Here is what can happen when the numerical dollar number on your check is different from the written dollar number.
In Nishiki v. Danko Meredith, APC, the California Court of Appeals for the Third Appellate District, was confronted with a case where an employee resigned without notice and the employer presented a check for full payment of unused vacation time to the employee within the statutorily required 72 hour period, but, the check contained a clerical error. The check contained the correct numerical payment amount of $2,889.31. However, in writing, it was spelled out “Two thousand eight hundred and 31/100” or $89 less than the correct amount.
The former employee advised the employer of the discrepancy and that her bank would not cash the check due to the discrepancy. However, the employer refused to deliver a new check unless the former employee came into the office to exchange it for the inconsistent check.
Alternatively, the employer offered to send an additional check for $89.00. The former employee demanded the corrected check be sent to her and it was mailed to her – albeit 17 days after she resigned and 9 days after she reported the discrepancy to her former employer.
The former employee filed a claim with the California Labor Commissioner against the employer for waiting time penalties and attorneys’ fees. The hearing officer awarded waiting time penalties for 17 days – from the date of resignation until the former employer received the corrected check – in the sum of $4,250 which was based on the former employee’s $250 average daily wage.
The employer appealed to the Superior Court which found the former employee was entitled to the 17 days of waiting penalties and, upon motion for statutory attorneys’ fees, awarded the former employee the sum of $86,160 in fees.
The employer appealed from the judgment.
The Court of Appeals determined waiting time penalties were appropriate since the employer knew what it was doing and intended such actions and held that was all that was required to find the failure to pay to be willful in order to support a waiting time penalty award. It also held under California law when there is a discrepancy, words on the check prevail over numbers. It, thus, determined waiting time penalties only applied for nine days – from the date the former employee notified the employer of the error on the check until the employer sent the correct check to the former employee.
It also upheld the attorneys’ fee award; awarded additional attorneys’ fees to the former employee as the prevailing party on the appeal; and awarded the former employee costs on appeal.
Had the employer just sent a replacement check the same day it was notified of the error for the price of a postage stamp it could have totally avoid the waiting time penalties and attorneys’ fees awards. Instead, a clerical mistake will cost the employer approximately $100,000.00.
When an employee terminates his or her employment the employer must promptly pay the former employee all sums to which the employee is entitled and provide them to the employee within prescribed statutory periods. It is even more important to immediately provide all
sums to which the terminated employee is entitled at the time of the termination where the employer terminates the employee.
Always check with legal counsel before you terminate an employee and immediately upon receipt of an employee’s resignation. No employer wants to pay hundreds of thousands of dollars to a former employee when all they have to do is lick a postage stamp.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
