California Labor Code section 203 deals with the penalties that can be assessed for an employer’s willful failure to hand over unpaid wages, as required under California law, to a worker who has been terminated or who has resigned. To understand California Labor Code section 203 clearly, you must also understand sections 201 and 202, which deal with unpaid wages owed to a terminated employee and an employee who resigns, respectively. For a brief introduction to these issues, continue reading. For the full text of the three sections, see the link below under "References".
Understanding Section 201
California Labor Code section 201 deals with the payment of wages owed to a terminated employee. Specifically, it states that an employer must pay all wages earned and unpaid immediately upon terminating the employee or be subject to certain penalties set forth in section 203. In addition to unpaid wages accumulated up until the time of discharge, the employer must also pay wages for any unused vacation days accumulated by the time of discharge.
There are two exceptions to this immediate-pay requirement. First, an employee who works away from the employer’s administrative offices may be paid within 24 hours of termination rather than immediately. Second, seasonal food packing and preparation workers may be paid within 72 hours of termination.
Understanding Section 202
California Labor Code section 202 deals with the payment of wages owed to an employee who resigns from a job of his or her own accord. Specifically, it states that an employer must pay all wages earned and unpaid within 72 hours of the employee’s resignation or be subject to certain penalties set forth in section 203. However, when an employee submits a notice of resignation more than 72 hours in advance of his or her official resignation day, he or she must be paid immediately on that resignation day. In addition to unpaid wages, the employer must also pay for any unused vacation days accumulated by the employee.
California Labor Code section 203 states that an employer who willfully refuses to pay wages owed to an employee under sections 201 and 202, at the time required in those sections, will be penalized a full day of wages for each day that the wages owed go unpaid. To enforce payment of the penalty, the employee must file a complaint for unpaid wages by a method accepted in law. Such penalty wages are to be paid to the employee. Note that penalty wages stop accruing at the legal limit of 30 days.