Labor Code Provisions Requiring Prompt Payment of Wages to Discharged Employees does not Apply to Employees Terminated Following Completion of Assignment

Many California employers are aware of the fact that employees who are “discharged” from employment must be paid their final wages immediately, and that the failure to make prompt payment can lead to “waiting time” penalties equal to a day’s pay, up to a maximum of thirty days, for each day that the wages are owed.  However, the labor code provisions that impose this obligation have recently been construed by a state appeals court not to apply to employment that terminates by reason of the completion of the assignment for which the employee was hired.  The case is Smith v. Superior Court, which was decided on October 19, 2004. 

The plaintiff was hired by L’Oreal, a beauty products company, for one day at a flat fee of $500 to model in a hair show for L’Oreal products.  She completed her assignment as scheduled; however, L’Oreal took more than two months to pay her the agreed upon fee.  Claiming that L’Oreal’s conduct violated labor code section 201, which requires that “discharged” employees be paid their wages immediately, and section 203, which imposes the thirty day “waiting time penalty” on employers who violate section 201, the plaintiff sued on behalf of herself and other models who were similarly situated.

L’Oreal defended on the ground that the plaintiff had been hired for a one-day assignment, and that her completion of that assignment naturally led to her termination, but not constitute a “discharge” from employment.  From this, L’Oreal argued that neither the “prompt payment” provision nor the “waiting time penalties” under the labor code applied to the plaintiff. 

The court agreed with L’Oreal.  In reaching its decision, the court noted that the term “discharge” was neither defined in the labor code nor the regulations promulgated by the Department of Industrial Relations, the state agency responsible for enforcing many of the labor code statutes.  The court looked to the dictionary meaning of that term, the context in which that term was used under the labor code provisions in question, and other out of state case authorities, to conclude that “discharge” meant the “affirmative dismissal of an employee by an employer from ongoing employment [but] does not include the completion of a set period of employment or a specific task.”

Obviously, this case is a favorable one for employers, particularly in industries where freelance, project by project employment is the norm, as would be the case in the motion picture and construction industries.  Even so, employers should bear in mind that other cases in this state have reached differing results on this issue, and that until and unless the state supreme court decides the issue, there is risk attached to the failure to promptly pay workers who complete their assignments.

Persons wishing further information or who have questions or comments about either this case or any of the cases that have appeared on this website can contact any of the attorneys at Epstein, Turner & Song.