The failure to pay all of the wages, salary, or benefits to which an employee is entitled is one of several forms of wage theft. Unpaid wages can include withholding too much for tips, failing to pay overtime when it is due or misclassifying an employee so they do not earn overtime to which they are entitled.
This is sometimes referred to as “withheld salary” or “withheld wages”, and it is illegal. Wages can go unpaid in a number of ways. Some of them are as follows:
- The employer fails to pay overtime wages when legally required to do so;
- The employer fails to pay the correct minimum wage;
- 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 time on the job – they are made to work “off the clock”;
- 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.
This list is not exhaustive; there are other forms of wage theft.
Federal and state laws set a minimum wage that most workers are entitled to receive. These laws also state which workers are entitled to receive overtime pay for working longer than a certain number of hours per day or per week. Sometimes employers fail to comply with state and federal minimum wage and overtime laws.
Another possibility is that an employee has a written employment contract which specifies the salary and benefits the employee will receive in exchange for a contractually-defined performance. An employer might fail to pay the full salary, provide all of the benefits promised in the contract or otherwise breach the employment contract.
What Should I Do if My Employer Has Not Paid Me?
First and foremost, it is important to understand that it is illegal to fire or otherwise punish an employee for filing a claim for unpaid wages. Thus, a person has a right to file a claim if necessary. Filing a claim for unpaid wages might involve:
- Approaching the employer about the unpaid wages or salary and requesting that the deficiency be corrected. If the company has a human resources department, an employee could consult with the human resources department about the problem and how it could be resolved;
- Contacting the Wage and Hour Division (WHD) of the U.S. Department of Labor to report a possible violation of the Fair Labor Standards Act (FLSA) wage regulations, or to find out more information about violations and reporting procedures;
- Filing a complaint with a government agency, such as the U.S. Equal Employment Opportunity Commission (EEOC); or
- Filing a private civil lawsuit, which would be appropriate if a person has a written employment contract.
Generally, filing an internal complaint with the company’s human resources department is sufficient to correct a mistake or simple oversight.
However, if the complaint involves the human resources department itself, or if an internal complaint does not resolve the issue, a civil lawsuit may be necessary. If several employees are similarly affected by unpaid wages, a class action lawsuit might be filed.
It is also important to note that unfair wages are a specific subset of wage theft violations. Sometimes the terms “wage theft” and “unfair wages “are used to refer to the same conduct.
Sometimes cases of both wage theft and unfair wages involve employment discrimination on the basis of race, gender, or other personal characteristics. In cases such as these, there may be a variety of legal issues involved; seeking a remedy may become more complicated. If employment discrimination is an issue in a case, it would be best to consult an employment lawyer.
How Do I File an Unpaid Wages Complaint?
There are several different ways to go about trying to recover unpaid wages. One approach is to file a complaint with the Wage and Hours Division (WHD) of the U.S. Department of Labor. It is important to keep in mind that there are time limits to filing a claim of unpaid wages so it is best not to delay or wait to file a claim.
A person can file a lawsuit under federal law in court; this must be done within two years of the violation, i.e., the date on which the wages became unpaid, unless the employer’s violation was willful. For a willful violation of federal law, the time limit is three years. Also, an employee may not file a private lawsuit if the employee has already been paid back wages as a result of a complaint filed with the WHD.
It is possible that if an employee files a complaint with WHD, the Secretary of Labor may file suit against the employer for back wages and “liquidated damages,” which can be equal to the amount of the back pay award. This would essentially double the damages. This could be done if the employer willfully violated the statute.
If an employee is a member of a union at their place of employment, the first step would be to report the problem to a union representative. The union may well be able to resolve the problem.
The state in which an employee lives may provide other options for the recovery of unpaid wages, and different remedies for employees who succeed in proving a violation. An employee would need to contact the agency in their state which handles violations of wage and hour laws and other labor standards. Each state has its own rules and agencies, so a person would be well advised to consult an employment lawyer to learn about the situation in their state.
For example, California requires a minimum wage of $13 an hour for employers who have at least 26 employees. Overtime pay of time-and-a-half must be paid for hours worked over 8 in a day, 40 in a week, and for the first 8 hours of the seventh day worked in a week. Double pay is required for hours worked over 12 in a day or eight hours on any seventh day of a workweek.
The California Department of Industrial Relations (DIR) enforces wage and hour regulations in California and an employee in California could file a claim for unpaid wages with the California Division of Labor Standards Enforcement of the DIR.
The Labor Commissioner’s Office of the DIR investigates claims to determine if any wages or benefits are owed by the employer to the employee. Usually, a settlement conference with the employee and employer is held to resolve the issue. If the conference does not lead to a resolution, there is then a hearing at which a hearing officer can review evidence and make a decision on the claim.
The minimum wage in Florida is $8.56 an hour. Federal overtime rules apply in Florida. So, an employee in Florida should probably submit a claim for unpaid wages to the federal WHD.
The state of Maryland has a minimum wage of $11 per hour. An employer must pay overtime for time worked over 40 hours a week. An employee can file a claim for wages, overtime, tips or pay for leave with the Employment Standards Service of the Maryland Department of Labor, Licensing and Regulation.
If an employee has a written employment contract which promises a certain salary and benefits in exchange for a certain performance, then the employee would probably want to file a lawsuit for breach of the employment contract in a court of law. It would be advisable to consult with an employment lawyer before embarking on a civil lawsuit for breach of an employment contract.
What are the Legal Consequences and Remedies for Unpaid Wages?
Withholding salary and other wage infractions are illegal. An unpaid wages lawsuit may result in significant negative legal consequences for an employer. These consequences might include:
- A damages award, paid by the employer to the employee, to make up for lost wages and other costs;
- A required change in company policies, replacing the policies that led to the infraction;
- Terminating the employer or supervisor who was responsible for the unpaid wages; or
- Consequences for the business itself, such as a suspension of its business license or the imposition of civil fines.
- Recovery of all unpaid wages for the hours the employee worked;
- Reinstatement of the employee to their former position;
- Punitive damages or penalty damages; or
- Investigation into the company’s overall policies and recordkeeping.
How Can I Prove an Unpaid Wages Claim?
Documentation is key. A lawsuit for failure to pay wages often requires 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. An employee should keep detailed records of their own about their employer’s practices in paying wages and should document the hours they have worked.
Do I Need an Attorney when Suing an Employer for Unpaid Wages?
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. These disputes can also be complicated because both state and federal law can be involved and each state has its own system of wage law enforcement.
For these reasons it can be especially helpful to consult an experienced employment lawyer. 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 much easier. They will inform you of the laws and what your options are, and can help you gather documentation and represent you in your lawsuit. You are most likely to get the best possible outcome if you have an experienced employment lawyer representing you.