The Law on Late & Unpaid Wages in California

Employers have a legal obligation to pay the wages that their employees earn. They also have an obligation to pay those wages on time.⁠1 When wages are paid late or not at all, California law entitles employees to recover the unpaid wages, with interest.⁠2 The law often adds penalties on top: as much as 30 days of extra wages when a final paycheck is late,⁠3 and set dollar penalties when paychecks are late during employment.⁠4

This article explains the payment obligations of California employers, as well as the solutions employees have when wages are not paid or are paid later than the law requires.

The Definition of “Wages”

California law defines a wage as payment for labor performed by an employee.⁠5 Labor in this context means work or services performed for an employer, not just physical labor.⁠6

All forms of compensation for work are wages, including:

• Hourly pay,
• A fixed salary,
• Commissions,
• Piece-rate payments, and
• Payment that varies by project or task.⁠7

The term wages also includes benefits that an employee receives as a part of his or her compensation, including money, room, board, clothing, vacation pay, and sick pay.⁠8 The extra hour of premium pay an employer owes for a missed meal or rest break counts as wages, too.⁠9

The Right to Wage Payments Generally

Every person employed in California is entitled to be paid wages they have earned. In fact, the California legislature has declared it to be state policy that the right to be paid wages for work applies to all workers, regardless of their immigration status.⁠10

An employee's right to be paid for work has two legal sources: contract law and the California Labor Code.⁠11

Wages as a Contract Right

When a worker accepts employment at a promised wage, the worker and the employer have entered into a binding agreement.⁠12

The promise to pay wages for work usually takes the form of a formal written contract. But an oral agreement is also enough to create an enforceable obligation to pay earned wages.⁠13

Wages as a Labor Right

California's Labor Code provides a right for employees to earn certain wages, such as a minimum wage or, in the right circumstances, overtime wages.⁠14

When California law gives an employee the right to receive a minimum wage or overtime, an employment contract providing for a lesser wage is not valid or enforceable.⁠15

Distinguish: Payments to Independent Contractors

Wages are paid to employees.⁠16 Independent contractors receive payments for work performed pursuant to a contract, but those payments are not wages.

However, when an employee has been misclassified as an independent contractor, the employee is entitled to be paid the wages that are required by California law.⁠17 Our guide to independent contractor misclassification explains how that determination is made.

The Form Wage Payments Must Take

Most employers pay wages by using a company check or a check issued by a payroll service from the employer's payroll account.

Employers are permitted to pay wages by means of a personal check or in cash,⁠18 but they are not permitted to make “under the table” payments. Whether wages are paid by cash or by check, employers are required by state and federal law to withhold payroll taxes.⁠19

Paychecks must also meet certain requirements. A check used to pay wages must be negotiable and payable in cash, on demand, without any fee or discount, at an established place of business in California.⁠20

Employers may pay wages by direct deposit as well, as long as the employee has voluntarily authorized the deposit into an account at a bank, savings and loan, or credit union of the employee's choice.⁠21 A standing direct-deposit authorization ends automatically when employment ends. So final wages must be paid under the rules described later in this article, unless the employee has authorized direct deposit of the final paycheck and it is paid on time.⁠22

All employees must be given a wage statement with each wage payment, regardless of whether the wages are paid by check or cash.⁠23 The wage statement must show, among other things:

• Gross and net wages paid,
• The number of hours worked during the pay period,
• The number of pieces for which the employee is being paid (if the employee is paid a piece rate), and
• Any deductions made from gross pay (like payroll taxes).⁠24

The employer must keep a copy of the wage statement for at least three years.⁠25 Current and former employees are entitled to inspect those records, or to receive a copy of them, upon request.⁠26 The employer must comply no later than 21 calendar days after the request is made, and a failure to do so carries a $750 penalty.⁠27

Having the right to inspect the employer's records helps employees make a claim for unpaid wages.

When Wages Must Be Paid

The agreement between the employee and employer sets the terms of employment, including when wages will be paid. But California law imposes some requirements on employers, regardless of their agreement with their employees.

General Rule: Semimonthly Payments

Most California employees must be paid at least twice a month.⁠28 An employer must establish an employee's regular paydays before wages are first paid.⁠29

The employer must post a conspicuous notice at the place of work or at the office where employees are paid, specifying the regular paydays and the time and place of payment.⁠30

If employees are paid semimonthly (twice a month) and the work periods for which they are paid are the 1st through the 15th and the 16th through the end of the month, wages must be paid on the following schedule:⁠31

• Wages earned between the 1st and 15th day of the month must be paid between the 16th and 26th day of the same month.
• Wages earned between the 16th and the last day of the month must be paid between the 1st and the 10th day of the following month.

