The Loftin Firm, P.C.
Legal Question? We can help.
Call 760-814-9649

Businesses Beware: Final paychecks are required for "retiring" employees too

Last month, the California Supreme Court handed down a decision that held that businesses must pay employees that "retire" in the same manner as prescribed by the Labor Code for employees who "quit."  (McLean v. California, 1 Cal. 5th 615 (2016).)

Under current California law, businesses have certain obligations to provide final compensation to employees when they are discharged or resign. (Labor Code §§ 201, 202.) Willful failure to pay wages due to the employee can result "waiting time penalties" equal to the employee's daily rate of pay for up to 30 days. (Labor Code § 203.)

In McLean, the California Supreme Court considered whether Sections 202 and 2013 of the Labor Code apply when employees retire (as opposed to resignation or discharge). The Court concluded that the word "quit" was not defined within the California Labor Code or its applicable regulations, which meant that an ordinary definition should be applied. The Court found the ordinary usage of "quit" to mean: "'to stop doing a thing; to cease,' and, in the employment context, 'to leave one's employment.'" (McLean, 1 Cal. 5th at 622.) In the context of retirement, the Court found that "the ordinary meaning of the word 'quit' is broad enough to encompass a voluntary departure from a particular employment, whatever its motivation." (Id.) As a result, the Court held that "the meaning of the word 'quit' accords with the role section 202 plays in the statutory scheme." (Id.)

In other words, the Court held that regardless of whether an employee resigns or retires, employers are required to pay final wages to the employee in accordance with the California Labor Code provisions and may be subject to waiting-period penalties if prompt payment is not provided by the employer. This case serves as a good reminder to businesses, both large and small, to proactively re-evaluate their compensation practices to ensure such penalties never become an costly issue down the road.

Ben Schwefel is an Associate Attorney at The Loftin Firm. For questions relating to a business, nonprofit, real estate, or estate planning matter, contact Ben at (760) 814-9649. 

No Comments

Leave a comment
Comment Information
Email Us For A Response

Contact Us

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Leading You Down the Path to Sucessful Legal Solutions
The Loftin Firm, P.C.

The Loftin Firm, P.C.
5760 Fleet Street
Suite 110
Carlsbad, California 92008-4713

Toll Free: 866-933-2340
Phone: 760-814-9649
Fax: 760-431-2003
Map & Directions

map