If an employer fails to timely pay a former employee all owed wages, the employee's wages continue as a penalty until paid, for up to 30 days.
Public policy in California has long favored the full and prompt payment of wages due an employee.
"The reasons for this penalty provision are clear. "Public policy has long favored the `full and prompt payment of wages due an employee.' [Citation.] `[W]ages are not ordinary debts. . . . [B]ecause of the economic position of the average worker and, in particular, his dependence on wages for the necessities of life for himself and his family, it is essential to the public welfare that he receive his pay' promptly." (Pressler v. Donald L. Bren Co. (1982) 32 Cal.3d 831, 837; see also Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1147.)." (Mamika v. Barka (1998) 68 Cal.App.4th 487.)
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.
"[U]npaid wages continue to accrue on a daily basis for up to a 30-day period. Penalties accrue not only on the days that the employee might have worked, but also on nonworkdays. (Cf. Iverson v. Superior Court (1985) 167 Cal.App.3d 544, 548 [unless otherwise specified, "days" mean "calendar days"].) The failure to pay wages has nothing to do with the number of days an employee might have worked during the preceding month. Rather, the targeted wrong is the delay in payment, a harm that continues each day that payment is not made.
Had the Legislature intended to award penalties equivalent to one- month's salary, section 203 would have been worded in that fashion. It is not. Under the trial court's reasoning, anyone working other than a standard five-day workweek could not recover the full penalties mandated by section 203. For example, if a part-time employee who worked only two days per month quit his or her job and was not paid the required wages, using the trial court's calculations, that employee would be entitled to only two days' pay as penalties, an inconsequential amount that does not further the statute's goal of compelling payment of wages that are owed. A proper reading of section 203 would instead mandate a penalty equivalent to the employee's daily wages for each day he or she remained unpaid, up to a period of 30 days. This larger penalty acts as an disincentive t o employers who are reluctant to pay wages in a timely manner, thus furthering the intent of the statutory scheme.
Thus, the critical computation required by section 203 is the calculation of a daily wage rate, which can then be multiplied by the number of days of nonpayment, up to 30 days." (Mamika v. Barka (1998) 68 Cal.App.4th 487.)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 (DLSE) is not considered the filing of an action, and does not stop the penalty from accruing.
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" does 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 waiting time penalty is not wages, thus, no deductions are taken from the penalty payment.
Labor Code Section 203
If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days. An employee who secretes or absents himself or herself to avoid payment to him or her, or who refuses to receive the payment when fully tendered to him or her, including any penalty then accrued under this section, is not entitled to any benefit under this section for the time during which he or she so avoids payment.
Suit may be filed for these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.