The Costly Mistake of Delaying Payday: What Every California Business Owner Should Know

Imagine this: payday is every Friday, but you’re planning a long weekend. You think, “I’ll just process payroll on Monday instead.” You even check with your employees, and they all say they don’t mind the delay. No problem, right?

Wrong. This could be one of the most expensive mistakes you can make as a business owner.

In California, once you establish a payday, you must stick with it. Employees cannot waive their right to timely pay, even if they agree to it. Whether you’re on vacation, out sick, or dealing with any other reason, your obligation to pay employees on time—specifically on their regularly scheduled payday—remains.

Even if your employees seem okay with a late paycheck, delaying payment in California violates timely pay laws, and the consequences can be costly. The penalties depend on several factors, including whether the delay was accidental or intentional, whether it’s a repeat offense, how long the employee had to wait, and whether they are still employed.

For a first-time accidental violation, penalties typically start at $100 per employee. If it happens again, or if the violation was intentional, the penalties increase and include a percentage of what’s owed.

The costs skyrocket if an employee has left the company and hasn’t been paid according to the final paycheck timelines. In such cases, you could owe them their average daily rate of pay for every day they had to wait, up to a maximum of 30 days. This applies to both late payments and underpayments and includes weekends and holidays.

Ensuring employees are paid accurately and on time is crucial. At LevelUp Pros, we help our clients standardize their payroll processes, comply with state labor laws, and ensure timely payments. If you’ve underpaid or paid someone late in the past, we can evaluate your process, calculate any penalties, and help you minimize liability.

If you’d like an audit or review of your current payroll system, feel free to reach out to us at LevelUp Pros. We’ll help you identify red flags, improve efficiency, and ensure your employees are happy, all while reducing liability for your company. Consider us your go-to resource for payroll, HR, and benefits.