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Final Pay Explained for Employees Working in CA

Final pay explained

Final Pay is Due at Time of Discharge. The California Labor Code requires that Employees receive all earned and unpaid wages (to include accrued and unused vacation/PTO) at the time of termination from employment, regardless of length of employment or reason for termination from employment. This is an area where Employers unknowingly put themselves at risk… but after you read this you will know. The HR consulting company of PLB Resources is in the business of helping Employers with what they know they don’t know.

Failure to comply with final pay requirements in California may result in an assessment of waiting time penalties up to 30 calendar days at the rate of the employee’s wages per calendar day, plus other possible fines and future restrictions that may affect your business.

The time requirement for a final paycheck depends on if the Employee:

  • Quit without notice (voluntary), or
  • Quit with at least 72-hours’ notice (voluntary), or
  • Was terminated or laid off (involuntary)

VOLUNTARY SEPARATION FROM EMPLOYMENT

Less Than 72-Hours’ Notice from Employee

If an Employee quits with less than 72-hours’ notice, you must pay all wages and accrued, unused vacation/PTO within 72 hours after notice is given.

An Employee who gives less than 72-hours’ notice is entitled to receive his or her final wage payment by mail ONLY IF he or she so requests in writing with an updated mailing address. For purposes of such an authorized mailed final payment, the 72-hour requirement is met if the postmark is within the 72 hour deadline. Unless the Employee who quit specifically requests payment by mail, you may hold his or her final paycheck until it is picked up.* Mailing the final paycheck without a request (written) to do so could subject the Employer to waiting time penalties.

72 Hours or More Notice from Employee

If an Employee quits with 72-hours’ notice or more (such as, but not limited to, a typical two week notice), you must pay all wages and accrued and unused vacation/PTO on the last day of work.

Quitting/resigning Employees who provide at least 72 hours’ notice are entitled to be paid on their last day of work, at the office or agency of the Employer in the county where the Employee has been working.

NOTE: Retirement, for the purpose of final payment, is considered a voluntary quit and the 72 hour rule continues to apply.

Pink slip

INVOLUNTARY SEPARATION FROM EMPLOYMENT

If you terminate an Employee or lay him or her off with no specific return date within the normal pay period*, all wages and accrued, unused vacation/PTO earned are due and payable immediately. It is unlawful to wait until the next regular payday to pay an Employee that you have terminated or laid off; significant financial penalties may apply.

Likewise, it is unlawful to withhold a final paycheck until the Employee:

  • Returns tools, uniforms, mobile devices, laptop computers, keys or any other items belonging to you.
  • Pays back money that he or she owes to you.
  • Turns in expense reimbursement forms.

*If there is a layoff with a return to work date within the pay period and the Employee is scheduled to return to work, you can pay the wages at the next regular payday.

NOTE: Terminating an employee to avoid paying due wages subjects you to the claim of wrongful termination in violation of public policy.

Suspension Prior to Discharge

Some Employers routinely suspend Employees before termination to have time to prepare a final paycheck or to receive one from a payroll service or the Employer’s out-of-state headquarters. You can be penalized for a willful failure to pay final wages on time, unless there is a good-faith dispute that any wages are due. An Employee who could show that his or her suspension was merely a way to extend the time for final payment of wages, rather than legitimate time for your investigation, would probably be awarded waiting time penalties due to the lack of any good-faith dispute.

Direct Deposit and Final Payment

If an Employee previously authorized direct deposit is terminated or quits, immediately terminated his or her direct deposit. You can pay final wages earned and accrued, unused vacation/PTO at the time an Employee is terminated by direct deposit to the Employee’s account only if the Employee voluntarily authorized you to do so (recommended in writing). However, the time limits still apply for making final pay available to the terminating Employee.

Expense Reimbursements and Final Pay

The payment deadlines for final wages do not apply to reimbursement of expenses that the Employee may have incurred on your behalf. Those reimbursements can be made at the normal time for payment.

Caution tape

This article is a simple guide, refresher, or learning tool for Employers. However there may be some other tricky mines you will need to navigate around or through in the ocean of possible scenarios with an Employee separating from employment with you. The information above is straightforward and will give you trusted bearings in straightforward separations.

However, there are more intricate and delicate guidelines to follow if you are:

  • Terminating an Employee who recently alleged improper payment of wages
  • Offering Severance Pay
  • Terminating an Employee who was wholly or partially compensated in commissions
  • Terminating a temporary Employee
  • Terminating an Employee who is a member of a bargaining unit (union)

For this situations consult a professional to walk you through the process and protect your company from unnecessary risk exposure. We’re here to help you at PLB Resources.

