Seyfarth Synopsis: The California Supreme Court holds that employers must promptly pay final wages owed to employees who quit, including those who retire, or risk paying steep statutory penalties under California Labor Code section 203.

What Were the Plaintiff’s Claims?

Janis McLean worked as deputy attorney general for the California Department of Justice. In November 2010, McLean retired and filed suit in an individual and representative capacity against the State of California shortly thereafter. She alleged that the State Controller’s Office failed to pay her final wages on her last day of employment or within 72 hours of her last day after she retired.

What Do California Labor Code Sections 201 and 202 Require of Employers?

California Labor Code sections 201 and 202 require employers to pay final wages owed to employees who are fired or quit. Depending on how the employment comes to an end, final wages are due immediately or within 72 hours after the last day of employment. Failure to timely pay final wages subjects employers to penalties of up to 30 days’ wages.

What Did the California Supreme Court Decide?

The California Supreme Court agreed with McLean that the prompt payment provisions of California Labor Code sections 201 and 201 included protections for employees who retire. The State had demurred to the complaint, arguing that because McLean had retired from her job, she had not stated a claim for statutory penalties which applies only when employees “quit” or are “discharged.” While the trial court sustained the demurrer, the California Court of Appeal and California Supreme Court disagreed.

The California Supreme Court looked to the legislative purpose of the statute and noted that the statute is meant to be “liberally construed with an eye to promoting such protection” of employees. The court also considered the ordinary meaning of the word “quit” to determine whether it encompasses the word “retire,” and concluded that the word “quit” is broad enough to cover a voluntary departure through retirement.

Lessons Learned for Employers?

This decision serves as a reminder to California employers to promptly pay wages owed to their employees after termination, regardless of the method in which the employment ends–through discharge, retirement, or resignation. For those who are interested, a more in-depth review of the case is available here.