Employees filed a class action lawsuit Tuesday after the abrupt closure of the PennySaver left hundreds out of work.
The legal challenge was launched just days after 700 employees learned the long-running Orange County-based classified paper was folding.
The lawsuit claims PennySaver violated California's labor code by not giving workers at least 60 days notice.
Former employees gathered outside the corporate office in Brea for a meeting Tuesday, where they were promised one week's pay. However even that changed by the time they left the meeting.
"They said that they could not guarentee they would honor those checks, the one week checks that they were going to give us today, so that was quite funny," former worker Troy Moss said.
The state's labor commissioner says a state agency is now investigating whether PennySaver violated labor laws.
Workers are devastated the company, which was founded in 1962 in Huntington Beach, is no longer operating.
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"It's been around 50 plus years. I just didn't think it would end this way," former employee Rosa Aguirre said.
They were told the business was closing as they left work to for the weekend Friday,
"(We were told) stop what you're doing, pack up your stuff it's time to go," ex-worker Kelly Flores said.
The paper is mailed to nine million California homes, and is a product from the Great Depression when small businesses needed a way to advertise at low cost.
In 2015, $50 a week paid for 15 words and access to a circulation of 100,000 people.
The publication was bought out by investment firm OpenGate Capital for $22.5m in 2013, and management claimed they fought to the end to keep the business going.
“PennySaver did everything possible to try to stay in business and was in the process of pursuing a number of alternatives when our lender unexpectedly ceased our funding late Friday evening," CEO Ronald Myers said in a statement. "Without any funding the company was forced to immediately cease operations."
