An unpaid wage claim is the legal recourse when an employer withholds salary or wages from a worker or group of workers. This can be done in a number of different ways. While some might be simple accounting or clerical errors, if the mistake is not corrected or if the withholding is intentional, this is when employees can assert legal rights.

The first step in this process is usually submitting a form to the proper state or federal agency that governs your employer. They are known by any number of names from workforce comissions, departments of labor, industrial or employment services, or any combination of similar terms. So what circumstances warrant an unpaid wages claim, and how do they work?

What is an Unpaid Wages Dispute?

Generally, an unpaid wages claim stems from an employer’s withholding of earned pay from their workers. This can happen in a number of different ways, with the most common being:

  • Partial withholding or underpayment of wages;
  • Complete withholding of paycheck;
  • Miscalculations in hours or wage rate;
  • Intentional wage withholding, especially in connection with a termination of employment or other possible legal causes of action;
  • Disputes over overtime hours or overtime rate;
  • An employer’s failure to pay the legally mandated minimum wage; or
  • The employer breaks payment or other clauses in worker’s employment contract

A claim may include violation of the law on one of these issues, but can also include two or more of them depending on the employee’s particular case and circumstances.

What Laws Govern an Unpaid Wages Claim?

As mentioned above, there are both state and federal agencies that oversee wage and labor disputes. On the federal level, the Fair Labor Standards Act (FLSA) is the law that establishes minimum wage, overtime pay eligibility, recordkeeping, and labor standards for full-time and part-time workers that hold a job in the private sector as well as in federal, state, and local governments. Every state also has their own labor laws, some of which mirror the FLSA closely, some of which provide more or less protection than the federal standard.

Most of the time there is some overlap between the federal and state labor laws. If both apply to a worker’s case, then the provision that is most favorable to the worker and not the employer takes precedent. There are also cases where a worker may not be protected by the FLSA due to an exception, but is still covered by their state’s labor law.

What About Tipped Employees?

Workers who receive the majority of their income through tips like bartenders or waitresses must receive a base hourly pay, as per the Department of Labor. This base is usually significantly less than the $7.25 federal minimum wage.

For these workers, as long as their tip total when added with the base pay can be divided and still meet the minimum wage rate, by law they are not being underpaid. If this threshold is not met, the employer must pay the difference.

What if the Dispute is About Wage Garnishment?

Many unpaid wage disputes involve government ordered wage garnishment. This is when a court orders a portion of the worker’s income be diverted from their paycheck towards things such as unpaid spousal support, child support, taxes, liens, and other judgments. As long as the employer follows the proper protocol and obeys the court order, the employee often has no legal recourse unless they can prove failure on one of these steps.

How Does Someone File an Unpaid Wages Claim?

On the federal level, all wage disputes are handled by the Wage and Hour Division (WHD) of the Department of Labor. There are WHD branches all around the country that handle wage and hours claims in their particular region. The worker either fills out the proper forms on the WHD website, or can go in person to their local branch to file their claim.

Once filed, investigators will look into the employer’s claims to determine if there has been a violation. If the initial investigation finds against the worker, they are entitled to appeal that decision. Each state also has their own application and appeals process.

What are the Possible Punishments for Unpaid Wages?

If the proper oversight agency does find that the employer violated wage and hour regulations, they will be subject to penalties. These can include civil judgements requiring the employer to pay all unpaid wages, as well as court ordered sanctions, injunctions, or fines.

Unpaid wage claims may lead to a larger-scale investigation of the company’s practices including audits for tax fraud or illegal hiring practices.

Do I Need an Attorney for an Unpaid Wages Claim?

Being an employee during a workplace dispute can feel like an unclimbable mountain. The company often has far more resources to fight unpaid wages claims and can make even the strongest cases feel like an impossible task.

That’s why seeking the assistance of an employment attorney to guide you through the claims process and be your advocate if any appeals are necessary is so important.