Final Pay

Summary

English (Rev. 1/2011)

Text

STATE OF CALIFORNIA Gavin Newsom, Governor   
DEPARTMENT OF INDUSTRIAL RELATIONS 
DIVISION OF LABOR STANDARDS ENFORCEMENT 
FINAL PAY 
Employees who are discharged must be paid all wages due at the time of termination. (Labor Code § 201) 
“All wages” include any earned, but unused vacation pay. (Labor Code §227.3) There is no requirement under 
California law that an employer pay accrued sick leave upon termination. An employer must pay a discharged 
employee at the place of discharge. (Labor Code § 208) 
An employee who does not have a written agreement for a definite period of employment and who quits 
without giving prior notice, must be paid his or her wages within 72 hours. If the employee gives at least 72 hours 
notice of his or her intention to quit, those wages must be
 paid at the time of quitting.  An employee who quits 
must be paid at the office or agency of the employer in the county where the employee worked.  An employee who 
quits without 72 hours notice may request that his or her final wage payment be mailed to a designated address.  
The date of mailing will be considered the date of payment. (Labor Code § 202) 
An employer who willfully fails to pay any wages due an employee who is discharged or quits within the 
time frames provided under Labor Code § 201 or Labor Code § 202, may be assessed continuing wages as a penalty 
from the date the wages were due up to a maximum of 30 da
ys.  (Labor Code § 203) The penalty is calculated by 
multiplying the daily wage rate of the employee by 30 days. (Mamika v. Barca (1998) 68 Cal.App.4th 487) Penalties 
under Labor Code § 203 may be avoided if the employer can show that a good-faith dispute existed concerning 
whether any wages were due. A “good-faith” dispute means that the employer’s defense, based on law or fact, if 
successful, would preclude any recovery on part of the employee.  (Title 8 California Code of Regulations § 13520) 
Even if there is a dispute, the employer must pay, without requiring a release, whatever wages are due and 
not in dispute. If the employer fails to pay what is un
disputed, the “good faith” defense will be defeated whatever 
the outcome of the disputed wages. (Labor Code § 206) 
SEVERANCE PAY 
There is no legal requirement under California law that employers provide severance pay to an employee 
upon termination of employment. Employees should refer to their employer’s policy with respect to severance pay.  
Severance pay plans provided by an employer pursuant 
to the Employee Retirement Income Security Act of 1974, 
29 U.S.C. § 1001, et seq. (ERISA), are subject to federal law.  Contact the U.S. Department of Labor at 
www.dol.gov. In certain limited situations, California laws  may apply.  However, a thorough review of the facts is 
necessary before a determination can be made. 
UNEMPLOYMENT INSURANCE 
California participates in a joint federal/state unemployment insurance program, which is designed to reduce 
the impact of economic fluctuations and assist those persons who become unemployed through no fault of their 
own. 
Final pay (rev. 1/2011) 1

With few exceptions, all California employers are covered under the unemployment insurance law and must pay the 
appropriate unemployment insurance tax. A former employee w ill be ineligible for benefits if he or she is out of 
work for one of the following reasons: 
1. Voluntary quit without good cause; (Unemployment Insurance Code § 1256) 
2. Discharge for willful misconduct; (Unemployment Insurance Code § 1256) 
3. Refusal of suitable work; (Unemployment Insurance Code § 1258) 
Employers are given the opportunity to respond to a claim for unemployment insurance by a former 
employee. (Unemployment Insurance Code § 1327) 
Employers and employees that disagree with the final 
determination of a benefit payment have the right to appeal the determination.  (Unemployment Insurance Code 
§ 1328) 
For additional information and eligibility requirements, contact the Employment Development Department 
at 800-300-5616 or at www.edd.ca.gov. 
Final pay (rev. 1/2011) 2

Retrieval chunks

• #1

  STATE OF CALIFORNIA Gavin Newsom, Governor DEPARTMENT OF INDUSTRIAL RELATIONS DIVISION OF LABOR STANDARDS ENFORCEMENT FINAL PAY Employees who are discharged must be paid all wages due at the time of termination. (Labor Code § 201) “All wages” include any earned, but unused vacation pay. (Labor Code §227.3) There …

• #2

  to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (ERISA), are subject to federal law. Contact the U.S. Department of Labor at www.dol.gov. In certain limited situations, California laws may apply. However, a thorough review of the facts is necessary before a determination can be …