Contract Employees Due Final Wages at End of Job

October 12, 2006 by Beeson Tayer & Bodine

The California Supreme Court has ruled that an employee who is hired for a specific assignment or duration is dis- charged, and thus owed all wages due, upon completion of that assignment or duration. California Labor Code Section 201 mandates that employers pay an employee’s final wages immediately upon “discharge” and, generally, within seventy-two hours if the employee resigns. Labor Code Section 203 imposes a penalty upon employers who fail to do so wages continue to accrue as a penalty from the due date until paid, up to thirty days. These Labor Code provisions apply to all employees, union and non-union alike. Because most union contracts are silent on when final wages are due to a terminated employee, Labor Code Sections 201 and 203 are important tools for unions to use to protect their members.

This past summer in Smith v. Superior Court, 39 Cal.4th 77, the California Supreme Court considered whether an employee who is hired for a spe- cific project or assignment upon completion of that project is “discharged” within the meaning of Section 201. The employee in this case was hired for a one day hair modeling assignment. The employer agreed to pay the employee $500 for the day, but failed to pay the employee for nearly two months after the work was done. The employee sued for penalties per the Labor Code.

The employer argued the employee was not “discharged,” claiming that a discharge requires the affirmative act of firing or laying off an employee. The Court disagreed, noting that the term discharge should be read broadly given the strong public policy favoring immediate payment of wages to employees. As a result of the decision, this employer may owe the employee as much as $15,000 in penalties.

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