Staffing Employer Not Required to Pay Final Wages to Employee Discharged by Client Employer
Staffing Employer Not Required to Pay Final Wages to Employee Discharged by Client Employer

Is a staffing employer required to immediately pay final earned wages to a temporary employee whose assignment ends as a result of their being terminated by a client employer but where the temporary employee remains an employee of the staffing agency?  No, held a California Court of Appeal in the recent case of Young v. REMX Specialty Staffing No. A165081, 2023 WL 3331378, at *1 (Cal. Ct. App. May 10, 2023).

In this case, Vanessa Young, a temporary employee, was assigned by the staffing company, REMX Specialty Staffing, to work at its client, Bank of the West.  REMX ended Young’s assignment with the bank after Young was verbally abusive to a REMX representative during a  telephone call.   REMX ordered Young not to return to the bank “due to her violent and threatening behavior and as a precautionary measure for the bank,” and notified Young that her project at the bank ended that same day.  Although Young’s assignment ended on a Friday, REMX did not pay Young for her work until Friday of the following week based on REMX’s normal payroll schedule.

Young sued for civil penalties under the California Private Attorneys General Act (PAGA) for late payment of wages.  The claim was based on an alleged violation of Labor Code section 201.3(b)(4), which provides that “if an employee of a temporary services employer is assigned to work for a client and is discharged by the temporary services employer or leasing employer, wages are due and payable immediately.”

In rejecting Young’s claim, the court first characterized the term “discharge,” as used in the statute, as an act that “ends the employment relationship at the point the job or service term is deemed complete.”  It then held that the right to immediate payment of wages upon discharge did not apply in this instance because Young only had an employment relationship with REMX, and did not have one with the client bank.  The court reasoned that since Young’s employment relationship with REMX was not terminated, REMX could immediately reassign Young to a different client, and Young could continue accruing wages.  The court therefore interpreted the law as requiring immediate wage payment when the discharge occurs when a temporary employee is terminated from employment by the temporary services employer, not simply when the temporary employee is terminated from a temporary work assignment.

Section 201.3(b)(5) of the Labor Code provides that if a temporary employee quits their employment with the staffing agency, earned wages are required to be paid within 72 hours.  The court acknowledged that “when an employee quits a temporary assignment, the employee controls the timing [of final wage payment], while when the employee is fired from a temporary assignment, the temporary services employer or client controls the timing.”  The effect of this ruling is to permit staffing agencies to avoid having to immediately pay temporary employees’ earned wages upon the termination of a particular work assignment, so long as they remain employed by the staffing agency and are available for future assignments.

Clients with questions regarding terminations, resignations, and final pay rules in the staffing industry may reach out to the author or their usual employment law counsel at AALRR.

This AALRR post is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 
© 2023 Atkinson, Andelson, Loya, Ruud & Romo

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