Does an employee who retires quit?  California employers are required to promptly pay final wages to employees when they “quit.”  Specifically, Labor Code section 202 provides that employees without a contract for a definite period are entitled to prompt payment of wages either within 72 hours of quitting or immediately upon quitting if they provide at least 72 hours advance notice of their intention to quit.  Employers who fail to make prompt payment of wages are subject to waiting time penalties up to 30 days of wages.  (Lab. Code § 203.)

In McLean v. State, 228 Cal. App. 4th 1500, 176 Cal. Rptr. 3d 734 review granted and opinion superseded, 338 P.3d 304 (Cal. 2014), the court of appeal concluded that an employee who “quits” includes an employee who retires.  There, a state employee retired and separated from her employer on the same day that she retired.  She did not receive her final wages on her last day of employment, nor did she receive them within 72 hours of that date.  Her employer argued that Labor Code section 202 and 203 only applied to employees who “quit” as opposed to those who “retire,” and that the distinction between a “quit” and a “retirement” was well-established in the civil service. The court of appeals disagreed; concluding that “quit” as used in Labor Code section 202 and 203 has one meaning for private and public employers, and includes employees who quit to retire.

That court of appeal decision is now being reviewed by the California Supreme Court.  In the meanwhile, both private and public employers are still subject to Labor Code sections 202 and 203.  Employers should be aware of the prompt payment requirements when employees resign, and the potential applicability of these requirements to employees when they retire.  The decision will have a profound effect, particularly as employees of the baby-boomer generation begin to retire.  It could also subject employers to potential actions by employees who have already retired for waiting time penalties if they did not receive timely payment of their final wages when they retired.

DID YOU KNOW…

Workers on a prevailing wage project are entitled to no less than the prevailing wage (i.e., a basic hourly rate).  This requirement seeks to ensure that the winning bidder is not awarded the project by paying lower wages to workers than the other bidders.  A court of appeal recently recognized that the second-place bidder can sue the winning bidder if the winning bidder only obtained the lowest bidder status because it did not pay workers the prevailing wage.  See, Roy Allan Slurry Seal, Inc. v. Am. Asphalt S., Inc., No. B255558, 2015 WL 738675 (Cal. Ct. App. Feb. 20, 2015).