Alternative Pay Schedules

If employees are paid on any other schedule the employer must generally pay wages no later than 7 days after the end of each work period.⁠32

This rule applies to employees paid on a weekly or biweekly (every two weeks) basis, as well as those who are paid semimonthly with work periods other than the 1st through the 15th and the 16th through the end of the month.⁠33

Overtime Wages

Wages for overtime earned during a work period must be paid not later than the regular payday for the next work period.⁠34

Exempt Employees

Certain employees are exempt from many of California's labor laws. They are usually employees who work in administrative, executive, or professional positions.⁠35 Exempt employees are paid on a different schedule than other employees.

They may be paid once a month, provided that the payment is made on or before the 26th of the month and includes wages for the entire month, including wages between the date of the payment and the end of the month that the employee has not yet earned.⁠36

Employees who are unsure if they are an exempt employee can consult our article How to Tell If an Employee Is “Exempt” under California Law.

Vehicle Sales Commission Payments

Commissions paid by a licensed vehicle dealer may be paid once each month on a date designated as a salesperson's payday.⁠37

Agricultural Employees

Agricultural employees who are not provided room and board and who are paid on the semimonthly schedule discussed above must be paid no later than the 22nd of the same month for work performed between the 1st and 15th, and no later than the 7th of the next month for work performed between the 16th and the last day of the month.⁠38

Other Exceptions

Certain employees, including household domestic employees, who receive room and board as part of their compensation may be paid once each month on a date designated in advance. Wages paid on that payday must include all wages earned up to the payday, and no two paydays can be more than 31 days apart.⁠39

Depending on the employee's type of work and employment agreement, there may be other exceptions to these schedules. Employees should consult an employment lawyer if they need advice about when their wages are due.

When Final Wages Are Due

The greatest risk of not being paid comes when an employee is discharged. The timing of an employee's final paycheck depends on whether they are fired or they quit.

Terminations

In general, an employee who is fired must be paid all unpaid wages that have been earned up to and including the date of termination. That payment must be made on the same day that the employee is terminated.⁠40

A layoff counts as a discharge for this purpose. Employees who are laid off are entitled to their final wages on the same immediate schedule as employees who are fired for cause.⁠41

There are, however, limited exceptions to this rule, depending on the industry in which the worker is employed.⁠42

Resignations

Employees who quit and give notice at least 72 hours before their last day of work must be paid their final wages on their last day, assuming it is the day stated in the notice.⁠43

Employees who quit without giving such notice must be paid their final wages within 72 hours after their last day of work.⁠44 An employee who quits without notice can also ask that the final paycheck be mailed to a designated address; the date of mailing then counts as the date of payment.⁠45

Vacation Pay

California law regards a paid vacation as a form of wages.⁠46 Paid vacations are compensation for labor the employee performs, but the payment is delayed until the employee takes the vacation.⁠47

Employers are not required to offer vacation pay to their employees,⁠48 but they must follow certain rules if they do.

If an employment agreement includes paid vacations, an employee is entitled to be paid wages for unused vacation time that has vested at the time the employee's work ends.⁠49 The right to a paid vacation vests as the employee performs the work that entitles the employee to a paid vacation.⁠50

When employment is terminated, the employee is entitled to be paid for the portion of the employee's unused paid vacation that the employee has earned.⁠51

California employers are not allowed to circumvent the right to be paid the proportionate share of vacation pay that the employee has earned by conditioning entitlement to vacation on the completion of a fixed period of work.⁠52

So, even if an employment agreement states that the employee is not entitled to vacation pay until the employee has worked a full year, the employee must be paid for unused paid vacation in proportion to the time that the employee worked before employment ended.⁠53

The Waiting Time Penalty for Unpaid Final Wages

California law provides for a “waiting time penalty” when employers willfully fail to pay final wages, in full and on time, after employment ends.⁠54 The penalty can apply to any earned wages that go unpaid at separation, including unpaid premium pay for missed meal or rest breaks.⁠55

The penalty for late payment of wages advances the public policy of assuring that employees are paid promptly for their work.⁠56 It incentivizes employers to pay wages in a timely manner.⁠57

Calculating the Penalty

The waiting time penalty consists of a full day of wages for each day that payment is delayed.⁠58 The penalty continues to accrue for as much as 30 calendar days, until the wages are paid in full or the employee files a lawsuit.⁠59

The waiting time penalty is calculated by computing the employee's daily wage rate and then multiplying it by the number of days that payment is delayed, up to a maximum of 30 days.⁠60

