Employers take note! A Court held an employer’s ignorance of a higher minimum wage set by local ordinance can constitute a “willful failure to pay”, resulting in waiting time penalties. California courts are permitted to award an employee a waiting time penalty (of up to 30 days’ worth of the employee’s wages), if the employer “willfully fails to pay” the employee her full wages immediately (if discharged/terminated), or within 72 hours (if she quits)¹. A waiting time penalty can also be awarded when the employee’s final paycheck is for less than the proper wage (minimum wage, prevailing wage, or living wage).
In Diaz v Grill Concepts Services², the appellate court found that the restaurant’s failure to pay the required living wages to terminated employees amounted to a willful failure to pay, justifying waiting time penalties. The restaurant was located in a special zone by the airport that was subject to an ordinance requiring a living wage that was higher than California’s minimum wage. What constituted a living wage was determined by the ordinance and when the ordinance was amended, the required wage increased. The restaurant was sued by terminated employees who sought waiting time penalties.
A failure to pay is willful if the employer knows what it is doing and intends to do what it is doing³. The restaurant’s HR director suspected it might be underpaying its employees as she saw a newspaper article that referenced a higher wage. The restaurant made one inquiry to try to determine the requisite wage, but was told that an amendment to the ordinance was “in process.” The restaurant purportedly took no further action beyond periodically searching the internet to see if the ordinance had been amended. The Court found the employer’s ignorance coupled with a failure to determine the wage was a willful failure to pay, justifying waiting time penalties.
A link to UC Berkeley Labor Center’s Inventory of Minimum Wage Ordinances is here. According to the Berkeley Inventory, some municipalities with living wage ordinances include: Albany, Berkeley, Davis, Emeryville, Fairfax, Hayward Los Angeles, Los Angeles Airport Hospitality Enhancement Zone, Marin County, Oakland, Oxnard, Pasadena, Petaluma, Port Hueneme, Port of Los Angeles, Port of Oakland, Richmond, Sacramento, San Diego, San Francisco, San Jose, San Leandro, San Mateo County, Santa Barbara, Santa Clara County, Santa Cruz, Santa Cruz County, Santa Monica, Santa Monica Hotel Worker Living Wage, Sebastopol, Sonoma, Sonoma County, Ventura, Vernon, Watsonville and West Hollywood.
¹California Labor Code section 203.
²Diaz v Grill Concepts Services, Cal. Ct. App. 2nd District, 05/24/18 Case No. B280846.
³In re Trombley (1948) 31 Cal.2d 801, 807.