This is a very interesting, yet common problem many employees face. This discussion is best broken down into the following components:
1. When are wages owed?
2. Consequences to the employer when full wages are not paid timely.
When are wages owed?
Pursuant to Labor Code section 204, if you are still working for the company, the general rule for most employees is that you should be paid at least 2 times per month, on predesignated dates. You are to be paid both timely and the full amount that you are owed.
What are the consequences if the employer fails to pay you when you are owed wages?
While there are certain exceptions to these rules (e.g. executive pay or commissions), an employer’s failure to honor its legal obligations to you exposes the employer to some interesting penalties. For the employer’s first violation, pursuant to Labor Code section 210, there is a first time penalty of $100, and an additional penalty for each subsequent untimely payment of $200. Besides the penalty, the employer also has exposure to an additional 25% of the amount that has been unlawfully withheld.
What if I no longer work for the company?
If you no longer work for the company, then different rules apply. If you no longer work for the company because you resigned or quit, then based on Labor Code section 202, wages are due within 72 hours. If your employer terminated you, then your wages are due immediately pursuant to Labor Code section 201.
If the employer, “willfully” fails to pay you either within the required 72 hours or immediately, the employer has exposed the company to owing you an additional 30-day’s pay as a penalty (plus the wages and interest). Keep in mind, that should your employer not pay you in a timely fashion and that you are seeking the 30-day’s penalty, this means THIRTY DAYS PAY, not ONE MONTH, and there is a big difference. A lot of people make this mistake, and in doing so, the employee can lose a great deal of money.
Suppose you make $12 per hour. If you generally work 40 hours per week, your weekly gross pay is approximately $480 (40 x 12). Since there are about 4.4 weeks in a month, your typical gross monthly pay would then be about $2112 (480 x 4.4). Now compare this with 30 days. If your average daily pay is $96 (12 x 8), then the 30-day’s penalty is $2880 (96 x 30).
Bottom line, don’t ask for 1 month’s penalty–ask for 30-days!