(Source: Ogletree Deakins Law Firm by Michael J. Nader, Kyle A. Wende, and Zachary V. Zagger – April 26, 2023)
On March 29, 2023, the California Supreme Court “put the final nail in the coffin” of an employee’s claim that California Labor Code Section 204 requires employees to be paid on weekends.
The California high court declined to review the case Parsons v. Estenson Logistics, LLC, in which an employee had sought to pursue claims under California’s Private Attorneys General Act (PAGA), alleging he was consistently paid two days late each week because his employer paid wages due on Saturday on the following Monday. The move leaves in place a decision by the Third District Court of Appeals that holds “when weekly-paid wages are due on a weekend or holiday, they may be paid on the next day that is not a holiday.”
Robert Parsons, a driver for Estenson Logistics, LLC, sued his employer under the PAGA on behalf of himself and other drivers alleging, among other things, that Estenson’s pay policies violated California Labor Code section 204. This code requires that weekly-paid employees get paid within seven “calendar days” after the end of each weekly payroll period.
Estenson, like so many businesses in California, used a standard Sunday-through-Saturday workweek and paid its California employees every week, meaning the seventh day following a workweek fell on Saturday. Because Estenson’s administrative offices were closed, and banks were not open on weekends, the company issued paychecks the following Monday.
Estenson argued that this schedule is consistent with the State of California’s longstanding position on the subject. The Division of Labor Standards Enforcement’s (DLSE) published guidelines (often called the DLSE Enforcement Manual) have explained for nearly 20 years that wages due on a weekend or holiday may be paid on the next business day. Further, multiple provisions in California’s Civil Code and Code of Civil Procedure, namely Section 12a, extend nearly all legal and contractual deadlines, for performance, when the last days fall on a weekend or holiday, to the next day that is not a weekend or holiday.
In his PAGA action, Parsons argued that a strict reading of Labor Code Section 204 mandated that the deadline to pay his wages was on Saturday and that payroll must be processed by each Saturday. He had argued that Section 12a applies only to civil procedure deadlines, or otherwise does not change the language of Labor Code Section 204, that wages are due within “seven calendar days” of the close of a payroll period.
A trial court judge agreed with Estenson and held that while the DLSE Manual is not binding on the court, it is a reasonable interpretation of California’s law. On appeal, the Third District Court of Appeal also sided with Estenson but focused on the force of Section 12a to extend deadlines, stating that it “cannot adopt an interpretation of section 204(d) that wholly ignores section 12a, and must instead adopt an interpretation that gives effect to both.” Since 12a extends deadlines for “all provisions of law,” the deadline to pay wages may also be extended.
The published Third District Court of Appeal decision means that wages that would be due on a weekend under California labor law, may be paid on the next day that is not a weekend or holiday (i.e., the next Monday or the next Tuesday if that Monday is a state-recognized holiday). While this previously was how the law was being interpreted and applied, it was technically an unanswered question of law. The decision by the Third District Court of Appeal now provides clear guidance for all California employers that wage payment deadlines follow the same procedural rules as any other legal deadline.