The daily wage rate is typically calculated by adding the base wages, commissions, bonuses, and vacation pay that the employee earns in a year, dividing that sum by 52 weeks, and dividing the result by the number of days the employee normally works each week (usually five).⁠61 Overtime counts toward the daily rate only when it is regularly scheduled; occasional or infrequent overtime is not included.⁠62

When a Failure to Pay is “Willful”

A failure to pay wages on time is willful if the failure is intentional.⁠63 An employer does not fail to pay wages willfully when there is a good faith dispute about the employee's entitlement to the unpaid wages.⁠64

A good faith dispute exists when an employer presents a legitimate legal or factual defense to the payment of wages, even if the employer does not prevail.⁠65

A dispute does not excuse the employer from paying the wages that are not disputed. When part of the pay is contested in good faith, the employer must still pay the conceded amount, without conditions and on the normal schedule; only the disputed balance can wait.⁠66 Nor can the employer require the employee to sign a release of a wage claim as a condition of being paid wages that are owed. A release signed under those circumstances is null and void.⁠67

Employer's Insufficient Funds

A related penalty applies when a paycheck bounces. If an employer pays wages, including final wages, with a check that is refused payment because the employer has no account at the bank or has insufficient funds in the account, the wages continue as a penalty at the employee's same rate of pay for up to 30 days until they are paid.⁠68

Two conditions apply. The employee must present the check for payment within 30 days of receiving it. And the penalty does not apply if the employer can establish that the violation was unintentional.⁠69

Penalties When Wages Are Late During Employment

In some cases, the employer fails to pay wages in full or on time and the employee continues to work for the employer. In these situations, the waiting time penalty doesn't apply.⁠70 Instead, the employer may be liable for statutory penalties.

If an employer fails to pay wages on the schedules described above, or unlawfully withholds wages that are due, the employer is subject to a penalty in the following amounts:⁠71

• First Violation. For any initial violation, the employer must pay $100 for each failure to pay each employee.⁠72
• Subsequent Violations. For each subsequent violation, or any willful or intentional violation, the employer must pay $200 for each failure to pay each employee, plus 25% of the amount unlawfully withheld.⁠73

These penalties were once payable only to the State of California. Since 2020, however, an employee whose paycheck is late or short can recover the entire late-payment penalty for themselves by filing a wage claim with the Labor Commissioner.⁠74 Penalties for unlawfully withheld wages are still recovered by the Labor Commissioner.⁠75

As an alternative, an employee can pursue these penalties as civil penalties by suing under the Private Attorneys General Act, on behalf of themselves and other affected employees.⁠76 These are called “PAGA” claims. The employee cannot do both: for the same violation, the employee must choose between the statutory penalty and a PAGA civil penalty.⁠77

To bring a PAGA claim, the employee must first follow certain procedures, which begin with a written notice to the state Labor and Workforce Development Agency and are described in Labor Code sections 2698 through 2699.5.⁠78 The employee must also have personally experienced each violation the lawsuit alleges, within the one-year limitations period.⁠79

Civil penalties recovered in a PAGA lawsuit are divided between the state and the workers: 65% goes to the Labor and Workforce Development Agency, and 35% goes to the aggrieved employees.⁠80 A prevailing employee is also entitled to reasonable attorney fees and litigation costs.⁠81 Many attorneys take these kinds of cases on a contingency basis, without any upfront fees.

Recovering Late or Unpaid Wages

Unpaid wages and penalties for late-paid wages can be pursued in three primary ways:

• By resolving the dispute informally with the employer,
• By filing a lawsuit in court, or
• By bringing an administrative claim for unpaid wages and penalties.⁠82

An administrative wage claim can be filed with the Labor Commissioner online, by email, by mail, or in person, and there is no fee to file.⁠83 The procedure is explained in our article How to File a Wage & Hour Claim in California. The pros and cons of wage claims and civil lawsuits are also discussed in that article.

Employees are protected when they take these steps. An employer may not fire or otherwise retaliate against an employee for filing a wage claim or complaining, in writing or orally, about unpaid wages. If the employer takes an adverse action within 90 days of that protected activity, there is a rebuttable presumption in favor of the employee's retaliation claim.⁠84 An employee who suffers retaliation is entitled to reinstatement and reimbursement of lost wages and benefits, and the employer is liable for a civil penalty of up to $10,000 per employee for each violation, payable to the employee.⁠85

Strict deadlines apply to wage claims and lawsuits, and they vary with the type of claim, so it is usually best to act quickly.⁠86 Of course, the best way to resolve a wage dispute will depend on the employee's specific situation. It's usually a good idea to get the opinion of a lawyer before deciding how to proceed.