Make-up Time

Make-Up Time

Make-up Time

Make-up time is an alternative to overtime pay. Make-up time allows an employee to request time off for a personal obligation and make up the time by working more than eight hours on another day without receiving overtime pay. You are not obligated to allow make-up time. Many employers find the management of make-up time to be an arduous administrative task, while others find it a useful tool for greater employee engagement.

Make-up Time Guidelines

If you choose to allow make-up time, you must comply with the following rules:

  • While you can inform an employee of the make-up time option, you cannot encourage or otherwise solicit an employee to request the make-up time>.
  • An employee can work no more than 11 hours on another workday>, and no more than 40 hours in a workweek, to make up the time off.
  • The time must be made up within the same workweek.
  • The employee must provide you with a signed, written request for each occasion that he/she desires make-up time.

Exception:

If an employee knows in advance that he/she will be requesting make-up time for a personal obligation that will recur at a fixed time over a succession of weeks, he/she can request to make up work time for up to four weeks in advance. For a recurring obligation, a written request must be made every four weeks. The make-up work must be performed in the same workweek that the work time was lost. For example, an employee who wants to leave an hour early every Monday and Wednesday afternoon for a college course (making up the extra two hours every Thursday) can turn in one make-up time request every four weeks, rather than two requests per week.

If an employee requests time off for a personal obligation, but does not submit the written request that is required for make-up time, you can inform the employee of the make-up time option. However, because you are prohibited from “encouraging or otherwise soliciting” an employee to request make-up time, you cannot condition granting the employee’s request for time off on his/her agreement to submit a written request for making up the time. If the employee does not want to make up the time, you can grant or deny the request based on organization policy and business needs.

On occasion, after working make-up time to take time off later in the week, an employee may not want to take the time off after all. You are not liable for daily overtime pay for the make-up time that was worked if the employee did not end up working more than 40 hours that workweek, nor more than 11 hours in any workday. This is based on an opinion letter from the DLSE. Courts may choose not to follow this opinion letter. Employers may wish to pay the overtime pay for the make-up time, require the employee to take the time off anyway, or seek the advice of counsel.

Make-up Time Example

An employee might request three hours off on Monday to go to an appointment with a financial planner. The employee might then make up the time by working:

  • 11 hours on Tuesday or any other day during that workweek.
  • One extra hour each day on Tuesday, Wednesday and Thursday, or any combination of days during that workweek.
  • The employee is limited to 11 hours per day and 40 hours per week when working make-up time.

Time Records for Make-up Time

When using make-up time, maintain a time record system that shows which hours you pay at an overtime rate and which hours you pay at straight-time for make-up time.
You can require that the employee attach a copy of the signed make-up time requests for that pay period to his/her timecard when he/she turns it in at the end of the period. (This is highly recommended by Fichter Silva Consulting)

Make-up Time versus Alternative Workweek

You cannot require or encourage employees to submit make-up time requests each week to create an alternative workweek schedule, without complying with the legal requirements for creating an alternative workweek; using make-up time in this manner violates the law.

On the other hand, neither the law nor IWC Wage Orders limit the number or frequency of make-up time requests each employee is allowed. An employee could submit a request each week and, with your approval, work more than eight hours a day on a regular basis without receiving overtime pay.

SOURCE: California Chamber of Commerce; HR California (2017)

protect yourself in the heat

California’s Heat Illness Prevention Regulation

California’s heat illness prevention regulation requires employers with outdoor workers to:

  • Develop and implement an effective written heat illness prevention plan that includes emergency response procedures.
  • Train all employees and supervisors on heat illness prevention.
  • Provide free, fresh, pure, suitably cool water so that each worker can drink at least one quart of water per hour. Encourage workers to do so.

Do you know everything you need to know about:

  • Heat Illness
  • Providing shade for employees
  • Training employees on heat illness
  • Providing the Cal/OSHA prescribed amount of water to employees

protect yourself in the heat

PLB Resources, who is still in the business of helping employers with what they know they don’t know, can assist you with creating your company’s Heat Illness Prevention Plan for Outdoor Employees required by Cal/OSHA.

Offsite employees

Getting Off-Site Employees On-Board with Form I-9

Offsite employees

Also Known As: How to have a compliant remote workforce.

It’s an age-old challenge… this may help.

