An employee of mine gave 1 week notice that he was quitting. He asked for his paycheck to be paid within 72 hours. We have a contract signed with him that dictates we pay him when our customer pays us for work he has done, and this is how we paid him for 10 years. Does the contract take precedence over the 72 hour requirement?
No, your contract does not take precedence of the law. California Labor Code section 202 requires employers to pay employees who give notice of quitting, within 72 hours of the notice but no later than the last day of their employment. Failure to do so may subject the employer to waiting time penalties equivalent to a day's pay for every day payment is late, up to a maximum of 30 days.
By the way, waiting until your customer pays you before you pay an employee is probably not legally correct either and may violate Labor Code section 204. It appears you need to consult with an employment law attorney who advises employers, to review your employment policies.
California Labor Code section 202 provides:
202. (a) If an employee not having a written contract for a definite period quits his or her employment, his or her wages shall become due and payable not later than 72 hours thereafter, unless the employee has given 72 hours previous notice of his or her intention to quit, in which case the employee is entitled to his or her wages at the time of quitting. Notwithstanding any other provision of law, an employee who quits without providing a 72-hour notice shall be entitled to receive payment by mail if he or she so requests and designates a mailing address. The date of the mailing shall constitute the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.
(b) Notwithstanding any other provision of law, the state employer shall be deemed to have made an immediate payment of wages under this section for any unused or accumulated vacation, annual leave, holiday leave, sick leave to which the employee is otherwise entitled due to a disability retirement, or time off to which the employee is entitled by reason of previous overtime work where compensating time off was given by the appointing power, provided at least five workdays prior to his or her final day of employment, the employee submits a written election to his or her appointing power authorizing the state employer to tender payment for any or all leave to be contributed on a pretax basis to the employee's account in a state-sponsored supplemental retirement plan as described under Sections 401(k), 403(b), or 457 of the Internal Revenue Code provided the plan allows those contributions. The contribution shall be tendered for payment to the employee's 401(k), 403(b), or 457 plan account no later than 45 days after the employee's last day of employment. Nothing in this section is intended to authorize contributions in excess of the annual deferral limits imposed under federal and state law or the provisions of the supplemental retirement plan itself.
(c) Notwithstanding any other provision of law, when a state employee quits, retires, or disability retires from his or her employment with the state, the employee may, at least five workdays prior to his or her final day of employment, submit a written election to his or her appointing power authorizing the state employer to defer into the next calendar year payment of any or all of the employee's unused or accumulated vacation, annual leave, holiday leave, sick leave to which the employee is otherwise entitled due to a disability, retirement, or time off to which the employee is entitled by reason of previous overtime work where compensating time off was given by the appointing power. To qualify for the deferral of payment under this section, only that portion of leave that extends past the November pay period for state employees shall be deferred into the next calendar year under this section may do any of the following:
(1) Contribute the entire payment to his or her 401(k), 403(b), or 457 plan account.
(2) Contribute any portion of the deferred payment to his or her 401(k), 403(b), or 457 plan account and receive cash payment for the remaining noncontributed unused leave.
(3) Receive a lump-sum payment for all of the deferred unused leave as described above.
Payments shall be tendered under this section no later than February 1 in the year following the employee's last day of employment. Nothing in this section is intended to authorize contributions in excess of the annual deferral limits imposed under federal and state law or the provisions of the supplemental retirement plan itself.
This statute beats your contract.
I wish you luck.
No, the contract does not take precedence over California law.
In California, an employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. (Labor Code Sections 201 and 227.3.) However, an employee without a written employment contract for a definite period of time who gives at least 72 hours prior notice of his or her intention to quit, and quits on the day given in the notice, must be paid all of his or her wages, including accrued vacation, at the time of quitting. (Labor Code Section 202.)
An employee without a written employment contract for a definite period of time who quits without giving 72 hours prior notice must be paid all of his or her wages, including accrued vacation, within 72 hours of quitting. An employee who quits without giving 72-hours prior notice may request that his or her final wage payment be mailed to a designated address. The date of mailing will be considered the date of payment for purposes of the requirement to provide payment within 72 hours of the time of quitting. ( Labor Code Section 202).
