Waiting Time Penalties Cannot Be Recovered Under UCL
In Pineda v. Bank of America, a California Court of Appeal held that waiting time penalties under Labor Code section 203 cannot be recovered as restitution under California's Unfair Competition Law. The plaintiff, seeking to represent a class of former employees, alleged that he had not been timely paid his final wages following his resignation of employment. (His last day was May 11 and he was paid on May 15.) He alleged a claim for waiting time penalties under Section 203 and a claim for restitution under the UCL (Business and Professions Code section 17200). The trial court granted Bank of America's motion for judgment on the pleadings, holding that the Labor Code claim was barred by the statute of limitations and that penalties could not be recovered as "restitution" under the UCL.
On appeal, the First District Court of Appeal agreed with the trial court. In an unpublished portion of the decision, the court held that a one-year statute of limitations applies to a claim for waiting time penalties where there is no underlying claim for unpaid wages. (The court suggested that if there is an underlying claim for unpaid wages, the statute of limitations for both claims is three years.) In this case, the plaintiff did not allege that Bank of America failed to pay him wages; he simply alleged that his final wages were paid 4 days late. Because the plaintiff did nothave an underlying claim for unpaid wages, a one-year statute of limitations applied. The plaintiff filed his action more than one year after his resignation and the Labor Code claim was, therefore, time-barred.
Also in an unpublished portion of the decision, the court interestingly held that leave to amend to substitute a suitable class representative as plaintiff, was properly denied by the trial court. The court held that plaintiff's counsel had several months to find a suitable class plaintiff through discovery and had failed to do so due to a lack of diligence. As a result, the court held that the trial court did not abuse its discretion in denying leave to amend.
Finally, in the published portion of the decision, the court held that the plaintiff's UCL claim was properly dismissed because Section 203 penalties cannot be recovered as restitution under the UCL. The court rejected the plaintiff's argument that waiting time penalties are a "vested property interest" that arises upon an employer's failure to timely pay wages.
Although this case was a victory for the employer, it is also a reminder of the litigation that can, and often does, follow when final wages are not paid in accordance with California's strict statutory time requirements. As a reminder, if an employee is involuntarily terminated, final wages (including accrued, unused vacation) must be paid at the time of termination (on the employee's last day). If an employee resigns and gives at least 72 hours notice, final wages must be paid on the employee's last day. If an employee resigns with less than 72 hours notice, final wages must be paid within 72 hours.