A recent $18.5 million settlement points up the potential liability for employers who do not promptly pay departing employees all wages owed. The settlement with the corporate owner of Albertson’s, Lucky Stores and Sav-on Drugs, allocates $15 million for compensation of approximately 200,000 class members and $3.5 million for attorney’s fees and costs. Ward v. Albertson’s, Inc., Case No. BC237646 (Apr 14, 2008).
Liability hinged on Labor Code section 203, which provides that all final wages are due on an employee’s last day of work, except that if the employee quit with less than 72 hours notice before their last day of work, all final wages are due within 72 hours of the employee giving notice. Failure to pay on time results in a penalty of an additional day’s pay at the regular rate of pay for every day the employee had to wait. In addition, section 227.3 provides that an employer who offers paid vacations must pay all vested vacation at the departing employee’s final rate, if there is no collective bargaining agreement.
The notice of intended settlement, which describes the details of the settlement, is available here.