What are my rights regarding my final paycheck if the company I work for suddenly goes out of business in California?
Under California law, your employer must pay you all final wages immediately upon termination, even if the business is closing suddenly. Here are the steps to take to secure your final paycheck.
Step 1: Demand Immediate Payment
Attempt to contact the business owner, a manager, or HR. Inform them that under California Labor Code Section 201, you are owed all your final wages, including accrued vacation, immediately. Document who you spoke with, when, and their response.
Step 2: Collect Your Documents
Gather all your employment records. This includes pay stubs, your offer letter or employment contract, timecards, and any written communication about the business closing. These documents are essential proof for a wage claim.
Step 3: Calculate Your Owed Wages
Your final check must include payment for all hours worked through your last day. It must also include payment for all accrued, unused vacation time, as this is considered a wage under Labor Code Section 227.3. Do not include sick leave unless your employer’s policy states it will be paid out.
Step 4: File a Wage Claim
If you do not receive your pay, immediately file a wage claim with the California Labor Commissioner's Office (also known as the Division of Labor Standards Enforcement or DLSE). You can file the claim online at the DLSE website or at a local office. There is no fee to file.
Important Details and Nuances:
You may be entitled to "waiting time penalties" under Labor Code Section 203. If your employer willfully fails to pay you on time, they can be penalized your average daily wage for each day you are made to wait, up to a maximum of 30 days. The DLSE will help you calculate and claim these penalties.
Warnings and Limitations:
If the company files for bankruptcy, it can complicate and delay your ability to collect. A bankruptcy filing puts a "stay" on all collection efforts, including a DLSE claim. In that case, you must file a "proof of claim" in the bankruptcy court. Employee wage claims have priority over many other debts, but payment is not guaranteed if the company has no assets.
This is general information and does not constitute legal advice. For complex situations, especially those involving bankruptcy, you should consult with a qualified California employment attorney.
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Disclaimer:
This information is for general guidance only and should not be considered as legal advice. Please consult with a qualified attorney for specific legal matters.
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Updated: August 13, 2025
Employment Law
Worker rights, wages, and employment regulations
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