California Supreme Court Rules that Employees Have Up to Three Years to Seek Waiting Time Penalties for Unpaid Wages
California employees now have up to three years after termination in which to claim waiting time penalties for unpaid wages.
In Pineda v. Bank of America, the California Supreme Court rejected a one-year statute of limitations period for suits arising out of an employer’s failure to “immediately” pay final wages upon an employee’s termination. Rather, the Court held that an employee may initiate an action for penalties up to three years after the underlying final wages are paid.
Under Labor Code Section 201(a), California employers must pay final wages “immediately” upon terminating an employee. To encourage compliance with this statute, Labor Code Section 203 imposes a penalty on employers for failure to pay in a timely fashion, continuing the unpaid wages for up to 30 days while they remain unpaid.
In Pineda, the defendant-employer did not pay the plaintiff-employee his final wages until four days after the employee’s resignation. Almost a year and a half later, the employee brought a class action suit “seeking to represent a class of former Bank of America employees whose final wages were untimely paid.” The suit sought payment of waiting time penalties allegedly owing under Section 203.
The lower court concluded that a one-year statute of limitations period applies when, as in this case, an employee files an action seeking only waiting time penalties (as opposed to seeking unpaid wages and penalties). However, the Supreme Court reversed, holding that the Legislature intended for a single statute of limitations period – three years – to govern the filing of any and all suits for wages and penalties. The Court, however, declined to permit recovery for waiting time penalties as a form of restitution under California’s unfair competition law, which would carry a four-year statute of limitations.