“SB 940, effective January 1, 2009, provides relief to staffing agencies.”
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WAGE AND HOUR LAW UPDATE
New Law Modifies
Temporary Agency Employee Paydays
Companies Hiring Temps
Should Confirm Compliance
By Christopher W. Olmsted
California law requires that all wages be paid twice during each calendar month, that wages be paid immediately upon discharge, and that wages be paid within 72 hours if an employee quits, with certain exceptions.
As we saw in the California Supreme Court’s 2006 ruling in Smith v. L’Oreal, (reported here) the failure to timely pay a final check upon the completion of a temporary assignment creates Labor Code liability, including up to one month of extra pay as a penalty. Some commentators interpreted the Court’s ruling to mean that a final paycheck was immediately due temporary employees at the end of an assignment even if future temporary assignments were anticipated (i.e., where the employee was not “terminated” in the traditional sense).
The California Division of Labor Standards Enforcement (DLSE) took the position that if there is a return date within the pay period and the employee is scheduled to return to work, the wages may be paid at the next regular pay day. While the labor agency’s interpretation was helpful, staffing companies were left with uncertainty because the California judiciary has often disregarded the DLSE’s views.
SB 940, effective January 1, 2009, provides relief to staffing agencies. The bill adds Labor Code Section 203.1. The new law requires agencies to pay staff on a weekly basis. If a temporary assignment ends before the next regular weekly payday, the final paycheck is not immediately due, but rather it is due on the next weekly payday.
For example, if the staffing agency’s regular payday is Friday, and the employee’s assignment ends on Wednesday, the paycheck is not due until the Friday on the following week.
Note that this new law applies only to staffing agencies and their temporary employees, as defined in the statute. Other companies must follow the traditional rules, even for short term employees. Employers should seek legal counsel regarding the DLSE’s enforcement opinion.
There are exceptions in the new law. First, where an assignment lasts longer than 90 consecutive calendar days, the staffing agency need not pay weekly. But then the regular final pay rules would apply.
Other exceptions apply to certain day laborers and labor dispute replacements. Such employees must be paid on a daily basis.
Where the temporary employee quits or is discharged, the traditional final pay rules apply. Pay must be provided within 72 hours of notice of a quit, or immediately upon discharge.
Certainly staffing companies will want to plan for compliance with the new law beginning January 1, 2009. Companies who hire temporary employees should ensure that their staffing agencies comply with the new law, because the agencies and the client companies could be deemed joint employers for compliance purposes.
More Legal Update articles.
Download entire September Legal Update in PDF format.
This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2008 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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