Time-Barred Wage Claims

California Court of Appeals Creates Conflict and Clarifies Confusion

On October 24th California’s Fifth Appellate District decided Church v. Jamison, a malpractice case in which the client sued his lawyer because the lawyer did not timely-file various wage claims. This case is important to employers and workers in California (as well as attorneys representing such clients) because the court clearly defined when various statutes of limitations begin to run regarding various wage and hour claims.

The court looked at expense reimbursement claims, unpaid wage claims, and claims for unpaid vested vacation, and found:

Expense Reimbursement:

  • An employee’s claim under Labor Code Section 2802 for reimbursement of business expenses begins to accrue on the date the employee incurs the particular expense.
  • The three-year statute of limitations applies to claims for reimbursement of business expenses because it is a liability created by statute.

Prior to Church, it was unclear whether the statute of limitations began to run when the expenses were incurred, when the employee leaves the employer, when the employee requested reimbursement of the expenses, or when the employer refused to pay the expenses.

Unpaid Wages:

  • An employee’s claim for unpaid wages begins to accrue on the date the wages were due (i.e., on the weekly, bi-weekly, or bi-monthly pay dates).

This means that every pay period begins a new statute of limitations. Conversely, the longer an employee waits to file a lawsuit, the more money the employee loses as a result of the delay. This is not surpising considering Cuadra v. Millan 17 Cal. 4th 855, decided in 1998, stated “a cause of action for unpaid wages accrueswhen the wages first become leagally due.”

The time within which an employee must bring a claim will depend on whether the claim is for unpaid minimum wage or overtime (three years), based on an oral agreement (two years), or based on a written agreement (four years). Many unpaid wage claims also include claims under Business & Professions Code Section 17200 which has a four-year statute of limitations.

Vested Vacation Wages:

  • An employee’s claim for unpaid vested vacation wages begins to accrue on the employee’s last day of employment.

The court did not decide whether the two-year, three-year, or four-year statute of limitations applies because Church’s attorney filed the claim within one-year of the termination.

The Church court acknowledged that a prior appellate decision (Sequeira v. Rincon-Vitova Insectaries, Inc. 32 Cal.App.4th 632) held that the statute of limitations on vested vacation begins to run when the vacation is accrued. Through a very detailed and thorough analysis, the Church court established that the Sequeira court incorrectly relied upon a DLSE opinion and that the prior court’s rationale was contrary to fundamental principles of law governing statutes of limitations as well as the text of Labor Code Section 227.3.

The Law Office of Phillip J. Griego
95 South Market Street, Suite 520
San Jose, CA 95113
Tel. 408-293-6341
 
Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
 

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