Warning to Employers Laying off Employees
Spanish Radio Station 107.1 Message
Rob Roy, President/General Counsel of the Ventura County Agricultural Association sent this message to us: Yesterday, the Association received an e-mail from one of its members commenting on a commercial on the local Spanish radio station 107.1 which was advertising legal services and communicating the following message:
“If you happened to get laid off recently, you have to get paid on the same day you were laid off, if they (employer) pays you the next day they (employer) are violating the law!… You have rights, and know your rights. You have from the day you were laid off, “x” amount of days to open a claim.”
VCAA members are advised to be on the alert for this type of advertisement. The unfortunate part is that the advertisement is legally accurate.
Like other agricultural observers, VCAA has been speculating when the agricultural industry would get hit with waiting time penalties pursuant to Labor Code Section 203 based upon an employer’s failure to pay all wages at the time of employment termination, which includes a layoff. It is the common practice of many employers to pay laid off employees within seven (7) days following the layoff date. Unfortunately, the California Labor Code does not afford agricultural employers such flexibility. It has generally been suspected that agricultural employers have incorrectly followed Labor Code Section 201 which states in pertinent part:
“(a) If an employer discharges an employee the wages earned and unpaid at the time of discharge are due and payable immediately. An employer who lays off a group of employees by reason of the termination of seasonal employment in the curing, canning or drying of any variety of perishable fruit, fish or vegetables, shall be deemed to have made immediate payment when the wages of said employees are paid within a reasonable time as necessary for the computation and payment thereof; provided, however, that the reasonable time shall exceed 72 hours, and further provided that payment shall be made by mail to any employee who so requests and designates a mailing address therefore.” [Emphasis added]
This specific provision of the Labor Code pertains only to layoff of seasonal employees in the “curing, canning, or drying of any variety of perishable fruit...or vegetables.” It does not apply generally to any other form of field harvesting or other agricultural operations.
To the extent that agricultural employers are paying laid off employees on the next regularly-scheduled pay day, they could be subject to Labor Code Section 203 penalties for the time period between the date of the layoff (termination) and the actual date of payment of the wages.
VCAA is unaware of any Labor Code provisions which extend the payment deadline other than Labor Code Section 201 for the specified agricultural workers. Therefore, in order to avoid potential waiting time penalties under Labor Code Section 203, it is recommended that you prepare the final wages to be paid at the time of the layoff.
If employees are compensated on an hourly basis, it may be an easier task to accomplish this on the date of the termination as the employer will know in advance approximately how many hours will be worked during the workweek. However, in those cases where employees are compensated on a piece-rate basis, this could become problematic. Under these circumstances, it is recommended that the employer attempt to prepare and make available final paychecks as quickly as possible. In such cases, the employer may be able to avoid any waiting time penalties on the ground that it did not willfully fail to pay the wages of the employee at the time of the employment termination (layoff) because such wages could not be correctly calculated prior to that date and, furthermore, it would take approximately “x” number of days in order to prepare the payroll checks, but not more than 72 hours!
Please note that under the case of Pineda v. Bank of America (2010) 50 Cal. 4th 1389, 1401-1402, the California Supreme Court in reviewing the applicability of either a three or one-year statute of limitations with reference to Section 203 penalties has concluded that a three (3) year limitations period applies:
“In light of the statutory language, as well as extrinsic evidence of the Legislature’s intent, including the Legislative history and considerations of public policy, we hold that the limitations period prescribed in Labor Code 203 (b) governs all actions seeking Section 203 penalties regardless of whether the claim for penalties is accompanied by a claim for unpaid final wages.”
What this means is that an employee will have up to three years from the date of the employment termination to seek waiting time penalties if wages are not paid at the time of the employment termination or layoff. Nevertheless, VCAA believes that if it is administratively impossible to calculate and distribute checks at the time of the employment termination, and the employer endeavors to provide the checks as soon as practicable (no more than 72 hours), the employer may have a good faith basis to defeat any claim of unpaid Section 203 penalties.
One last note, such penalties may be filed by individual employees or through a class action or representative lawsuit under The Private Attorney General Act (PAGA).
VCAA members who have any questions regarding the foregoing should contact Rob Roy at the Association office. At this point in the season, many of you will not be laying off any workers. Therefore, it is essential to adopt this payroll practice as soon as possible to avoid potential future penalties.