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I signed a general release claim in exchange pay after being

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I signed a general release...
I signed a general release claim in exchange for severance pay after being terminated. My severance agreement noted that I will receive my final paycheck immediately, however after I signed my agreement, my paycheck was not given to me but was sent to me in the next payroll cycle, 10 days later. I'm in CA and aware that I can file a wage penalty claim with the Dept of Labor, but I want to make sure there's nothing that would invalidate this claim. My wages was not in dispute, my former employer just didn't want to request an immediate check upon my termination. If I file a claim with the Dept of Labor and it some how is not valid, will that be a breach of my release agreement, will I have to pay back the severance pay? Can I ask my former employer to pay me the 10 days worth of wages instead of filing a claim through the Dept of Labor? I do not want to obtain a lawyer for my case, as I am aware if I do not go through the Dept of Labor.
Submitted: 1 year ago.Category: California Employment Law
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3/23/2016
California Employment Lawyer: Attorney2020, Lawyer. replied 1 year ago
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California Employment Lawyer: Attorney2020, Lawyer. replied 1 year ago

It truly depends on the severance agreement. The request for 10 days worth of penalties seems to be the best route. I cannot comment upon whether or not the company can revoke and claw back the severance monies. You will have to look to he agreement to confirm whether or not the employer has the right to revoke the agreement upon a labor claim filing. As you stated, employees in California are due wages the day of termination.

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Customer reply replied 1 year ago
Your answer does not help me. Here are parts of the agreement that I'd like you to review so you can better answer my questions.
2. Salary and Vacation Pay. On the Termination Date, the Company will pay you $X (less all applicable withholding taxes and other deductions). This amount represents all of your salary earned through the Termination Date and all of your accrued but unused vacation time or PTO. You acknowledge that the only payments and benefits that you are entitled to receive from the Company in the future are those specified in this Agreement.
3. Severance Pay. Although you otherwise would not have been entitled to receive any severance pay from the Company, the Company will continue paying you an amount equal to your current base salary, less all applicable withholding taxes, for two weeks in accordance with the Company's standard payroll procedures, starting after you sign this Agreement. The aggregate amount of these severance payments is equal to $X. If you breach any provision of this Agreement, you understand that no additional severance payments will be made.
5. Release of All Claims. In consideration for receiving the severance benefits described above, to the fullest extent permitted by law, you waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns and employee benefit plans with respect to any matter, including (without limitation) any matter related to your employment with the Company or the termination of that employment, including (without limitation) claims to attorneys' fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title V Il of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement or any claim to indemnification under Section 2802 of the California Labor Code.
6. Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
Customer reply replied 1 year ago
If you cannot answer my question, please refer this to another expert you can. Thank you.
California Employment Lawyer: socrateaser, Lawyer replied 1 year ago
socrateaser
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Hello,

Different contributor here. I a a member of the State Bar of California, and the Bar of the U.S. District Court for the Central District of California. Please permit me to assist. You asked:

My wages was not in dispute, my former employer just didn't want to request an immediate check upon my termination. If I file a claim with the Dept of Labor and it some how is not valid, will that be a breach of my release agreement, will I have to pay back the severance pay?

A: There is a split of authority on the question that you have asked. A California District Court of Appeals, in 1946 ruled that an employee could waive immediate payment of wages at termination, in favor of a release agreement -- however, another District Court of Appeals, in 2010 disapproved of that prior opinion, and declared immediate payment of final payment nonwaivable. Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal.App.4th 338. In my view, the more recent opinion is likely to be enforced in favor of the one from 60 years ago. But, until the California Supreme Court rules on the issue, there is no absolutely definitive answer.

Can I ask my former employer to pay me the 10 days worth of wages instead of filing a claim through the Dept of Labor?

A: Yes. If an employer were to claim the right to contractually obtain a waiver of the employee's right to waive immediate payment of wages at termination, then that same employer could not logically claim the employee has no right to negotiate to receive the 10-days of waiting time penalty in the same agreement.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, the website retains your entire payment, and I receive nothing for my efforts in your behalf.

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California Employment Lawyer: socrateaser, Lawyer replied 1 year ago

Errata: After reviewing the Singh case, previously cited, I realize that it was the same District Court of Appeals that overruled its prior opinion rendered in 1946. Therefore, you cannot waive your right to immediate payment under current law, regardless of the release agreement between you and your employer.

My apologies, for any confusion.

I hope this better clarifies my original answer. Thanks again for using Justanswer!

