When an employer fails to pay wages (as required by Labor Code Section 204) on a regular payday, the employer, under Labor Code Section 210, is subject to a civil penalty for each such missed payday.
The initial penalty for failure to pay wages is $100 per employee per missed payday. So if your company has 25 employees, the potential civil penalty is $2,500.
Civil penalties for subsequent missed paydays are much more severe. The penalty is $250 per employee, plus 25 percent of the amount unlawfully withheld.
Most penalties required by the Labor Code and the Industrial Welfare Commission Wage Orders go to the employees; however, payday penalties go to the state of California. These penalties may be recovered by the Labor Commissioner through a hearing process outlined in Labor Code Section 98(a) or by going directly to the courts.
Labor Code 1194.2 provides for recovery of wages because of nonpayment of the minimum wage. An employee can recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon. The Labor Commissioner may assess liquidated damages based on the current minimum wage multiplied by all unpaid hours in the pay period (except overtime hours).
Failure to pay wages at all can result in hefty fines. The Labor Commissioner can also:
- Issue stop-work orders against employers who fail to comply with final orders against them relating to nonpayment of wages,
- Issue levies against employers bank accounts, and
- Place liens on real and personal property.