Claims for violations of employment laws must be filed within the time limits mandated by laws called statutes of limitations. These laws establish deadlines for filing lawsuits against an employer for various kinds of violations. In this blog, I discuss the statutes of limitations that pertain to the most common “wage and hour” claims. The term “wage and hour” is shorthand for those claims relating to wages, meal and rest breaks, the reimbursement of expenses, proper record keeping, and a number of other basic benefits of employment mandated under California law.
Our clients are often surprised by how long we are able to “reach back” for unpaid wages, for interest on unpaid wages and for certain kinds of valuable penalties the law imposes on employers who fail to follow the law. For many wage and hour claims, we can reach back four years from the date we file a lawsuit. Because the right to be paid wages timely and correctly is a fundamental right, the statutes of limitations governing wage and hour claims in California are fairly generous.
How far would you be able to reach back for your unpaid wages if you worked for a company from January 1, 2016 through December 31, 2018, and then filed a lawsuit for unpaid minimum and overtime wages one year after you resigned (12/31/2019)? By including a claim under California’s Unfair Competition Law (Business and Professions Code § 17208), you would be permitted to reach back four years from the date we filed the lawsuit. That covers the entire time you worked for the company!
Let’s look at specific kinds of wage and hour claims and how their statutes of limitations work.
Claims for Unpaid Wages, Including Minimum Wages, Overtime Wages and Off-the-Clock Wages
Claims for unpaid, underpaid and late wages are governed by the California Labor Code, including Labor Code §§ 200, 201, 202, 203, 204, 510, 1182.12, 1194, 1194.2, 1197.5. Together, these provisions control how and when wages must be paid to a nonexempt employee. (Please see my blog on exempt and nonexempt employees for a full explanation of the concept of exemption under California law.)
California Code of Civil Procedure § 338 establishes a three-year statute of limitations for these kinds of claims. We are often able to stretch this period to four years under California’s Unfair Competition Law (“UCL”). The UCL provides for remedies arising out of an “unlawful, unfair or fraudulent business act or practice” of a business. While damages are unavailable under the UCL, a court can order an employer to make restitution to an employee of wages that were earned but unpaid. Claims under the UCL are governed by the four-year statute of limitations set out in Business and Professions Code § 17208.
If an employee has a binding written employment contract with an employer with respect to the employee’s wage rights, then we can also rely on Code of Civil Procedure § 337, governing written contacts, to reach back a total of four years from the date a lawsuit is filed.
Claims for Meal and Rest Periods Under Labor Code § 226.7
Meal and rest period claims also are governed by Code of Civil Procedure § 338’s three-year statute of limitation for actions arising out of the violation of a statute. Like claims for unpaid minimum or overtime wages, claims for missed meal and rest periods also are deemed to be claims for unpaid wages. In Murphy v. Kenneth Cole Productions, Inc. the California Supreme Court expressly recognized that meal and rest periods are a type of premium wage. Furthermore, claims for meal and rest periods are subject to restitution under the UCL and, therefore, to its four-year statute of limitations.
Claims for Waiting Time Penalties Under Labor Code § 203
California Labor Code § 203 states, “If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 201.6, 201.9, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.”
Although Labor Code § 203 refers to a “penalty,” the California Supreme Court has determined that such claims are subject to a three-year statute of limitations governing wages and not the one-year statute of limitations controlling claims for penalties. Pineda v. Bank of America, NA 50 Cal.4th 1389 (2010) In the same case, however, the Supreme Court found that claims for waiting time penalties are not subject to restitution under the UCL. Therefore, the four-year statute of limitations under the UCL does not apply to these claims.
Claims for Penalties Under Labor Code § 226
Labor Code § 226 provides for the imposition of penalties (up to $4,000) against an employer who knowingly and intentionally fails to include certain information on pay stubs, including the number of hours worked and the rates of pay applied to those hours. As a penalty, claim under Labor Code § 226 are governed by the one-year statute of limitations of Code of Civil Procedure § 340.
Claims for Unreimbursed Expenses
Labor Code § 2802 states in part that an employer must “indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties…” California courts have determined that claims for unreimbursed expenses are governed by a three-year statute of limitations for claims arising under a statute. Furthermore, under the UCL, an employee may reach back four years to obtain the restitution of unpaid business expenses.
For most wage and hour claims, we are able to reach back four years in time under the UCL. As the example above shows, even when an employee has not been employed for a year or more, their right to obtain unpaid wages from a former employer can survive.
Knowing this can help the worker who is afraid to bring a lawsuit while they are searching for a new job. Job applicants do not want to have to explain to a prospective employer that they are suing their last employer for violations of California’s wage and hour laws.
Many of our clients come to us after they have secured a position at a new company. This can make a lot of sense. Suing a former employer for wages can help a worker obtain wage justice and close a chapter in their lives in a positive way. Nothing feels quite like cashing a settlement check.