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Customer reply replied 1 year ago
I need more clarification and definite answers on whether or not filing a wage penalty will breach my release agreement and if so, does the company have the right to take back the severance money legally? The agreement does not state that they will attempt to the money back, if there's a breach, but I don't know if that is a standard in these types of agreements. Additionally, in writing it mentions I will receive my final pay immediately after signing the agreement, but I was not given a paycheck and told it would just come later (as previously mentioned) so I did not waive any rights to immediate pay. As for your answer to my second question about requesting the wage penalty directly, I understand the answer is yes, but if you can better explain your answer, it would just help me make sure I did not misinterpret anything. Additionally, any ideas on how to ask for this wage penalty addition? I read that the payment should not have wage deductions because it's not "wages", is that also correct? Here are parts of the agreement that I'd like you to review so you can better answer my questions if I'm breaching any part of the agreement.
2. Salary and Vacation Pay. On the Termination Date, the Company will pay you $X. This amount represents all of your salary earned through the Termination Date and all of your accrued but unused vacation time or PTO. You acknowledge that the only payments and benefits that you are entitled to receive from the Company in the future are those specified in this Agreement.
3. Severance Pay. Although you otherwise would not have been entitled to receive any severance pay from the Company, the Company will continue paying you an amount equal to your current base salary for X weeks in accordance with the Company's standard payroll procedures, starting after you sign this Agreement. The aggregate amount of these severance payments is equal to $X. If you breach any provision of this Agreement, you understand that no additional severance payments will be made.
5. Release of All Claims. In consideration for receiving the severance benefits described above, to the fullest extent permitted by law, you waive, release and promise never to assert any claims or causes of action, whether or not now known, against the Company or its predecessors, successors or past or present subsidiaries, stockholders, directors, officers, employees, consultants, attorneys, agents, assigns and employee benefit plans with respect to any matter, including (without limitation) any matter related to your employment with the Company or the termination of that employment, including (without limitation) claims to attorneys' fees or costs, claims of wrongful discharge, constructive discharge, emotional distress, defamation, invasion of privacy, fraud, breach of contract or breach of the covenant of good faith and fair dealing and any claims of discrimination or harassment based on sex, age, race, national origin, disability or any other basis under Title V Il of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act and all other laws and regulations relating to employment. However, this release covers only those claims that arose prior to the execution of this Agreement. Execution of this Agreement does not bar any claim that arises hereafter, including (without limitation) a claim for breach of this Agreement or any claim to indemnification under Section 2802 of the California Labor Code.
6. Waiver. You expressly waive and release any and all rights and benefits under Section 1542 of the California Civil Code (or any analogous law of any other state), which reads as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
California Employment Lawyer: socrateaser, Lawyer replied 1 year ago

I need more clarification and definite answers on whether or not filing a wage penalty will breach my release agreement and if so, does the company have the right to take back the severance money legally? The agreement does not state that they will attempt to the money back, if there's a breach, but I don't know if that is a standard in these types of agreements.

A: The case law that I previously cited unambiguously declares any attempt waiver or release of the right to immediate payment of final wages unlawful. Singh at 362-364 ("There is no provision in the Labor Code allowing an employer to condition the required payment of earned wages upon discharge or upon resignation on the employee's signing of a release or on any other conduct by the employee. In our view, the plain language of Labor Code sections 201 and 202 compels the conclusion that the required payment of earned wages is unconditional.")

The Singh case seems to be entirely consistent with your circumstances: your employer is conditioning final payment upon your signing a release agreement. Singh holds that such a condition is unenforceable.

Let's suppose that you sign the agreement, wait until after all of the severance is paid, and then file the wage penalty claim. The employer will claim that it has a release. You will claim that Singh holds the release unenforceable as to the wage penalty. I'm not the judge at the Labor Commissioner hearing, so I can't give you an absolutely definitive answer. But, it seems to me that you must win this argument.

Let's further suppose that the employer appeals the case to the Superior Court, and further claims that it is entitled to recover the severance pay, because you are in breach of the release agreement. Assuming that the Court holds that the release is unenforceable as to the wage penalty, but that the remainder of the agreement is enforceable, then you win.

Is it possible that the Court could determine that the employer was mistaken about its rights, that it would never have entered into the original severance and release agreement had it known you had the right to the wage penalty? Sure, that's possible. But, the law requires employers to pay final wages immediately upon termination of employment -- so, I can't see how the court would rule that this was an "honest mistake," entitling the employer to rescission. The release agreement is intended to protect the employer from being sued for unlawful discrimination -- not to release the employer from its obligations to follow the requirements of the Cal. Labor Code.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, the website retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

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Customer reply replied 1 year ago
Can you answer this question which was included previously, I read that the (wage penalty) payment should not have wage deductions because it's not "wages", (so the amount should be a gross amount) is that also correct?
California Employment Lawyer: socrateaser, Lawyer replied 1 year ago

Your question has never been addressed by any California Court of Appeals. In IN THE MATTER OF THE APPEAL OF: DARLA KAY MARSH, Case 462002 (Cal.St.Bd.Eq. July 21, 2009), the California State Board of Equalization (BOE), in a non-precedent opinion, determined that the taxpayer was liable for employment taxes on the penalty. However, once again, this is not a precedent decision of the BOE, and even if it were, it's only persuasive authority for a court.

