Let's say you work at a company, where the employer ends up not paying you correctly and owing you a significant amount of money. Should you necessarily quit that job as soon as possible? 
- In some cases, for strategic reasons it's better not to quit or at least not to quit that job right away. Instead, you should consider filing a wage claim or a lawsuit for unpaid wages. In the likely event the your employer retaliates against you for filing that case, you will also have a retaliation and wrongful termination case against them. This will provide you with additional leverage to negotiate a more favorable settlement or do better at trial if your case goes that far. On the other hand, if you quit, you will obviously not have any type of wrongful termination case, because no termination took place.   

Of course, your decision whether to quit and when will depend on other personal factors, including the prospects of you taking a new and better job, whether you can temporarily hold on to two jobs, and other factors. However, if for instance you are working from home, quitting will probably not be that urgent and you should at least stick around till your employer learns about your claim to "give them some time" to retaliate against you. 

If you are considering bringing a case against your employer for wrongful termination, discrimination, or any wage violations, cashing your final paycheck will generally not hurt your potential case in any way, unless you sign a document that actually states that you agree that the employer doesn't owe you any other wages and that you release any and all claims you might have against that employer.  

A tricky situation occurs when an employee signs a severance agreement and general release of all claims in exchange for accepting a certain amount of money from the employer as severance, but while still not being paid correctly his regular wages. Under California law, an employee cannot waive by agreement his right to wages earned. Under Labor Code section 206.5 employers and employees may not enter into agreements that waive the employee’s right to receive wages that are undisputed. Labor Code section 206.5 also provides that an employer may not require “as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.” Therefore, unless the severance agreement specifically provides that the severance paid also covers wages which should have but not have been paid, the employer will still be liable for those wages, even if they pay severance, and even if that severance is significant.    

A typical mistake that employers make is assuming that by having a terminated employee sign a general release form and severance agreement, which doesn't contain specific language concerning unpaid wages, they effectively settle any and all potential disputes. While claims for discrimination, wrongful termination, harassment, retaliation and similar claims are waived by this type of agreement, as noted above - an employee will still likely be able to make a claim for wages earned but not paid correctly. 

As an employee who is about to be laid off or terminated, you may find yourself in the following dilemma: an employer offers you a certain amount of severance in exchange for your signing a severance agreement and release of all claims. At the same time, you believe you are owed earned bonus or commissions that are to be paid at a future date. The employer disputes your entitlement to those additional wages, and at the same time pressures you into signing the severance agreement sooner than later, if you want to receive that severance. The question is - if you accept severance and sign the severance agreement, can you still bring a claim for unpaid bonus or commissions, if you choose to do so?   

California law provides for significant and important protection to employees in these types of situation.  California Labor Code section 203 states that an employer has to pay all wages earned in full and cannot require signing of a waiver as a condition of paying those wages. Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal.App.4th 338, 365. This effectively means that when you sign any type of severance release, you are not waiving your claim to any earned and unpaid wages, and you can bring a claim for unpaid wages, earned commissions and bonuses to which you believe you are entitled to in even after you sign that severance agreement. Of course, this only applies to earned, performance based extra wages and not to discretionary bonuses. 

Many employees and employers are not aware of their obligation to set a commission plan in writing. Effective California Labor Code section 2751 (enacted back in 2013) requires employers to provide written commission plan agreements to all employees who perform services in California and whose compensation involves commissions. The agreement must  explain the method by which commissions shall be computed and paid. The commission plan must also be signed by the employer and the employer must obtain a sign receipt from each employee.  

This law incorporates the definition of commissions from California Labor Code section 204.1 which  defines commissions as "compensation paid to any person for services rendered in the sale of such employer's property or services and based proportionately upon the amount of value thereof."  The types of payments excluded from this definition are productivity bonuses, temporary incentive payments and bonus and profit sharing plans, unless there has been an offer by the employer to pay fixed percentage of sales or profits as compensation for work to be performed. 

Clearly, the purpose of this law is to reduce the chances of vagueness and misunderstanding between employers and commissioned employees regarding their compensation structure and create a binding, enforceable contract.  ​

The video below explains a key difference between bonus payments and commission, and why this difference is important. 

In the recently decided case Kao v Joy Holiday, the appellate court confirmed that a worker waiting for his H1B visa to be approved / processed must be treated as a regular employee and be paid accordingly. In that case, the employer claimed that Kao was just a trainee during the 11 months of working before having his work visa approved. The court disagreed. The court stated: employee is defined under the FLSA as “any individual employed by an employee and is broadly construed to encompass virtually “all workers not specifically excepted.” Patel v. Quality Inn South (11th Cir. 1988). The FLSA protects undocumented aliens, making an initial lack of a work permit irrelevant. Only a person receiving training but no salary, and whose work serves only his or her own interest, is a non-employee trainee under the FLSA. Walling v. Portland Terminal Co. (1947).  

California law is in agreement on this point with FLSA (Federal Labor Standards Act), applying an even broader definition of employee than does the FLSA. Martinez v. Combs (2010). An employee is “any person employed by an employer,” an employer is one who “employs or exercises control over the wages, hours, or working conditions of any person” and “employ” means “to engage, suffer, or permit to work.” “To employ, then, . . . has three alternative definitions. It means: (a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship.” The definitions are sufficiently broad to encompass a proprietor who employs a worker by contract, permits work by acquiescence, or suffers work to be performed by a failure to hinder. A proprietor who knows that persons are working in his or her business without having been formally hired, or while being paid less than the minimum wage, clearly suffers or permits that work by failing to prevent it, while having the power to do so.”

