A “good faith” dispute removes an employer’s liability to pay waiting time penalties to an employee.
By law, employers are required to pay all outstanding wages owed to a worker within 72 hours of the employee’s last shift. If this is not done, the employee can collect waiting time, which is an additional day of pay at the employee’s regular rate for each day the worker is kept waiting for his or her final wages.
However, the worker is not eligible for waiting time penalties in California if the employer shows that there was a good reason the wages were not paid.
When Can an Employer Claim a Good Faith Dispute?
The good news is that, even by making a good-faith defense, the employer agrees that the employee’s claim is valid. However, the defense allows an employer to state the reason why the wages were not paid on time—and if the reason is valid, the employer can get out of paying some or all of the waiting time penalties.
Depending on which good faith dispute is made, an employer may be able to escape liability for:
Waiting Time Penalties:
Employers can be excused for a violation of state and federal pay requirements if the employer can prove that his actions conformed with an applicable written order, ruling, or interpretation of the Wage and Hour Division of the U.S. Department of Labor. Even if the written rule that was applied is later overturned or rescinded, the employer can claim a good faith dispute as long as the order was in effect at the time of the dispute. If successful, the defense allows employers to avoid liability altogether.
Under some circumstances, an employer can admit that the company owes you back pay while also reducing the number of liquidated damages you are owed. Liquidated damages are an additional amount equal to the amount of back pay owed, and are intended to punish the employer for wrongdoing. If the employer had reason to believe that he or she was doing the right thing—for example, listening to the advice of a lawyer who gave misinformation—then the company may not be liable for liquidated damages.
For more information on your wage and hour case, read through our free book, California Truck & Delivery Driver Wage Theft: The Ultimate Straight Talk Guide to Getting Your Hard Earned Wages Back.