Retirees Have Standing to Assert Statutory Wage Claims

In McLean v. State of California, et al., Case No. S221554, published August 18, 2016, the Supreme Court of California held that Labor Code sections 202 and 203, which govern prompt payment of an employee’s final wages, apply to employees who retire.

The State of California was sued by a former deputy attorney general who retired and allegedly did not receive her wages as provided under sections 202 and 203. Under section 202, an employee’s final wages are due at the time he or she quits, or within 72 hours of quitting if the employer received less than 72 hour notice. Section 203 specifies the waiting time penalties for willful failure to comply with the payment deadlines. The former employee sued on behalf of herself and a class of former state employees who, having retired or resigned, allegedly did not receive their final wages within the statutorily mandated time period. The trial court sustained a demurrer as to all claims of the plaintiff and class without leave to amend. The Court of Appeal reversed the decision and the California Supreme Court granted review.

The Supreme Court held that the statutory language, which states that the prompt payment provisions apply to employees who “quit” encompasses those employees who retire. After a lengthy discussion of both the plain meaning of the statutory language, the legislative history, and public policy in favor of prompt payment of final wages, the Supreme Court rejected the State’s argument that retirees were outside the scope of sections 202 and 203. After also determining whether the State of California is the proper defendant was a fact question, the court affirmed the Court of Appeal’s conclusion that an employee who retires may assert a claim under sections 202 and 203.

McLean is a reminder that employers who do not observe the technical requirements of providing an employee final wages upon separation from employment subject themselves to significant liability for wages due and waiting time penalties. Those requirements are not relaxed simply because an employee separates due to retirement.

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August 22, 2016