Employee compensation is cash payments and benefits which an employee receives in exchange for the services that they provide to their employer. Most employees receive wages or salary payments as their main form of compensation.

However, employees may also receive other forms of compensation, which may include:

  • Health insurance;
  • Life insurance;
  • Disability insurance;
  • Pensions;
  • Vacation benefits; and
  • Stock options.

Employee compensation can be divided into two main types, fixed and variable. Fixed compensation is generally subject to a set rate and includes:

  • Wages;
  • Salaries; and
  • Benefits.

Variable compensation is typically dependent on the performance of the employee. It may include:

  • Sales commissions;
  • Pay bonuses;
  • Cash incentives; and
  • Other similar forms of compensation.

The expected type and amount of employee compensation is usually stated in the employment contract. For example, some company executives may be offered bonus incentives or high stock options as part of a compensation package. Because of the broad package the employer offers, they may be able to justify paying a lower salary for the job.

There are some benefits which are required by law and some which are negotiated between an employer and an employee. It is important for an employee to fully understand their compensation package so that they are able to identify if their employer is denying them compensation to which they are entitled.

What are Some Common Employee Compensation Disputes?

The most common employee compensation disputes are wage and hour disputes. These types of disputes may include:

Other types of employee compensation disputes may include:

  • Disputes over medical leave and other benefits;
  • Retirement and severance package disputes;
  • Conflicts over workers compensation for on the job injuries;
  • Insurance disputes;
  • Spousal benefit claims;
  • Not paying the employee the agreed upon salary or hourly wages, or not paying them at all;
  • Not paying the employee at the times agreed upon, such as biweekly, monthly, etc.;
  • Not paying the employee their vacation and/or sick pay;
  • Unpaid overtime; and
  • Unreimbursed business expenses.

Paychecks that are late, delayed, or docked are often common concerns and issues. It is very important for the employee to review their employment contract or other documents to ensure that the contract clearly states when they will receive their paycheck and when their wages can be docked.

It is important to note that the employee’s pay cannot be docked for poor work performance or for a bad review. Docked pay typically only occurs if it was proven that an employee stole from an employer or that the employee broke equipment or a product.

In most cases, the employee must be notified if their pay will be docked prior to it occurring. In addition, if an employer desires to dock an employee’s pay due to a stolen product, the employer must first prove that the theft occurred.

What are Some Compensation Dispute Lawsuits Involving Wage and Hour Claims?

The grounds for employment compensation lawsuits may vary and can involve wage and hour claims. The majority of wage and hour claims include:

  • Minimum wage, or not paying the employee the minimum wage as required by federal and state laws;
  • Exemptions. Certain categories of employees are exempt from overtime pay laws, which means that they are not entitled to overtime pay;
    • Employers may make the mistake of classifying some or all their employees as exempt, when they really are not. Others knowingly wrongly classify employees to avoid paying them more, which is illegal;
  • Job title vs. actual duties performed. The majority of FLSA provisions are based on the actual duties that the employee performs, rather than their job description. This means that the exemptions are based on duties performed and not their job title;
    • A common mistake for employers is to base the employee’s FLSA status on their job title rather than their job duties;
  • Working off the clock. FLSA violations may arise because not all companies operate according to a strict, 40-hour work week;
    • Many businesses and employees operate under alternative weeks, such as 4 day work weeks or 10 hour days, etc. Some employers do not include business meetings as part of the work day; and
  • Withholding of wages. These types of claims involve an employer wrongfully withholding an employee’s payments. The reason for withholding wages must be illegal, such as discrimination or retaliation.

What are Some Other Issues that Arise Because of Compensation?

The Family and Medical Leave Act (FMLA) protects the jobs of eligible employees who are working for covered employers when they take qualified medical or family leave. An employee is entitled to take this leave and their employer is prohibited from using the employee’s absence against them. In addition, while on leave, the employer must continue to provide group health coverage for the employee.

An employer may violate the FMLA rights of an employee if they:

  • Fire, reprimand or discriminate against the employee;
  • Retaliate against the employee;
  • Fail to notify an employee of their FMLA rights;
  • Unlawfully share confidential medical information;
  • Eliminate their health benefits; and
  • Force an employee to continue to work even though they are on leave.

An employee whose rights under the FMLA have been violated may file a complaint against their employer. Penalties for violation of the FMLA are serious for the employer and may include payment of lost wages and benefits and equitable relief, which may include reinstatement to the same or a higher employment position.

What are Some Ways to Resolve an Employee Compensation Dispute?

In certain cases, a dispute regarding employee compensation may be resolved using the company’s human resources department. This process can often help resolve a minor disagreement or a clerical error.

If the violation is more serious, it may require an investigation by a government agency such as the EEOC, especially if the dispute involves allegations of discrimination. Pursuant to the Fair Labor Standards Act (FLSA), there are a number of different ways in which an employee can recover wages which are owed to them, including:

  • Filing a claim with your state labor commissioner; and
  • Filing a private lawsuit against their employer to recover unpaid wages and possibly other damages.

Remedies which may be available if an individual is successful in a wage and hour claim against their employer include:

  • The recovery of all unpaid wages for hours the employee worked;
  • Recovery of any unpaid overtime;
  • Punitive damages or penalty damages; and
  • Attorney fees and court fee expenses.

How are Employment Compensation Disputes Proven?

Employment compensation disputes require an analysis of many different statements and documents which prove a claim that an employee was either underpaid or not paid for hours they worked. These documents may include:

  • Pay stubs;
  • Work logs, including the input of clocking in and out, etc.;
  • Tax papers;
  • Receipts and other documents; and
  • Statements from other co-workers with the same issues.

Should I Hire a Lawyer if I Have an Employee Compensation Dispute?

It is important to hire an employment lawyer if you have any employee compensation disputes. A dispute over employee compensation may sometimes involve large sums of money, especially if the issue has been ongoing for several weeks or months.

Your lawyer can review your situation, advise you regarding the circumstances of your claim, and assist you with your administrative claim or lawsuit, if necessary. Your attorney will ensure your rights are protected and get you what compensation you are owed.