child support). Common deductions authorized by employees consist of:
- funds for employee participation in hospitalization and medical insurance coverage plans
- retirement plans,
- loan payments or wage advances
- company products or services and company devices or residential or commercial property.
These permissions need to be made through a legal and legitimate agreement.
Employers need to record each withholding with precision. In general, wage reductions and withholdings cannot drop an employee’s gross earnings listed below the base pay rate, unless licensed by law. Employers might not obtain any monetary gain from wage reductions.
Companies should offer each employee with an itemized wage statement at the time salaries are paid. The itemized wage statement needs to reveal:
- Gross wages earned.
- Employee’s wage rate (or rates).
- The quantity of hours the employee worked for each relevant rate.
- The sum of hours worked (unless the employee is on salary and is exempt from overtime wage payment arrangements).
- If the employee is paid on a piece-rate basis, the quantity of piece-rate units earned and any applicable piece rate.
- All the pay period’s deductions and withholdings.
- Net wages earned.
- The inclusive dates of the pay period.
- The employee’s name and the last four digits of his or her Social Security (or other identification) number; and
- The employer’s name and address.
Employers that violate California’s wage payment laws might undergo the criminal, administrative and civil charges listed below. Normally, these sanctions are enforced in addition to applicable court expenses, reasonable lawyers’ fees, and any enforcement costs.
Wage payment infractions might lead to misdemeanor charges, punishable by a fine, imprisonment or both. Possible sanctions depend upon the kind of violation.
|General failure to follow wage payment requirements||Up to $1,000||Up to six months|
|Failure to post a regular pay day notice||Up to $1,000||Up to six months|
|Failure to maintain a required payroll deposit||Up to $1,000||Up to six months|
|Willfully refusing to pay wages that the company can pay.||Up to $1,000||Up to six months|
|Deliberately declining to pay an employee’s last wages*||If unpaid earnings are $1,000 or less, between $1,000 and $10,000 per offense|
If unpaid earnings are more than $1,000, in between $10,000 and $20,000 per offense
|Up to six months if unpaid wages are $1,000 or less|
If unpaid earnings are more than $1,000, up to one year.
|General failure to follow wage statement requirements (intentionally and with understanding) **||Up to $1,000||Up to one year|
|Incorrectly rejecting the quantity or credibility of an employee’s wages with the intent to:|
– Secure any discount on the quantity of wages due; or
– Annoy, harass, oppress, prevent, defraud, or delay the employee.
|Up to $1,000||Up to six months|
|Unlawful withholding or deducting from employee wages||Up to $1,000||Up to six months|
|Failure to remit any withheld or deducted funds to their designated recipient (willful or with intent to defraud)||Up to $1,000||As much as 6 months for an overall total of unpaid incomes below or equal to $500|
Up to 1 year if unpaid wages totals more than $500.
|Deliberately and knowingly violating wage statement requirements||Up to $1,000||Up to six months|
Employers that fail to pay wages as required, or unlawfully withhold earnings due, will be fined as follows:
|Intentional or willful failure to follow withholding and reduction requirements.||An order to provide all overdue incomes plus interest and: $100 for each initial violation; or$200 plus 25 percent of the amount unlawfully withheld for each subsequent violation.|
|Failure to follow last payment of earnings requirements.||A fine equal to approximately the amount the company would have paid the employee for 30 days of work. Employees cannot enforce this penalty for the number of days they are unreachable (they avoid or refuse to accept complete payment).|
|Failure to follow wage statement requirements (intentionally and with knowledge)||A fine between $250 and $1,000 per affected employee and as much as $4,000 in actual employee damages. State law exempts companies from this penalty, if they can show that the violation was a separate incident and an unintended payroll mistake due to a clerical or unintentional error.|
|Failure to allow a previous or existing employee to analyze or copy his/her own wage statements.||A $750 fine and actual damages (or $50, if greater), for the preliminary pay period in which the violation happens, plus $100 per employee for each violation in a subsequent pay period (as much as $4,000).|
|Failure to provide a statement of wages||$250 per employee per violation, for a preliminary citation; and$1,000 per employee per violation, for each subsequent citation. A company might not be punished for a first violation if it can show that the violation was due to a clerical mistake or unintended error.|
Speak to a TPG Payroll & HR Specialist by calling 909.466.7876 for more information on wage payment laws in California. Also, have you checked out our ACA Reporting Tool? Discover more about this option on our website today!
* If the quantity of unpaid wages is not more than $1,000, only one charge will apply (fine or imprisonment). Each failure to supply an employee’s last wages is a separate and unique offense. Although, the DLSE will think the aggregate overall quantity of unpaid incomes to figure out the level of fine and imprisonment.
** State law excuses companies from this charge, if they can reveal that the violation was a single event and an unintentional payroll mistake due to a clerical or unintended error.