Unpaid wages, or a denial of the wages, salary, or benefits that an employee is entitled to receive are all forms of wage theft. Simply put, unpaid wages occur when an employer fails to pay an employee what they are legally owed.
This is sometimes referred to as withheld salary or wages, and is illegal. Unpaid wages occur when:
- The employer fails to pay overtime wages;
- The employer fails to meet minimum wage requirements;
- The employees are intentionally miscategorized in a way so that they are paid less than they should be;
- Clerical or administrative errors are made;
- The employee is not paid for all of their services;
- There are disputes regarding paid leave or other benefits;
- Salaries are withheld when an employee files for disability; or
- Business expenses paid out of pocket are not reimbursed when they should be.
Another instance of unpaid wages is if a deduction is made that violates the terms of an employment contract between the employee and the employer. Further, payment of withheld wages is often referred to as back pay or retro pay.
First and foremost, it is important to understand that it is illegal to fire or otherwise punish an employee for filing a complaint for unpaid wages. Thus, if you are an employee you should not hesitate to file a complaint if necessary. Filing a complaint for unpaid wages might involve:
- Filing an internal complaint with the company’s human resources department;
- Filing a complaint with with a government agency, such as the EEOC (the U.S. Equal Employment Opportunity Commission); or
- Filing a private civil lawsuit if all other means of action have been exhausted
You can also contact the Wage and Hour Division to report a potential FLSA (Fair Labor Standards Act) wage violation, or to find out more information about infractions and reporting procedures.
Generally, filing an internal complaint with the company’s human resources department is sufficient enough to correct a mistake or simple oversight.
However, if the complaint involves the human resources department itself, or if the internal complaint is not enough, a civil lawsuit may be necessary. If several employees are affected by unpaid wages all at once, a class action lawsuit may be filed.
Another important note is that unfair wages are a specific subset of wage theft violations. Sometimes, wage theft and unfair wages are used interchangeably.
Many cases of both wage theft and unfair wages involve employment discrimination, such as those due to race, gender, or other personal characteristics. In cases such as these, legal issues may overlap, and a remedy is not so straightforward.
Withholding salary and other wage infractions are illegal and may result in severe legal consequences. These consequences can include:
- A damages award, paid by the employer to the defendant, to make up for lost wages and other costs;
- A required change in company policies, replacing the policies that lead to the infraction;
- Termination of the employer or supervisor who was responsible for the unpaid wages; or
- Business consequences such as a suspension of license, civil fines, and other penalties.
In most cases, the damages award is enough to help the employee recover the losses incurred by the employer’s violation, plus any losses related to the claim, such as attorney fees and lost profits and deals. Some of the common remedies in unpaid wages claims include:
- Recovery of all unpaid wages for the hours you worked;
- Reinstatement of the employee to their former position;
- Punitive damages or penalty damages; or
- Investigations into the company’s overall policies and recordkeeping.
Documentation is key. Unpaid wages claims often require analysis of several documents, records, and statements. Some examples of acceptable documentation for unpaid wage claims are:
- Pay stubs and timesheets;
- Tax papers such as W2s; or
- Receipts and other documents if your employer is withholding reimbursement for out of pocket payments.
It is also important to have a working knowledge of your state’s wage and hour laws, in addition to the federal wage and hour laws. Keep detailed records of your own, documenting the hours you’ve worked.
As can be seen, wage disputes are complicated because they often also involve other legal matters, such as discrimination and even sometimes, theft. Having wages withheld creates problems for both employees and employers.
It is important to prepare yourself by learning about federal and state laws regarding employment disputes such as unpaid wages. A knowledgeable and experienced employment lawyer can make the process a little easier on you. They will inform you of the laws and what your options are, and can help you gather documentation and represent you in your lawsuit.