Although California doesn’t require employers to provide severance pay to their employees by default, if your employer shows you the door, they might still have a legal obligation to pay up. Let’s talk about how to make sure your employer pays you every dime you’re entitled if you’ve just been handed a pink slip.
What is severance pay?
Severance pay is the compensation paid by an employer when they terminate a worker’s employment. It’s often part of a complete severance package that includes a lump sum of money and a limited continuation of benefits.
Severance Pay California Law
California state law doesn’t require employers to offer severance pay, but California state law does require employers to honor their contracts. If you are fired, laid off or find your position cut, check your contract.
Even if you don’t think you’re entitled to severance pay, California employers regularly offer severance voluntarily and by contract — so you might be legally entitled to severance pay and not even know it. If you’re unsure, check with an experienced contract lawyer or skilled employment attorney.
Other Monetary Entitlements After Termination
If you are laid off or fired, and you don’t have a contractual entitlement to severance pay, you may still be entitled to additional money on top of your expected last paycheck.
Accrued Paid Time Off as Earned Wages
If you’ve worked at a job that offers vacation pay, holiday pay, sick pay and compensation time, you may be entitled to a lump sum payment for any accrued compensation depending on your contract as well. Plus, regardless of contractual entitlements, California’s labor code guarantees you compensation for all earned wages. You might assume that exclusively means your hourly wage or normal salary, but it also includes other compensation too.
Employees of California businesses should be aware that paid time off is considered an earned wage in our state. Earned paid time off can’t expire. Don’t let your employer try to tell you that paid time off is a “use it or lose it” situation in our state. It’s not. Paid time off is definitively an earned wage.
Think of it this way — if you get four hours of paid time off every paycheck, you already earned that paid time off. That means that you’re entitled to it, even if you’re fired. Earned paid time off isn’t a “gift,” it’s part of your earned wages that come in exchange for your labor.
Typically, sick pay is not considered an earned wage. If you’re unsure of what types of compensation are viewed as earned wages in California and what types of compensation you may be contractually entitled to, please feel free to consult with one of our California contract and employment attorneys.
California “Waiting Time” Penalties
If your employer terminates your employment, they have 72 hours to pay your final wages. In section 203 of the California labor code, it requires employers to pay employees all earned wages on time. If they fail to meet the deadline, they must also pay you the equivalent of a full day’s wages for every day that the final payment is delayed. This “waiting time” entitlement lasts for 30 calendar days. You’re under no obligation to let a delay slide.
These penalties are owed to you and if they don’t live up to their responsibilities as an employer in our state, we can help you recover the compensation you legally deserve.
Sales Commissions as Earned Wages
The California labor code also requires your employer to pay you for any earned commission. This means that if you’re a salesperson and you make a substantial sale, your employer can’t just lay you off and keep the commission for themselves. Commissions are considered an earned wage. If all commissions aren’t paid to you in your final check, you have grounds for a lawsuit. That is your money, and you’re entitled to it.
Earned Bonuses
Although holiday bonuses can be withheld from your final payment, performance-based bonuses are considered earned wages. Consequently, your employer must pay you all performance-based bonuses in your final paycheck. Earned bonuses are non-discretionary. Your employer can’t withhold a bonus awarded to your through a past performance review. You earned that. If they try to withhold this money, reach out to us. We can get you the compensation you deserve.
Unemployment Insurance Entitlement
California employers are required to purchase unemployment insurance with only rare exceptions. While unemployment insurance entitlement can become very tricky and some employers go out of their way to depict a fired employee as ineligible, they must purchase this.
If you’re terminated from your position, you can file an unemployment insurance claim. Depending on your employer’s response to the state about your claim, your benefits may be approved or denied. If they are denied and you believe your employer is deliberately falsifying the characteristics of your termination, you may have grounds for a lawsuit.
Do You Need an Experienced Contract & Employment Attorney?
LloydWinter P.C. excels at employment disputes like those that arise by an employer not paying their terminated employees every last cent that California law dictates you are owed. We didn’t even touch on wrongful termination disputes today, but if you were fired for an unjust reason, please contact us! We can help with that too. We will do everything we can to fight for your legal entitlements.
