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What is the law for final pay and severance?

California employees never know when their job might be in jeopardy, eliminated or they might be dismissed. It is with this in mind that workers are accorded various protections under the law such as final pay and severance. However, there are times when employers might seek to avoid giving employees what they are supposed to receive based on the law and their employment contract. When there is a deprivation of benefits or a breach of contract, those who were affected by this treatment need to know that they have the right to seek compensation through a legal filing.

The law states that employees who lose their jobs are required to receive all the wages they are owed at the time they are terminated. That includes vacation pay that was not used. However, there is no legal basis for employees to receive compensation for sick pay they had accumulated at the time they were dismissed. If there is no agreement in writing for a specified period of employment and the employee quits without notice, the wages must be paid within 72 hours. If there is notice of 72 hours, the wages will be paid at the time the employee quits. Without that 72 hours notice, the wages can be mailed to a specified address.

If the employer does not pay the required wages, they can be penalized continuing wages from the date they were due for up to 30 days. These might not have to be paid if there was a good faith dispute shown by the employer. If there is a dispute, the employer still must pay the wages that are owed and are not subject to dispute. An employer who does not pay what is not in dispute will not be able to use the good faith defense to avoid penalties.

California does not have a law requiring severance pay. The employee needs to know the policy of the employer when it comes to severance. A plan for severance pay is a federal issue and the U.S. Department of Labor oversees it.

Those who have either been dismissed from their job or chose to leave still have certain rights under their employment agreement in the private sector. If there is a dispute, it is important to speak to an attorney about filing a case to be compensated and receive benefits that are owed.

Source: dir.ca.gov, "Final Pay," accessed on Aug. 23, 2016