Appellate Court Determines One-Year Statute of Limitations is Proper for Waiting Time Penalties
Posted by Connor J. Moyle
A California appellate court recently clarified that a one-year statute of limitations applies to claims brought solely for waiting time penalties relating to late payment of wages under Labor Code section 203.
Specifically, in McCoy v. Superior Court, the court determined that a putative class action plaintiff was not entitled to allege a claim for waiting time penalties alone because the one-year statute of limitations for those penalties had run. In that case, the underlying wages had indisputably been paid, but plaintiff claimed that his employer had not paid wages owed until one day after completion of temporary work assignments. Plaintiff argued that the statute of limitations for a claim seeking waiting time penalties is the same as that for recovery of the underlying wages, which he asserted is four years. Defendant argued, however, that in a claim that only seeks waiting time penalties, the general one-year statute of limitations for penalties should apply.
The appellate court agreed with the defendant-employer and reasoned that the purpose of Section 203 is to ensure that employers pay wages promptly, not to provide for a penalty independent of the wage claim. Thus, where the employer has paid the underlying wages, the purpose for extending the statute of limitations for waiting time penalties to coincide with that for wages no longer exists. Having found the time period in Section 203 inapplicable, the court applied the general one-year limitations period for penalties found in Code of Civil Procedure section 340(a). The court also rejected plaintiff's alternative argument that waiting time penalties should be considered “wages” rather than a penalty, and that the longer limitations period for wages should therefore apply.
Employers should note that the McCoy court explicitly limited its holding to suits that do not also involve a claim for unpaid wages. Nevertheless, this decision has the potential to benefit employers by limiting the amount of time they remain exposed to employees for waiting time penalties where all underlying wages have been paid. The decision also underscores the importance of promptly paying wages due upon discharge. Please contact us directly to discuss any questions relating to the effect this decision may have on your workplace.