End of the Assignment vs. End of Employment – California Wage Payment Requirements for the Staffing Industry

03.25.2026

California has strict rules that apply to payment of final wages to separating employees. Failure to timely pay final wages to an employee will result in potential liability of up to 30 days of waiting time penalties at the employee’s daily rate of pay. Given the expensive consequences of failing to timely issue final wages, California law fortunately makes clear that certain staffing industry employers are not required to follow the typical requirements governing final pay upon the end of an employee’s temporary assignment.

California Labor Code section 201.3 sets forth the relevant requirements for payment of wages by a “temporary services employer” to an employee whose temporary assignment with a “client or customer” is ending. Specifically, Labor Code section 201.3(b) provides that if an employee of a “temporary services employer” is assigned to work for a “client,” that employee’s wages are due and payable at least weekly, regardless of when the assignment ends, and wages for work performed during any calendar week shall be due and payable not later than the regular payday of the following calendar week. A temporary services employer is deemed to have timely paid wages upon completion of an assignment if wages are paid in compliance with these requirements. (Separate rules within Labor Code 201.3 apply if the employee is a security guard, or is assigned to work for a client on a day-to-day basis, or for a client engaged in a trade dispute, or if the employee is assigned to work for the client for over 90 consecutive days.)  In other words, California’s final pay requirements do not apply if a temporary employee’s assignment ends.

Staffing industry employers should confirm that Labor Code section 201.3 applies to them and their operations, before following its terms. A “temporary services employer” governed by Labor Code section 201.3 is defined by the law to mean an employing unit that contracts with “clients or customers” to supply workers to perform services for the clients or customers and that performs all of the following functions:

(A) Negotiates with clients and customers for matters such as the time and place where the services are to be provided, the type of work, the working conditions, and the quality and price of the services.

(B) Determines assignments or reassignments of workers, even if workers retain the right to refuse specific assignments.

(C) Retains the authority to assign or reassign a worker to another client or customer when the worker is determined unacceptable by a specific client or customer.

(D) Assigns or reassigns workers to perform services for clients or customers.

(E) Sets the rate of pay of workers, whether or not through negotiation.

(F) Pays workers from its own account or accounts.

(G) Retains the right to hire and terminate workers.

However, a “temporary services employer” does not include any of the following:

(A) A bona fide nonprofit organization that provides temporary service employees to clients.

(B) A farm labor contractor, as defined in subdivision (b) of Section 1682.

(C) A garment manufacturing employer, as that term is defined by law.

Further, for purposes of Labor Code section 201.3, the terms “client” and “customer” each mean the person with whom a temporary services employer has a contractual relationship to provide the services of one or more individuals employed by the temporary services employer.

Staffing industry employers that are governed by Labor Code section 201.3 are cautioned that California’s usual final pay requirements apply if the employee of the temporary services employer is terminated from employment or resigns from employment.  All earned wages of a terminated employee are due and payable immediately upon termination (including accrued, unused vacation/PTO).  All earned wages (including accrued, unused vacation/PTO) of a resigning employee must be received by that employee within 72 hours of the resignation, unless the employee gave 72 hours previous notice of their resignation, in which case the employee is entitled to their final pay on their final day of employment.

Employers with questions regarding laws governing the staffing industry may contact the author of this post or their usual employment law counsel at AALRR.

This AALRR publication 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.

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