California court dismisses appeal challenging employer's payroll practices

Under section 204(d) of California’s Labor Code, wages for employees paid weekly are considered timely if paid not more than seven calendar days after the payroll period’s end.

However, if the seventh calendar day falls on a Saturday, the wages may be paid the following Monday, a recent case said.

Estenson Logistics, LLC – the defendant in the case of Parsons v. Estenson Logistics, LLC – paid its employees weekly. Its pay period ran from Sunday to the following Saturday. It paid its employees on the second Monday or nine calendar days after the pay period’s end. If Monday was a holiday, it paid its employees on Tuesday or 10 calendar days after the pay period’s end.

The plaintiff, who was one of Estenson’s employees, filed a wage and hour claim under the Private Attorneys General Act of 2004 (PAGA). He alleged that Estenson’s practice of paying its employees, who were paid weekly, on the ninth calendar day after the pay period’s end violated section 204(d), which required it to pay wages to employees not more than seven calendar days following the pay period’s end.

Estenson filed a summary judgment motion alleging that its payroll practices did not violate section 204(d). It argued that, because the last day for paying its employees always fell on a Saturday, it had the option of paying them on Monday or on Tuesday if Monday happened to be a holiday.

To support its position, Estenson cited the Division of Labor Standards Enforcement (DLSE)’s Enforcement Policies and Interpretations Manual and section 12a of California’s Code of Civil Procedure.

Section 12a provided that, if the last day for payment fell on a holiday, then the period would be extended until the next day that was not a holiday, as specified in section 135 of the Code of Civil Procedure. Section 135 defined “judicial holidays” as including Saturdays, Sundays, and most major holidays.

The trial court granted summary judgment in Estenson’s favor. It found the DLSE’s interpretation of the relevant provisions persuasive and reasonable. The plaintiff appealed.

The California Court of Appeal for the Third District agreed with the trial court’s decision. The appellate court held that the rule in section 12a was applicable to section 204(d)’s time limits regarding the payment of wages since section 12a clearly applied to the Code of Civil Procedure and to any other code or statute, which would include the Labor Code.