Waiting Time Penalty

Labor Code § 203 governs “Waiting Time” penalties in the state of California. This penalty is assessed when an employer fails to timely pay an employee all wages accrued upon termination or after resignation of his or her employment.
California courts have a long history of strictly enforcing the waiting time penalty. As stated in the recent California case of Mamika v. Barca (1998) 68 Cal.App.4th 487, 492: “The reasons for this penalty provision are clear. ‘Public policy has long favored the full and prompt payment of wages due an employee.’ ‘ Wages are not ordinary debts…Because 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)… “Section 203 reflects these policy concerns. The statute is designed to ‘compel the prompt payment of earned wages; the section is to be given a reasonable but strict construction’ [against the employer]. (Barnhill v. Robert Saunders & Co. (1981) 125 Cal.App.3d 1, 7) ‘The object of the statutory plan is to encourage employers to pay amounts concededly owed by [them] to [a] discharged or terminated employee without undue delay and to hasten settlement of disputed amounts.’ (TriadData Services, Inc. v. Jackson (1984) 153 Cal.App.3d Supp. 1, 11.)”.
The penalty amount is equal to a day of wages for each day all of the wages have not been paid. It continues to accrue up to a maximum of 30 days.
The statute provides that the employer must “willfully fail” to pay the accrued wages. However, the definition of “willful” for purposes of Labor Code § 203 has been determined by the California courts broadly. The civil penalty assessed under Labor Code § 203 does not require that the employer intended the action; merely that the action occurred and it was within the employer’s control. (Davis v. Morris (1940) 37 Cal.App.2d 269; 99 P.2d 345). The complete definition is summarized at Title 8, California Code of Regulations, § 13520 as follows:

A willful failure to pay wages within the meaning of Labor Code Section 203 occurs when an employer intentionally fails to pay wages to an employee when those wages are due. However, a good faith dispute that any wages are due will preclude imposition of waiting time penalties under Section 203. A ‘good faith dispute’ that any wages are due occurs when an employer presents a defense, based in law or fact, which, if successful, would preclude any recovery on the part of the employee. The fact that a defense is ultimately unsuccessful will not preclude a finding that a good faith dispute& did exist. Defenses presented which, under all the circumstances, are unsupported by any evidence, are unreasonable, or are presented in bad faith, will preclude a finding of a ‘good faith dispute’. (8 C.C.R. § 13520) (Emphasis added)

“Any wages” includes any amount due as wages (see Labor Code § 200, see also, DIR, DLSE v. UI Video, 55 Cal.App.4th 1084,1091); but does not include expenses. (Hagin v. Pac. Gas & Elec. 152 Cal.App.2d 93). Failure to pay an employee all premium pay required by the Labor Code and Wage Orders as required by Labor Code §§ 201 and 202, such as overtime premium, reporting time pay, meal period/rest period premium, and split shift premium pay, may entitle an employee to waiting time penalties. Vacation pay and other fringe benefits are included as part of the determination of unpaid wages. (Labor Code § 227.3.)
Inability to pay is not a defense to the failure to timely page wages under Sections 201 and 202 and does not relieve the employer of penalties under Section 203. Any employee who, during the regular course of employment or upon discharge, is paid with a non-sufficient funds instrument is entitled to recover a penalty of one day’s pay for each day those wages remain unpaid. In addition, of course, ignorance of the law is no excuse. (Hale v. Morgan (1978) 22 Cal.3d 388, 396.)