Court Rules that Labor Code Guarantees Prompt Payment of Wages for Workers on Projects of Limited Duration

On July 10, 2006, the California Supreme Court ruled that employers must promptly pay employees for work done on a limited duration project, such as a construction project or film or television production.

Section 201 of the Labor Code requires than an employer immediately pay workers their wages if they are discharged. Until the case of Amanza Smith v. L’Oreal USA, Inc., it was not clear that these rules – and the penalties for failure to pay in a timely fashion in Section 203 – applied to employers working on a project of limited duration and not just individuals who were fired.

In the ruling, the California Supreme Court concluded that the intent of the statutes was to protect workers from the economic hardship that unpaid wages caused. The decision stated that Sections 201 and 203 apply whether an employee is fired or released after completing a specific job or limited duration. The ruling reversed a previous decision by an appeals court in favor of the employer.