California Laws for Paying Employees

Instructor: Ian Lord

Ian has an MBA and is a real estate investor, former health professions educator, and Air Force veteran.

The State of California has laws that specifically cover when employees have to be paid. In this lesson we will look at the legal requirements for the timing for different kinds of employee pay, along with the penalties for failing to follow the law.

Employee Payment Timing Laws

Frank's Hot Dogs has grown to the point where Frank can no longer run the business by himself; he needs to begin hiring employees. The State of California has a number of laws regarding employee pay that Frank needs to brush up on before he brings on his first employee. For example, California has a number of laws regarding when and how employees are to be paid. Let's review with Frank the laws regarding the timing of employee paychecks, as well as special rules for overtime, direct deposit, and an employee's final paycheck.

Regular and Overtime Pay

Frank needs to read the relevant sections of California Labor Code which define the responsibilities of an employer with the timing of distributing employee compensation. Section 207 of the Code requires a written and posted schedule of regular pay dates which includes the date, time, and location where his employees will receive their paychecks. Frank's employees must be paid at least twice per month but any payment schedules that fit this requirement are legal, such as weekly or biweekly paychecks.

California also places a deadline for employee payments. For work performed between the 1st and 15th of the month the employee must be paid by the 26th of that month. Pay for the 16th through the end of the calendar month must be paid within ten calendar days after the end of the payroll period. If the payroll periods are different than this such as a biweekly schedule than the payment must be made within seven calendar days after the end of the payroll period.

Accrued overtime pay must be paid to the employee no later than the payday for the pay period that occurs after the pay period in which that worker has overtime hours. This is one of the more confusing parts of the law, but to help Frank understand let's run through an example. The pay period where one of his workers has three hours of overtime runs from January 1st through January 14th, with payday for that period on the 17th. The next pay period runs from January 15th through the 31st, with payday on February 3rd. The employee who worked three hours overtime in the first two weeks of January is legally required to be paid for that time by February 3rd.

Final Pay

Sooner or later Frank will have an employee quit or get fired. When that happens California law has specific rules in place for the final paycheck. With a few exceptions, an employee who leaves is entitled under the law to immediate payment of all accrued wages, including compensation for any accrued vacation time. Certain industries such as oil drillers, fruit and vegetable canning, and film, television, or live theater have unique legal allowances for the timing and location of final wages. Employees with an employment contract for a specific period of time who give at least 72 hours' notice of leaving must be paid upon quitting, but without notice the employer has 72 hours to pay.

Final pay may be made by cash or check and must be given at the time of employee termination or as set by industry specific law. Employees may agree to have final paychecks direct deposited instead of receiving cash or a check, but this option is only possible with employee permission. Direct deposit allows an employee to receive payments directly into a bank account, but there must be explicit consent given to the employer to have the final paycheck made by direct deposit. Employees under an employment contract for a specific period of time who quit with less than 72 hours' notice can ask that the final check be sent to a designated mailing address rather than return to work to collect the check.

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