Wage Law

Wage and hour lawyers are talking about a law and motion ruling made last week by Orange County Superior Court Judge David Velasquez, holding that waiting time penalties under Labor Code § 203 were recoverable as restitution under Business & Professions Code § 17203. In Ybarra v. Aramark Corp., No. 30-2008-00180008-CU-OE-CXC, the court treated section 203's "wages of the employee [that] shall continue as a penalty" as ordinary wages.

In similar fashion to the "additional hour of pay" [in Murphy v. Kenneth Cole Productions, Inc. (2007) 40 Cal.4th 1094, 1108], the instant court observes that Labor Code § 203 does not provide that the employer is "subject to" the imposition of the waiting time penalty. Rather that section states "the wages of the employee shall continue" if the employer does not pay separation wages within 72 hours of the employee's termination. The employee is not required to do anything affirmative — "take action" — in order to be entitled to the continuing right to wages. The right to the waiting time penalty is self-executing, i.e., the employee's right to payment of the waiting time penalty arises immediately upon the satisfaction of the condition precedent, late payment of the last wages due to the employee at the time of termination from employment. In that respect, because the waiting time penalty becomes immediately due and payable to the employee, the right to receive the penalty becomes a vested property right of the employee and the proper subject of restitution. (Cf. Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178 [wages which are due but unpaid are the proper subject of restitution].)

If this is appealed, it must proceed by writ petition, but the writ will be submitted to the same appellate division that gave us McCoy v. Superior Court (2007) 157 Cal.App.4th 225 (review denied) last year. In McCoy (which we previously discussed at a post found at this link), the court ruled that the statute of limitations was one year on causes of action seeking section 203 penalties that do not arise in conjunction with the claims for the underlying wages. The McCoy court noted that its holding meant that the court didn't need to address the plaintiffs claim that the statute was four years under the alternate theory of unfair competition, which was unfortunate, because the issue has arisen in quite a few very large cases.

[Hat tip: The UCL Practitioner, which has a link to the order]