After-Hours Resignation Didn't Start Clock for Final Pay

When an employee resigns without notice, California law requires the employer to pay all wages due to that worker within 72 hours. If the employer intentionally fails to do so, the employee's wages continue to accrue from the due date until the wages are paid, for up to 30 days. These additional payments are known as waiting-time penalties.

So when does the clock start ticking if an employee sends notice after hours?

A California appeals court held that an e-mail resignation sent by a law firm employee after work hours on a Friday did not immediately start the 72-hour period. The court rejected the employee's reading of the applicable statute—that the time began to run as soon as she submitted her resignation, regardless of when the employer received the notice of resignation. Such an interpretation would run counter to the statute's clear intent to provide an employer reasonable time to pay an employee who quits without notice, the court said.

[SHRM members-only HR Q&A: What are the rules regarding payment of final wages in the state of California?]

The appellate court further ruled that for waiting-period penalties to apply, the employer's failure to pay must be intentional. A mistake resulting in a payment delay does not trigger the penalties. However, the employer's failure to correct its mistake as soon as it is made aware of it does trigger penalties.  

The plaintiff worked for the defendant law firm as an office manager and paralegal. She resigned by sending an e-mail to the firm's two partners at 6:38 p.m. on Friday, Nov. 14, 2014. In the e-mail, she noted that her unused vacation time "needs to be paid within 72 hours of [her] notice of resignation." She sent a copy of the e-mail to the firm's bookkeeper, who then sent an e-mail about the resignation to both partners at 9:08 a.m. on Saturday, Nov. 15.

At the time the plaintiff resigned, she was owed $2,880.31 for her unused vacation time. The law firm mailed her a handwritten check on Tuesday, Nov. 18, but the check had an inconsistency: The amount in numerals in the dollar amount box was written "2,880.31," the correct amount. However, the amount spelled out was "two thousand eight hundred and 31/100"—$80 less than the correct amount.

On Wednesday, Nov. 26, at 9:46 a.m., the plaintiff sent an e-mail to the bookkeeper stating that she had been unable to deposit the check because of the inconsistency and that she was therefore entitled to waiting-time penalties.

Just after midnight on Thursday, Nov. 27—Thanksgiving Day—the bookkeeper responded in an e-mail, "No check has been refused or returned, so we are unable to confirm it was not honored upon presentation to the bank."

The plaintiff responded that she had taken the check to the bank, but the bank could not accept it because of the discrepancy. On Monday, Dec. 1, the bookkeeper sent an e-mail in response: "Notwithstanding what your bank told you, the check you were sent is negotiable. If you would like to return the check to the office, we will issue you a new one. If you wish to keep the check, we'll issue a second check for $80. We can mail the check or you can pick it up at the office. Let me know what you want to do."

The plaintiff replied that the bank was not able to accept a check with two different amounts on it and that she was out of state but had mailed the check to the firm.

The bookkeeper mailed a corrected check for $2,880.31 to the plaintiff on Friday, Dec. 5, 2014.

The plaintiff filed a complaint with the labor commissioner seeking, among other relief, waiting-time penalties for the delay in receiving the corrected check.

The hearing officer found that the plaintiff was entitled to the penalties for the time between Nov. 18 and Dec. 5 and awarded her $4,250, or her $250 average daily wage multiplied by 17 days.

The law firm sought review of the administrative decision in the Superior Court, which affirmed the $4,250 award. The firm appealed.

Appeals Court Reduces Award

The appellate court affirmed the award of waiting-time penalties but concluded that the plaintiff was entitled to payment for nine days, not 17. The award was reduced to $2,250.

The appeals court first ruled that the 72 hours did not begin to run when the plaintiff sent her initial e-mail after work hours on a Friday, although it did not decide whether it began on Saturday, Nov. 15, when the defendant's bookkeeper had read the resignation e-mail, or at the start of business on Monday, Nov. 17. Based on either of these dates, the court said, the Nov. 18, 2014, check was timely.

The court further concluded that the defendant's initial mistake in writing the check was inadvertent, not purposeful. It noted that the statute requires that the failure to pay be intentional.  

However, the law firm delayed until Dec. 5 in sending the plaintiff a corrected check, even though the plaintiff told the bookkeeper by e-mail on Wednesday, Nov. 26, that she had been unable to deposit the check because of the discrepancy. The court therefore concluded that the plaintiff was entitled to waiting-time penalties for the nine-day period between Nov. 26, when the defendant had notice of the error, and Dec. 5, when it sent the corrected check.

Nishiki v. Danko Meredith PC, No. A147733 (Aug. 1, 2018).

Professional Pointer: If the employer in this case had immediately stopped payment on the first check and sent a second, corrected check when the plaintiff informed the bookkeeper of the error, it would not have been liable for any penalties.

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.