Labor Code sections 201 and 202 provide that when an employee is terminated or resigns from his or her employment, final wages are generally due and payable immediately. Under Labor Code section 203, if an employer willfully fails to timely pay final wages, “the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.”
A one-year statute of limitations typically governs actions to recover penalties. Code Civ. Proc. § 340(a). However, Labor Code section 203 provides that an employee may sue for “these penalties at any time before the expiration of the statute of limitations on an action for the wages from which the penalties arise.” Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal. 4th 1094, 1109. (“The Legislature expressly provided that a suit seeking to enforce section 203 penalty would be subject to the same statute of limitations as an action to recover wages.”)
The other issue addressed in the Pineda matter, supra, is whether a different statute of limitations applies when an employee seeks to recover only section 203 penalties when final wages were paid – albeit belatedly – prior to the filing of a lawsuit, as opposed to when an employee seeks both final wages and penalties. The answer is no. Labor Code section 203 sets forth a single limitations period governing all actions to recover section 203 penalties regardless of whether an employee seeks to recover only penalties or wages and penalties.
Another issue addressed in the Pineda matter, supra, is whether an employee could recover Labor Code section 203 penalties as restitution under California’s unfair competition law (UCL) (Bus. & Prof. Code § 17200 et seq.) The answer to this questions is also no. Section 203 penalties are not recoverable as restitution under the UCL because employees have no ownership interest in the funds.
In conclusion, labor code section 203 contains a single, three-year limitations period governing all actions for section 203 penalties and irrespective of whether an employee’s claim for penalties is accompanied by a claim for unpaid final wages.
If you need assistance in recovering your final wages, or should you need a free consultation to determine whether you are owed any wages, please do not hesitate to contact my san diego labor and employment law firm.