Thus, if you report to work prior to receiving a work permit from the immigration authorities, you have the same regular employee rights to compensation, including minimum wage, overtime, meal break and rest break and any other rights and protections as available under the law to all other employees. You may find below a link to download the full Kao v Joy Holiday decision. 

Many employees and employers believe that workers who work illegally or whose residence or immigration papers are otherwise not in order and do not allow them to lawfully work in the us cannot enforce their employment rights, such as filing claims for discrimination, wrongful termination, unpaid wages and other workplace violations. This is not correct.

​Like with most other civil rights, immigration status has no relevance to a person's ability to make a claim against his or her employer.  Under California law, “all protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.” Cal. Lab. Code § 1171.5(a). The California courts has emphasized that California “statutes leave no room for doubt about this state’s public policy with regard to the irrelevance of immigration status in enforcement of state labor, employment, civil rights, and employee housing laws.” Hernandez v. Paicius (2003).  

Therefore, any employer who thinks that he can get away with discriminating, harassing, retaliating or not paying correct to an employee whose visa has expired or wasn't approved risks being sued by that employee in exactly the same way as he would be by a US citizen or a permanent resident. It's important to remember the following distinction: it's true that it's illegal to hire or be hired for work without proper employment authorization. However, if an employee who is not authorized to work in the US was hired to work, then he has virtually the same rights as any other employee. 

Generally, deductions from commissions are permitted when (1) the deductions are tied to that employee’s sales rather than general business expenses, and (2) the employee agrees to the deductions by contract. Aguilar v. Zep (2014). Even if such a contract exists, an employer cannot shift the cost of doing business to an employee. Where routine business expenses that shift the cost of doing business to the employee are deducted from the employees’ commission-based compensation, the fact that the employee consented to the practice is irrelevant and does not make such deductions legal.  

The above principle was first presented by the California Supreme Court in Kerr’s Catering case. There, the employer promised a commission of 15 percent to its sales people on all sales in excess of a certain minimum, where the employees sold food items from its lunch trucks. At the same time, the employer deducted cash shortages resulting from the failure to properly charge for the sold items as it routinely happens at jobs that involve many smaller transactions per day. The court held that those deductions were improper, observing that “some cash shortages, breakage and loss of equipment are inevitable in almost any business operation” and should be borne as a “business expense,” rather than deducted from a promised commission. This holding was applied to managerial employees in Quillian v. Lion Oil Company (1979). There, the court found that commissions similarly calculated on sales volumes and reduced by cash and merchandise shortages improperly placed the “burden of losses” on the managers and thus violated California Labor Code section 221 and other law, even though the managers had executed written contracts agreeing to this method of salary calculation.

More recently, in the Hudgins case, the court addressed an employer policy that promised salespersons commissions based on completed sales, but deducted on a pro rata basis returned merchandise that could not be traced to a particular sale or salesperson. The court found the policy “calls for deduction from earned commission wages of all sales associates a sum of money representing what would otherwise be business losses,” The court explained that this was improper under Labor Code section 221.

As the Hudgins court noted, the Legislature has recognized the employee’s dependence on wages for the necessities of life and has, consequently, disapproved of unanticipated or unpredictable deductions . . . .”  The court further stated that by enacting Labor Code section 221, and retaining it as interpreted by the courts and [the Industrial Welfare Commission], the Legislature has prohibited employers from using self-help to take back any part of ‘wages theretofore paid’ to the employee, except in very narrowly defined circumstances provided by law. In cases such as Kerr’s Catering, Quillian and Hudgins, the courts’ findings were based on the impressibility of transferring to the employee, by way of wage deductions, the financial burden of business expenses and accidental losses that otherwise would be borne by the employer. 

Suppose you resign from your job, and for whatever reasons your employer refuses to properly pay you for your last days of work, or your last paycheck doesn't include all wages do. May be your employer owes you as little as a couple of hundred dollars or a few thousands dollars, but you are still understandable upset, because you worked and you expected to b paid for that time. What is the best way to to recover that relatively small amount without getting involved in a legal process that's too complicated or costly? 

The first step should be sending a formal, firm, but at the same time courteous letter requesting a payment to be made within a limited amount of time. You can write that letter yourself, or - if you believe that your former employer will be more likely to take your request more seriously if the letter comes from a lawyer - you can hire an attorney for that limited purpose of writing a letter, which shouldn't cost very much.   

If the employer refuses to pay your final wages or ignores you letter, your next step should be filing a claim for unpaid wages with DLSE. The DLSE website is very informative and contains all the necessary information regarding regarding how to file a wage claim in California. The filing is free and a relatively simple process.

Most employers who owe a small amount to an employee will much prefer paying it shortly after they are notified of this filing by the Department of Labor, because even their initial legal fees to their lawyers for defending that claim will likely exceed the small amount they owe you, except in those cases where the employer dislikes you so much that they are willing to keep paying to fight you just for the sake of fighting.