First a review of Form I-9…

Form I-9 is used for verifying the identity and employment authorization of all individuals hired for employment in the United States (US). Both employees and employers (or authorized representatives of the employer) must complete the form. On the form, an employee must attest to his or her employment authorization. The employee must also present his or her employer with acceptable, original documents evidencing identity and employment authorization. The employer must examine the employment eligibility and identity document(s) an employee presents to determine whether the document(s) reasonably appear to be genuine and to relate to the employee and record the document information on the Form I-9. The list of acceptable documents can be found on the last page of the form. Employers must retain Form I-9 for a designated period and make it available for inspection by authorized government officers. NOTE: State agencies may use Form I-9. Also, some agricultural recruiters and referrers for a fee may be required to use Form I-9.

The challenge…

U.S. Research shows:

  • 63% of companies have off-site employees.
  • One in five employees work remotely, and this number is on the rise.

5 Challenges for Properly Completing Form I-9 for a Remote or Out-of-State Employee

  1. Accuracy
  2. Completer must physically and personally inspect a new hire’s acceptable identity and employment authorization documents
  3. Must be filled out within three days of an employee’s start date
  4. Fines have doubled since July 2016 for not completing Section 2 on time with a physical document review
  5. ICE is ramping up worksite audits

Apparently Equifax has developed a service to assist employers with these challenges (see attached). I have not used this service, nor am I necessarily endorsing it, but the attachment’s first 5 pages are a great tutorial or refresher for employers.

If you are familiar with this service or if you are using this service I would be very interested in your feedback.

Using this service or not, do not overlook the importance of a properly and timely executed Form I-9s for all new hires. Remember, PLB Resources is in the business of helping employers with what they know, they do not know. We are here to assist and all initial consultations are complimentary.

English only? Are you sure?

English Only in the Workplace. Are you SURE About That?!

The Fair Employment and Housing Commission (FEHC) will be enacting a new employment regulation on July 1, 2018.

English only? Are you sure?

In light of this new development, it is very important to take stock or a closer look at your existing policies, employee handbooks, interview and hiring practices, job applications, and job descriptions, to ensure compliance with the new rules within this regulation (synopsis attached).

For more information concerning your obligations as an employer, contact PLB Resources at https://www.plbresources.com/contact/. All initial consultations are complimentary and PLB Resources offers a variety of services to assist you in complying with this and all employment regulations such as Friendly HR Compliance Audits/Assessments and development of Employee Handbooks.

Moreover, PLB Resources partners with its Clients to ensure they can concentrate on what they do best (their core business), and still comply with the ever-growing, sometimes changing, usually frustrating employment regulations in the most efficient and ‘painless’ way possible. PLB Resources has been helping employers with what they know they don’t know since 2000.

You Could be Guilty of a Misdemeanor…

…If your Company Does Any of the Following in 2018!

Guilty of Misdemeanor

#1 – If you don’t update your hiring practices! That is, as we ring in 2018, California Assembly Bill No. 168 mimics other states such as Oregon, Massachusetts, and Delaware, and the precious cities of San Francisco and New York City in making it illegal (misdemeanor) to rely on an applicant’s prior salary history as a factor in determining whether to offer employment or what salary to offer an applicant. That’s right! Employers may no longer, orally or in writing, directly or indirectly, seek salary information about a candidate! It’s true! This includes both an applicant’s rate of compensation as well as other benefits (total compensation). This applies to public (government) and private employers.

Any exceptions to this lovely new development in the challenging-enough-world of recruiting; with the California unemployment rate at 4.0% and the national unemployment rate at 4.1% (November 2017)? Why yes, since you asked, there are two exceptions:

  1. You may use salary history information that is publicly available under federal or state law.
  2. You may rely and use salary history only if an applicant voluntarily and without prompting self-discloses their salary history. Good luck with that one.

That’s right, that stack of blank applications sitting at the receptionist’s desk and that page on your you just installed will all need modifications. There are two approaches:

  1. Eliminate all questions or blanks to be filled in relating to past salary. Just take them off, do away with them, kaput! This is my recommendation. This includes any interview guideline questions that might be used on a panel or a telephone screening call, utilized by a well-meaning, but yet uninformed member of the recruitment team, OR
  2. (and I only add this second choice because I know you’re going to ask or worse yet, just try it…and I might as well address it now) Add ‘OPTIONAL’ or ‘VOLUNTARY’ where you have a space to or prompt to gain passed salary information. C’mon, you know this was your first reaction!

I strongly discourage this course of action because it always gets back to the statement that begins “Well, you honor, it’s like this….” (never ends well). Follow me here…just as compelling an argument to your ‘well-you-honor’ speech could be made that, of course someone applying for a job would want to convey as much information as it appeared the prospective employer was seeking and therefore be construed by the plaintiff that it seemed less than ‘optional’, but I digress. Choose your poison. I’m here to help.

