©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 353 13.2.3 EDD Change of Status California employers must provide employees who are terminating employment, either voluntarily or involuntarily, with written notice of the change of employment relationship and the employee’s potential entitlement to unemployment compensation benefits.10 This form must be provided immediately upon termination. 13.2.4 HIPP notice Under the California Health Insurance Premium Program (HIPP), California employers with 20 or more employees must give a HIPP notice to terminating employees with health insurance. The form is available from the State Department of Health Services.11 13.3 Final Pay Checks 13.3.1 Time of payment California employers generally must pay discharged employees in full on the day of discharge. An employee without a written contract for a definite period who resigns must be paid within 72 hours of the notice of resignation. (See § 7.5, Wage Payment Rules.) 13.3.2 Wages due The final check must include all wages earned and unpaid.12 “Wages” includes all amounts for labor performed by employees of every description, whether the amount is determined by time, task, piece, commission, or other method of calculation.13 Vested vacation is paid “as wages” to the terminating employee.14 Wages do not include employee business expenses.15 Where wages are not calculable until after termination, the employer must pay the wages as soon as the amount is ascertainable.16 13.3.3 Paying all accrued used vacation pay See § 7.19, Vacation Pay. 13.3.4 Penalties Willful failure to fully pay a discharged or resigning employee can result in substantial “waiting time” penalties under Labor Code section 203. As to any amount owed but unpaid, the employer’s defense for failure to pay promptly is limited. “Willful” for the purpose of assessing a penalty does not require a refusal to pay, an evil motive, or a purpose to defraud workers; “willful” merely means that there was a failure to pay that was within the employer’s control.17 Inability to pay is not a defense.18 The employer’s ignorance of the requirement to pay is also not a defense.19 Where the wages are not calculable until after termination, waiting-time penalties would begin to run when the employer knows the ascertainable amount and fails to pay.20 Courts and the DLSE have rejected a defense of “conditional payment” (i.e., an employer promises to pay the employee as soon as the employer is paid from another source, such as a general contractor).21 The penalty imposed is an amount not exceeding 30 working days of pay. (See § 7.5.) Further penalties may be due if the employer fails to pay after a Labor Commissioner hearing. If the Labor Commissioner finds that the employee’s claim for wages is valid, then the claim is due and payable within 10 days after receipt of notice by the employer that the wages are due. An employer who has the ability to pay and who willfully refuses to pay those wages within 10 days will be subject to an additional penalty of treble the amount owed.22
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