CA Supreme Court Rules Coverage of Wage Payment Law Not Restricted to Fired Workers

July 27, 2006

The California Supreme Court has unanimously decided that the state's wage payment law—which requires that earned and unpaid wages be paid to discharged workers "immediately"—applies to employees who leave their jobs after a specific assignment or time duration, as well as to employees who are fired [Smith v. Superior Court of Los Angeles County, Cal. Sup. Ct. No. S129476 (07/10/06)].

Under the Section 201 of the Labor Code, if an employer "discharges" an employee, wages earned and unpaid at the time of discharge are due and payable immediately. An employer's willful failure to pay wages to a "discharged" employee in accordance with section 201 subjects the employer to penalties.

One-Day Work Assignment

In return for $500, the plaintiff agreed to work one day for the employer as a "hair model" at a products show, and she stayed at the show until she was told she could leave. The employer waited more than two months to pay her the $500, and she filed a class action lawsuit on behalf of herself and similarly situated models, claiming the employer had violated Section 201 and seeking penalties.   Contending that the individual was not entitled to penalties under Section 203 because the job termination did not constitute a "discharge" or "layoff" triggering the immediate payment requirement, the trial court granted the employer summary judgment.  After the Court of Appeals also ruled against the plaintiff, the California Supreme Court granted her petition for review.

Meaning of "Discharge" in Dispute

Rejecting the employer's definition of "discharge," the California Supreme Court reasoned that an employer effectuates a discharge under sections 201 and 203 of the labor code when it releases an employee upon the completion of the particular job assignment or duration for which he or she was hired.  According to the court, "[e]xcluding employees like plaintiff from the protective scope of sections 201 and 203 would mean that employees who fulfill their employment obligations by completing the specific assignment or duration of time for which they were hired would be exposed to economic vulnerability from delayed wage payment, while at the same time employees who are fired for good cause would be entitled to immediate payment of their earned wages…"

Although the high court determined that the employer had discharged the individual when she was informed she could leave the show, the court did not decide whether the employer had "willfully" failed to pay her wages, thus incurring the penalty sought by the plaintiff.  Accordingly, the case was remanded for further consideration. 

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