We often hear from employees who think that they have signed away their claim for back wages because their employer demanded a release before they could receive their final payroll check. Usually, they are seeking consultations not for wage claims, but to see if they have a wrongful termination claim. The bad news, sometimes, is that their firing was lawful. The good news, sometimes, is that the release they signed was invalid.
The factual scenario is usually a variation on this theme: the employee is due a certain amount of wages. The employer offers less, and refuses to pay even the lower amount unless the employee signs the release. Under what circumstances is that release going to be upheld?
The standard for enforceability of a mandatory wage claim release is simple. If the release only absolves the employer of liability for the wages being paid, or if the release is given in connection with a full and complete payment of all wages due, then the release will be enforceable. If not, the release isn't worth the hot air coming out of the defense lawyer reading it into the record.
The language of the law can be found in California Labor Code § 206.5
No employer shall require the execution of any release of any claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of such wages has been made. Any release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee and the violation of the provisions of this section shall be a misdemeanor.
The code's imposition of misdemeanor liability can give rise to punitive damages. Under Civil Code § 3294, punitive damages are recoverable where a plaintiff can prove malice, fraud or oppression. That standard is generally met where a defendant's conduct is "in blatant violation of law or policy." Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.
So an employee who was shorted on his or her final wages does not need to worry about the existence of a release. To the contrary, the employer's heavy-handed tactics could leave the company liable for substantially more than the wages that were originally due. If you would like to have your situation reviewed to see if you have a claim, drop us an email and we would be happy to give you an evaluation.