Labor Code Section 203(a) provides: "If an employer willfully fails to pay, without abatement or reduction, in accordance with Sections 201, 201.3, 201.5, 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. [emphasis added]"

The highlighted phrase could easily be interpreted to mean that the employer is penalized by having to pay additional wages (which would be taxable as such); or that the amount of the wages shall be assessed as a penalty (which would not be taxable).

Bot***** *****ne, if you want to be the test case, then you can challenge the payroll tax withholding with the BOE, and if it rules against you, you can petition the Superior Court for a writ of review.

I wish I had a better answer for you -- but, where no answer exists, all I can do is provide the law for your consideration.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, the website retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

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California Employment Lawyer: socrateaser, Lawyer replied 1 year ago

Hello again,

I see that you have reviewed my answer, but that you have not provided a rating. Do you need any further clarification concerning my answer, or is everything satisfactory?

If you need further clarification, concerning this matter, please feel free to ask. If not, I would greatly appreciate a positive feedback rating for my answer -- otherwise I receive nothing for my efforts in your behalf.
Thanks again for using Justanswer!

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California Employment Lawyer: socrateaser, Lawyer replied 1 year ago

Hello again,

I just found a very interesting comment at the Dept of Industrial Relations (DIR) website, which states: "The waiting time penalty is not wages, thus, no deductions are taken from the penalty payment."

What I find interesting is: (1) as previously mentioned, no California court has ruled on this issue, so I don't know how the DIR can make this definitive statement; and (2) since the DIR does make the statement, presumably that is how an administrative law judge (ALJ) reviewing the issue would rule at a Labor Commissioner hearing on a waiting time penalty claim.

This may cause you some confusion, but, to be clear a Labor Commissioner ALJ is not bound by a decision by the Cal. State Board of Equalization (BOE), nor is the BOE bound by a decision of of the ALJ. Consequently, you could obtain an order for the gross amount of the waiting time penalty from the Labor Commissioner, regardless of the BOE's prior decision on the issue.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, the website retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

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Customer reply replied 1 year ago
Thank you for your responses. In one of your replies, you say:
"Let's further suppose that the employer appeals the case to the Superior Court, and further claims that it is entitled to recover the severance pay, because you are in breach of the release agreement."
On what claims would the employer use as a basis for breach of the release agreement if 1) it is unlawful for the employer to attempt to waive my rights to immediate payment of wages & 2) the "delayed final wage payment" occurred AFTER my employment, isn't the release agreement only for claims of events that occurred within my employment, so this claim falls outside of it?
I'd like to recover the wage penalty payment because it is a sizeable amount, but I do not want to incur additional legal concerns if there are any holes in my argument. Do you see any other concerns as to why I would not be able to legally request this wage penalty payment based on all the given information? Thank you.
Customer reply replied 1 year ago
I'm looking forward to getting my concerns covered. Thank you.
Customer reply replied 1 year ago
I believe it's been more than 24 hours, I am still looking for an answer, please refer to me someone who can assist. Thank you.
California Employment Lawyer: N Cal Atty, Attorney replied 1 year ago
N Cal Atty
N Cal Atty, Attorney
Category: California Employment Law
Satisfied Customers: 9,525
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New Expert here.

You quoted the release as stating:

"However, this release covers only those claims that arose prior to the execution of this Agreement. Execution of this Agreement does not bar any claim that arises hereafter,"

Because the claim for late payment of wages arose after the agreement was signed, you are not breaching the agreement by filing a wage and penalty claim with the DIR.

I hope this information is helpful.

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Customer reply replied 1 year ago
As you are the 3rd person responding, is your answer conclusive after reading the entire thread or just to my most precious question? I didnt like the other persons not being able to finish answering/responding to questions related to their expertise!
Customer reply replied 1 year ago
The reason I ask is because my questions arose from several others and ultimately want to be able to pursue the wage penalty with no legal recourse to me as I can't afford to be entangled in it, but want to collect the wage penalty if it's due to me.
California Employment Lawyer: N Cal Atty, Attorney replied 1 year ago

I read the entire thread before I posted my answer.

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