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Retiring Employees Are Covered by Prompt Pay Laws

California’s highest court confirms that retiring employees are covered by a State statute mandating that employees be paid promptly.

Background

Like many other states, California mandates that employers who pay their employees late must pay a wage penalty for each day the wages are overdue.  The question before the State’s highest court was whether this law covers employees who leave their employment to retire.

Janice McLean retired from her work with the California Attorney General’s office. McLean’s last paycheck was prepared after the State's deadline for employees who quit. Her employer (the State of California) argued that the wage penalty law was not intended to ensure prompt payment of employees who retire. McLean argued that it makes no sense and violates state and federal law to treat retired employees less favorably than other employees.

A trial court agreed with the State, an appeals court did not, and the California Supreme Court agreed with AARP, ruling that retiring employees are entitled to protection under the State's prompt pay laws. AARP filed a friend of the court brief in support of retiring workers. AARP's brief, prepared by attorneys with AARP Foundation Litigation, argued that denying retired employees the same protections and benefits as other employees is not only illogical, but constitutes age discrimination. The brief explained that retirees are -- by definition – older employees and that both federal and state legislation prohibiting age discrimination clearly prohibit denying employees labor protections merely because of their age. Moreover, caselaw clearly protects against denying employees labor protections merely because they are eligible for retirement.

The brief also noted that that this is not merely an academic question. Many retirees continue working past retirement for financial reasons, and denying prompt payment of wages harms them financially. Some workers retire because of age limits in certain jobs. Some retire due to downsizing or closure of businesses for which they work. Some retire due to health problems. In other words, “retirement” is often due to circumstances a retiree does not choose and results in a diminution of available income.

What’s at Stake

Workers who retire should not be treated less favorably than workers who leave jobs for other reasons. Federal laws, as well as California’s own state laws, protect against this discrimination and should be vigorously upheld.

Case Status

McLean v. California was decided by the California Supreme Court, the state’s highest court.