Paying Semi-Monthly

It seems simple. You work, you get paid. Yet many small businesses are not aware the importance of paying employees on time. California law has protections in place for employees to be paid in a clear manner.

Most California employees must be paid at least twice a month. An employer must establish an employee’s regular paydays before wages are first paid.

The employer must post a conspicuous notice at the place of work or at the office where employees are paid, specifying the regular paydays and the time and place of payment.

If employees are paid semimonthly (twice a month) and the work periods for which they are paid are the 1st through the 15th and the 16th through the end of the month, wages must be paid on the following schedule:

  • Wages earned between the 1st and 15th day of the month must be paid between the 16th and 26th day of the same month.
  • Wages earned between the 16th and the last day of the month must be paid between the 1st and the 10th day of the following month.

Alternative Pay Schedules

If employees are paid on any other schedule the employer must generally pay wages no later than 7 days after the end of each work period.

This rule applies to employees paid on a weekly or biweekly (every two weeks) basis, as well as those who are paid semimonthly with work periods other than the 1st through the 15th and the 16th through the end of the month.

Overtime Wages

Wages for overtime earned during a work period must be paid not later than the regular payday for the next work period.

Exempt Employees

Certain employees are exempt from many of California’s labor laws. They are usually employees who work in administrative, executive, or professional positions. Exempt employees are paid on a different schedule than other employees.

They may be paid once a month, provided that the payment is made on or before the 26th of the month and includes wages for the entire month—including wages between the date of the payment and the end of the month that the employee has not yet earned.

The Waiting Time Penalty

California law provides for a “waiting time penalty” when employers willfully fail to pay final wages, in full and on time, after employment ends.

The penalty for late payment of wages advances the public policy of assuring that employees are paid promptly for their work. It incentivizes employers to pay wages in a timely manner.

Calculating the Penalty

The waiting time penalty consists of a full day of wages for each day that payment is delayed. The penalty continues to accrue for as much as 30 days after discharge, depending on when payment is fully satisfied.

The waiting time penalty is calculated by computing the employee’s daily wage rate and then multiplying it by the number of days that payment is delayed, up to a maximum of 30 days.

The daily wage rate is typically calculated by adding base wages, commissions, bonuses, and vacation pay that the employee earns in a year, dividing that sum by 52 weeks, and dividing that result by 40 hours.

When a Failure to Pay is “Willful”

A failure to pay wages on time is willful if the failure is intentional. An employer does not fail to pay wages willfully when there is a good faith dispute about the employee’s entitlement to the unpaid wages.