Labor Code Section 212 contains peculiar rules regarding paychecks.
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PAYROLL LAW UPDATE
Paying Wages Drawn On Out-Of-State Banks Violates Labor Code
By Christopher W. Olmsted, Esq.
A recent ruling in a Federal District Court in northern California serves as a reminder regarding the particular—and peculiar—rules regarding payment of wages in California.
The case is titled Solis vs. The Regis Corporation. The Chicago-based company, which owns Supercuts, issued paychecks to California employees drawn off of a bank located in Chicago.
That payroll practice led to an employee class action.
California Labor Code section 212 provides: “(a) No person, or agent or officer thereof, shall issue in payment of wages due, or to become due, . . . (1) Any . . . check . . . unless it is negotiable and payable in cash, on demand, without discount, at some established place of business in the state, the name and address of which must appear on the instrument …”
The District Court ruled that issuing the paychecks from a Chicago bank violated Labor Code section 212 because it was not a bank with a branch in California.
Apparently some employees were not able to cash the checks without paying a fee.
The court found that Labor Code penalties of $100 to $200 per paycheck per employee could be imposed.
Employers—especially those headquartered out of state— are urged to review payroll practices to ensure compliance with Labor Code section 212.
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This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2008 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.
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