California Employers’ Guide to Unpaid Wages: Compliance, Lawsuits, and Preventing Claims
Introduction
California law protects employees’ rights to be paid fully and promptly for all work they perform. Employers who fail to pay earned wages—including salaries, commissions, and other compensation—can be held liable in court for nonpayment. Labor Code §§ 201, 202, 218.
Legal Standard: Essential Elements
To prove a nonpayment of wages claim, the employee must show:
They performed work for the employer.
The employer owes wages under the terms of employment.
The amount of unpaid wages.
“Wages” include all amounts for labor performed, whether calculated by time, task, piece, commission, or another method. Labor Code § 200.
Scope of Wages
California’s wage laws apply to all employees, from hourly workers to executives. Compensation may include:
Regular pay (hourly, salaried)
Commissions or bonuses
Earned vacation
Nondiscretionary bonuses
Severance pay (if contractual)
All time worked, including “off the clock” or “on-call” time, if the employer knows of the work
Davis v. Farmers Ins. Exchange, 245 Cal.App.4th 1302, 1332 fn. 20 (2016); Hernandez v. Pacific Bell Tel. Co., 29 Cal.App.5th 131, 137 (2018).
Compensable Hours and Employer Control
“Hours worked” include both time when the employee is under the employer’s control and time when the employee is “suffered or permitted to work,” even if not required. Unpaid minutes worked regularly cannot be ignored or deemed de minimis. Troester v. Starbucks Corp., 5 Cal.5th 829, 847 (2018).
Limitations on Wage Deductions
Employers may not make deductions from wages for losses or breakages caused by simple negligence. Wage deductions for business losses are only permitted if the loss is due to dishonesty, willful act, or gross negligence. Labor Code § 221; Hudgins v. Neiman Marcus Grp., Inc., 34 Cal.App.4th 1109, 1118 (1995).
Practical Guidance for California Employers
Employers should:
Keep accurate records of all hours worked and amounts owed.
Pay all wages, commissions, and bonuses on time and in full.
Carefully review pay policies and avoid unauthorized deductions.
Promptly address any wage claims to avoid costly penalties or litigation.
Bottom Line
California strictly enforces wage laws and protects employees’ right to full compensation for all work performed. Employers must pay all earned wages, cannot deduct unauthorized expenses, and must document time and pay accurately to avoid liability.
Citations
Labor Code §§ 201, 202, 218, 200, 221; Davis v. Farmers Ins. Exchange, 245 Cal.App.4th 1302, 1330–32 (2016); Hernandez v. Pacific Bell Tel. Co., 29 Cal.App.5th 131, 137 (2018); Morillion v. Royal Packing Co., 22 Cal.4th 575, 582–84 (2000); Troester v. Starbucks Corp., 5 Cal.5th 829, 847 (2018); Hudgins v. Neiman Marcus Grp., Inc., 34 Cal.App.4th 1109, 1118 (1995).
