Prompt Payment Requirements That Apply to Employees Who Quit Also Apply to Employees Who Retire

California’s Third District Court of Appeal recently concluded that the final wage payment requirements and waiting time penalties prescribed by Labor Code sections 202 and 203 apply not only to employees who quit, but also to employees who retire.  (McLean v. State of California et al., August 19, 2014, C074515.)


Janis McLean ("McLean") worked as a deputy attorney general for the California Attorney General’s office until her retirement in November 2010.  After her retirement, McLean alleged that she did not receive the requisite prompt payment of her final wages.  On this basis, she  brought an action against the State for the failure to comply with the prompt payment requirements of Labor Code section 202.  She also sought waiting time penalties under Labor Code section 203.

The State contended that McLean’s complaint failed to state a cause of action because McLean retired, rather than “quit” – which is the precise word used in the statute.  The trial court agreed, and McLean immediately sought appellate review.

On appeal, McLean argued that the term “quits” as used in sections 202 and 203 was intended to include an employee who “retires.”  McClean reasoned that both terms refer to a “voluntary separation from service,” and noted that an employee must essentially quit before he or she can retire. 

The State, on the other hand, maintained its position that a “quit” is different from a “retirement.”  In support of its position, it pointed to the following language from section 202, subsection (c): “when a state employee quits, retires, or disability retires…”  The State argued that the Legislature’s inclusion of the word “retires” in addition to the word “quits” in that subsection suggested that the Legislature knew how to distinguish between “quit” and “retire” when it intended to do so.


The Court of Appeal first applied the principles of statutory interpretation.  First, it looked to the plain meaning of the statute.  Because the plain language did not definitely resolve whether an employee who “quits” includes an employee who “retires,” the Court turned to the legislative history.  It concluded that there was nothing in the legislative history to suggest that the Legislature intended to exclude employees who retire from the prompt payment requirements. 

The Court then applied a specific canon of statutory construction.  It explained that “[w]here different words or phrases are used in the same connection in different parts of a statute, it is presumed that the Legislature intended a different meaning,” but acknowledged that “[t]he inference… is stronger when the different parts of the statute are enacted at the same time.” 

The Court noted that subsections (b) and (c) of section 202 were added to the Labor Code after 202(a) and 203.  Initially, sections 202(a) and 203 only applied to private sector employment, where the distinction between “quits,” “retires,” and “disability retires,” is generally unnecessary.  In enacting sections 202(b) and 202(c), the Legislature sought to extend the protections of 202(a) and 203 to state employees.  It would not have made sense for the Legislature to include retirees and disability retirees in sections 202(b) and 202(c) if 202(a) did not apply to employees who retire.

After applying the principles of statutory construction, the Court noted that even those principles must yield to the purpose and intent of a statute.  The Court explained that the statutes governing the payment of wages to employees in California are to be liberally construed in favor of the employee.  On this basis, the Court held that an employee who “quits” in Labor Code section 202(a) and section 203 includes an employee who quits to retire.


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