Derrick McCoy worked for
Kimco Staffing Services, Inc., a temporary employment agency headquartered in
action lawsuit against Kimco, alleging the company didn’t pay final wages in a
timely way after employees completed temporary work assignments, in violation
of California Labor Code Sections 201 and 202, which set out detailed time limits
for final paychecks. The suit charged that instead of paying temps on discharge
or within 72 hours of a resignation, as the law requires, Kimco paid them on
the next scheduled payday.
McCoy’s lawsuit didn’t
seek payment for the underlying final wages; he admitted that Kimco eventually paid
all wages due. Rather, the lawsuit sought only waiting-time penalties under
Labor Code Section 203. That law provides that if an employer willfully fails
to pay wages of an employee who is discharged or quits, wages continue to be
earned as a penalty each day from the due date until they are paid, up to a
maximum of 30 days.
How Far Back Can a Suit
Reach?
Kimco asked the court to
limit how far back McCoy (and the class members) could recover waiting-time penalties.
The company contended that a one-year statute of limitations applies, meaning
the suit could only seek penalties for violations in the year before it was
filed.
McCoy, however, pointed
to language in Labor Code Section 203 stating that lawsuits to recover waiting-time
penalties can be filed any time before the statute of limitations expires to
sue for the underlying wages. Based on this language, he contended, he could
reach back up to four years for the penalties.
The trial court sided
with Kimco and applied a one-year limitations period, finding that the language
relied on by McCoy only applied to cases in which the lawsuit also was seeking
payment for the unpaid wages that gave rise to the penalties. Here, McCoy was
only suing for the penalties and not the wages. McCoy appealed.
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One-Year Limitations
Period Applies
Now a
court’s ruling in favor of Kimco.1 The appeals court
concluded that the Section 203 language specifying that the statute of limitations
to recover waiting-time penalties was the same as that for claims seeking the
underlying wages clearly applied only when the penalties claims were linked to
a wage claim. And, because the section did not specify a statute of limitations
when only a waiting-time claim was at issue, a one-year limitations
period applied, which is the time limit that applies to lawsuits seeking
penalties where the statute imposing the penalties (here, Section 203) doesn’t
specify a statute of limitations.
The court explained its
reasoning. The waiting-time penalty statute serves to induce employers to pay wages
in a timely manner. Allowing employees to recover the penalty as part of an
action for payment of back wages is consistent with that intent. But if the employer
has already paid the underlying wages, albeit late, there is no need to extend
the statute of limitations for the employee to recover penalties. Further, said the court, the intent of the Section 203
language making the statute of limitations the same for both the penalties and
underlying wages is clearly for an employee’s convenience, rather than to
establish a time to independently recover a penalty without regard to whether
the back wages were paid.
Lawsuit-Avoidance
Tactics
This case limits
employer exposure to years’ worth of waiting-time penalties in situations in
which the employer does pay the final wages, even if late. Thus, it’s a good
idea to consider settling up with employees on claims for final wages to limit
your penalty exposure. Here are some final pay guidelines to help you avoid
lawsuits:
• An employee who is
discharged must be paid all wages, including accrued vacation, immediately at the
time of termination.
• A group of employees
who are laid off because of the termination of seasonal employment in the
curing, canning, or drying of any variety of perishable fruit, fish, or
vegetables must be paid within 72 hours after the layoff.
• An employee engaged in
motion picture production whose employment terminates must be paid within 24
hours after discharge, excluding Saturdays, Sundays, and holidays.
• An employee in the oil
drilling business who is laid off must be paid within 24 hours after discharge,
excluding Saturdays, Sundays, and holidays.
• An employee without a
written employment contract for a definite period of time who gives at least 72
hours’ prior notice of quitting, and quits on the day given in the notice, must
be paid all of his or her wages, including accrued vacation, at the time of quitting.
• An employee without a
written employment contract for a definite period of time who quits without
giving 72 hours’ prior notice must be paid all of his or her wages, including
accrued vacation, within 72 hours of quitting.
_
1 McCoy v.
Inc.),
4) No. G038589, 2007