Most employers are aware that timing requirements exist regarding the payment of final wages to employees who quit or are terminated from the company. However, employers now need to know that they owe the same prompt payment to employees who retire from the company according to a recent decision by the California Supreme Court.
There are different requirements placed on employers dependent on how the relationship with the employee ends. On one hand, if an employer discharges the employee, the employer must immediately pay the employee any wages earned that remain unpaid at the time of discharge. On the other hand, if an employee who is not under contract quits his or her position with the company, the employer must pay any unpaid wages to the employee within 72 hours. If the employee gives the employer 72 hours notice of his or her intention to quit, then the employee is entitled to any unpaid wages at the time of quitting.
Last week, the California Supreme Court held that employers must also satisfy the requirement of timely payment of unpaid wages for employees who retire from the company just as they would have to if the employee quit his or her job. This means that if an employer is aware that an employee will retire with 72 hours notice of the retirement date, the employer must satisfy the prompt payment of unpaid wages at the actual time of retirement.
If an employer fails to pay any unpaid wages in accordance with the time requirements, it may be subject to penalties of up to 30 days of wages. Therefore, it is imperative that employers comply with these stringent time periods whether an employee is terminated, quits, or retires from the company.