In Diaz v. Grill Concepts Services, Inc. the Court of Appeal affirmed a trial court decision finding an employer liable for waiting time penalties. Here, defendant employer was required to pay its employees a living wage subject to an ordinance promulgated by the Los Angeles City Council. When the ordinance was amended to impose a higher living wage requirement, Defendant impermissibly continued paying its employees the same pre-amendment wage. Although Defendant suspected that it was underpaying its employees, Defendant made minimal efforts to clarify the current living wage by making one inquiry to outside counsel but never following up on the inquiry. Defendant proceeded to reimburse all current and former employees for the full amount of underpaid wages.

The main issue was whether Defendant was required to pay a “waiting time” penalty –­a penalty of up to 30 days’ worth of wages – to former employees who either quit or were terminated in accordance with Labor Code Section 203. To be on the hook for waiting time penalties, the employer’s failure to pay must have been willful. Here, the Court agreed with the trial court in holding that Defendant’s failure to pay was willful because its inability to find the amended ordinance was the result of Defendant’s negligence to follow up on its investigation of where to find the statute. Furthermore, the Court disagreed with Defendant that the statute was vague because Defendant presented no evidence that any other employer was confused by the language of the statute. Finally, the Court also affirmed the lower court’s determination that courts do not have the discretion to waive the imposition of waiting time penalties on equitable grounds.

In sum, employers must pay waiting time penalties if their failure to pay was “willful” and trial courts do not have the discretion to waive the penalties.

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