#2 – If you continue to screen out convicts! No, it’s not an urban legend—Effective January 1, 2018, with the passing of Assembly Bill No. 1008, California’s Fair Employment & Housing Council (FEHC) has chosen to follow the federal Equal Employment Opportunity Commission’s (EEOC’s) precedence, which states that employer’s use of an individual’s criminal history in making employment decision, may in some instances, violate the prohibition against employment discrimination.

Job Application - Ban the Box

In this case, such a violation may occur when an employer treats criminal history information differently for different applicants or employees, based on their race or national origin.

The initial burden of demonstrating that considering the criminal history has an adverse impact, as set forth in the regulations, is that of the applicant or employee.

However, once the claim has been stated, the employer must then show/demonstrate that the policy/practice of treating the criminal history information of one or more applicants differently than that of other applicants’ criminal history information is justifiable because it is both:

  • Job related; and
  • Consistent with business necessity. Business necessity is defined, in this case, as the existence of an overwhelming, legitimate, business purpose such that it would be necessary to insure the safety and efficiency of the business operation.

CAUTION: Even when an employer has shown that its policy is job-related, an applicant or employee may still prevail on a claim by showing that there is a less discriminatory means to achieve a particular business necessity.

Criminal History Now Prohibited from Consideration in Employment Decisions:

  1. Arrest or detention not resulting in conviction;
  2. Referral to or participation in a pretrial or post-trial diversion program;
  3. Judicially dismissed or ordered sealed, expunged, or statutorily eradicated conviction;
  4. Arrest, detention, processing, diversion, supervision, adjudication, or court disposition that occurred while a person was a juvenile; and
  5. Non-felony marijuana possession conviction that is two or more years old.

NOTE: Other Conditions Apply, such as:

  • State or local agency employers may not ask applicants to disclose criminal conviction history until after the employer has decided that an applicant meets the minimum employment qualifications.
  • Employers are still subject to federal or state laws or regulations that prohibit individuals with certain criminal records from holding particular positions or occupations or mandate a screening process employers are required or permitted to utilize before employing individuals in such positions or occupations. (e.g., 21 U.S.C. § 830(e)(1)). Examples include, but are not limited to:
    • Peace officers,
    • Individuals at health facilities where they will have regular access to patients, and
    • Individuals at health facilities or pharmacies where they will have access to medication or controlled substances.
  • Local laws or city ordinances may further restrict employers from inquiring about applicant or employee’s criminal history.
  • Employers who conduct background check or investigative consumer reports are still subject to comply with the Fair Credit Reporting Act (FCRA) and the California Investigative Consumer Reporting Agencies Act.

Adverse Impact of Criminal Conviction

Criminal history information can be obtained from a wide variety of sources including court records. However, if an employer obtains an applicant’s or employee’s criminal history from a Consumer/Credit Reporting Agency (CRA), the employer must, if a criminal conviction qualifies for an adverse hiring action, :

  • Provide the applicant or employee with a Pre-Adverse Action Notice indicating his/her disqualifying conviction
  • Provide the applicant with a reasonable opportunity to present evidence that the information is factually inaccurate before the employer sends the Adverse Action Letter.

If employee or applicant presents evidence that the information is factually inaccurate, the employer cannot lawfully consider the inaccurate information in the employment decision.

Best practices would dictate that you pay close attention to the use of any criminal history in an employment decision and review all of your policies, procedures**, and assessments to ensure compliance with the FCRA and the California Investigative Consumer Reporting Agencies Act (ICRAA).

This would include any questionnaires and screening pages on recruitment sites such as, but not limited to: Brass Ring, Monster, Indeed, etc. where salary fields on the employment history information are no longer present.

At the time of this writing, recruitment site CareerBuilder.com provides clients with the option to hide the salary field on the employment history page of the invitation, so the information is not collected on your candidates. Other recruitment sites would be wise to follow suit to support the dynamic needs of their clients, as they adapt to new legislation surrounding the activities of employment recruitment.

#3 – Prohibiting Employees from Discussing Their Salaries, Benefits, or other Working Conditions! Workers have been protected for decades (more than 80 years now) from retaliation from employers for discussing their pay. Yet pay secrecy policy may still remain. This oversight prompted President Barrack Obama to sign an Executive Order in April of 2014, bringing attention to the unlawful practice and reminding employers of their employees’ rights to talk together about things that matter to them at work… including pay.

Secret Salary Discussions

Don’t get caught being 80 years behind the times! It will cost you dearly! Here’s what may happen:

  • Your company can be ordered to provide back pay to wrongfully terminated employees; and/or
  • Your company can be ordered to offer former employees their old jobs back; and/or
  • Your company can lose current and future federal contracts.

Need help getting with the times, contact us!