Unpaid wage disputes can be a significant source of conflict between employers and employees. If an employer withholds salary or wages from a worker or group of workers, an unpaid wage claim is the legal recourse available to the employees affected.
Although some disputes may arise from simple accounting or clerical errors, in cases where the mistake is not corrected or if the withholding is intentional, legal action becomes necessary.
Unpaid wage disputes usually stem from employers withholding their workers’ earned pay. The most common forms of withholding include the following:
Unpaid wage claims can also arise from the misclassification of employees as independent contractors, failure to provide meal and rest breaks, and retaliation against employees who assert their rights.
In addition to federal labor laws overseen by the Department of Labor’s Wage and Hour Division, each state has its own labor laws that may offer additional protections to employees. For example, some states have higher minimum wage rates than the federal rate, while others require employers to provide paid sick leave or family and medical leave.
Employees who file unpaid wage claims may be able to recover not only the amount of unpaid wages owed to them but also additional damages, such as interest on the unpaid wages, liquidated damages, and attorneys’ fees and costs.
Both state and federal labor laws govern unpaid wage claims. On the federal level, the Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay eligibility, and labor standards for full-time and part-time workers in the private sector as well as in federal, state, and local governments.
Each state also has its own labor laws. Some closely mirror the FLSA, while others provide more or less protection than the federal standard.
In cases where both state and federal labor laws apply, most favorable provision to the worker takes precedence. Unpaid wage claims may also include violations of state and federal anti-discrimination laws if the withholding of wages is based on an employee’s gender, religion, color, national origin, race, age, or political affiliation.
Tipped employees, such as bartenders or servers, are subject to unique laws governing their pay. These employees must receive a base hourly pay, which is usually less than the federal minimum wage of $7.25/hour. The employer must pay the difference if the base pay and tip total do not meet the minimum wage rate.
However, disputes may arise over how tips should be allocated among employees or whether tips are considered part of the regular rate of pay for overtime purposes. Employers may also illegally take a portion of the tips for themselves or use them to offset the employee’s wage cost, resulting in underpayment of wages.
Any violation of these laws can result in the employer being required to pay back wages, interest, and liquidated damages.
Government-ordered wage garnishment is a common cause of unpaid wage disputes. Wage garnishment is when a court orders a portion of the worker’s income to be diverted from their paycheck towards unpaid spousal support, child support, taxes, liens, and other judgments.
An employer must obey the court order. The employee often has no legal recourse unless the employer fails to follow the proper protocol or deducts more from the employee’s wages than allowed by law.
While wage garnishment is a legal process, it can still cause financial hardship for employees who are already struggling to make ends meet.
Employees facing wage garnishment may be able to challenge the garnishment by filing a claim of exemption with the court. This claim asserts that the employee needs the full amount of their wages to support themselves or their family and requests that the court reduce or eliminate the garnishment.
Each state has its own rules for claiming exemptions, so consult with an experienced employment attorney who can help you understand your rights under state and federal law.
In addition to filing a claim of exemption, employees who are facing wage garnishment may also be able to negotiate a payment plan with their creditor or government agency. This payment plan can allow them to pay off their debts over time without needing wage garnishment.
If an employer is improperly garnishing an employee’s wages, the employee may be able to file a complaint with the appropriate government agency, such as the Department of Labor’s Wage and Hour Division. The agency may investigate the employer’s practices and take action to recover any illegally withheld wages.
To file an unpaid wages claim, employees typically submit a claim with the proper state or federal agency that oversees their employer.
On the federal level, all wage disputes are handled by the Wage and Hour Division (WHD) of the Department of Labor, while on the state level, each state has its own agency that handles unpaid wage claims. Employees may also choose to file a lawsuit in court.
The process for filing a claim involves filling out a complaint form and providing evidence of unpaid wages. The agency or court will investigate the claim and determine whether the employer violated any labor laws.
If the agency or court determines that the employer violated any labor laws, they may order the employer to pay back wages to the affected employee or employees. The agency or court may also order the employer to pay additional damages, such as liquidated damages or civil penalties, to deter future violations and compensate the employee for any harm they suffered due to the wage violation.
Suppose the employer refuses to comply with the agency or court order. In that case, the affected employee or employees may be able to pursue additional legal action to enforce the order, such as by obtaining a court order to garnish the employer’s bank accounts or assets.
In some cases, the agency or court may also investigate the employer’s practices to determine if there are any ongoing violations or systemic issues that need to be addressed. This process may involve auditing the employer’s payroll records, interviewing employees, and conducting site visits to the employer’s premises.
If an employer is found to have violated labor laws, they may be subject to civil judgments requiring them to pay all unpaid wages, as well as court-ordered sanctions, injunctions, or fines. Employers may also be required to post notices of labor law violations or to provide training to employees on their rights under the law. Unpaid wage claims may also lead to a larger-scale investigation of the company’s practices, including audits for tax fraud or illegal hiring practices.
Unpaid wage disputes can be complex and time-consuming. Employers may have more resources to fight such claims, making even the strongest cases feel daunting to employees. For this reason, seek the assistance of an experienced employment attorney who can guide employees through the claims process and serve as their advocate in any necessary appeals.
An attorney can help you understand your options and represent you at hearings and in court, making the process less intimidating and increasing the likelihood of a favorable outcome. An attorney can also help you negotiate a settlement with their employer, which may be a faster and less costly option than going to trial.
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