Unpaid Wages: Everything You Need to Know
Unpaid wages is a form of wage theft and is a violation that involves an employer not paying the rightful wages to an employee. Unpaid wages from your employer can be resolved if you know the right process.
How Do You Recover Back Pay and Unpaid Wages from Your Employer?
Investigations of unpaid wages and recovery of back pay are conducted by the Department of Labor's Wage and Hour Division under the Fair Labor Standards Act when a worker initiates a complaint. Any complaint you file is considered confidential under department regulation and the name of staff and even the nature of the complaint are not disclosed. Exceptions are made only with the employee's permission and the employee's identity is only revealed when it is necessary to pursue the allegations.
Information required by the Department of Labor in order to file a complaint does include an employee's name, address and contact information such as your email address and phone number. Initiating a complaint will also require that he or she disclose the company's name for whom you worked and the location. Details such as the nature of work as well as the names of the owner or owners, and supervisors or managers will also be needed. A worker will need to include how he or she was compensated as well as when, if applicable, how they were paid.
Documentation of the employer's pay practices, as well as copies of personal records such as a record of hours worked and copies of pay stubs is also helpful. Even if the Department of Labor does not move forward with an employee's complaint the services of the department will remain confidential. There is also no charge for these services. It's important to understand that an employee may not be terminated or otherwise discriminated against by the owner of the business, management or staff for filing a complaint with the Department of Labor's Wage and Hour Division.
Investigations of businesses and industries in violation of the Fair Labor Standards Act are not just initiated due to worker's complaints. The Department of Labor's Wage and Hour Division may also select certain types of industries or businesses for investigation. Specific industries, regions or a group of businesses may be investigated by the department. Once an investigation of a business or businesses is initiated, a conference is held between the Department of Labor's Wage and Hour Division and representatives of the business or businesses to explain the process.
The Department of Labor will review company records to determine any laws or exemptions are applicable to the case. The records reviewed may include annual revenue of the business and what goods or services are manufactured, handled or sold by the business. Payroll records and any related materials may be copied or transcribed.
At this point the Department of Labor may conduct private interviews with some employees. These interviews are conducted to verify that accuracy of payroll records and to sufficiently detail the duties of workers. While interviews are typically conducted on the employer's premises other arrangements can be requested. Current and former employees may also be interviewed off premise, by phone or by mail by completing a written interview form.
Once all the evidence is gathered and interviews have been completed the Department of Labor will determine whether any violations have occurred. If it has been determined that the employer has violated the Fair Labor Standards Act they will be directed by the Department of Labor to correct them. If it is determined that back wages are owed, the Wage and Hour Division of the Department of Labor may supervise the payment of those wages.
If the employer is unwilling or unable to comply the Secretary of Labor may bring suit to ensure the payment of back wages and ascertained damages. To ensure compliance with the Fair Labor Standards Act by an employer or company the Secretary of Labor may obtain an injunction. This is to ensure that the employer is not unlawfully withholding wages and overtime owed to an employee.
An employee may also choose to file a private suit against an employer to recover back pay and ascertained damages in addition to attorney's fees and court costs. That employee may also sue for relief if they have been discharged or otherwise discriminated against in retribution for filing a complaint. This relief may include the reinstatement of employment or promotion. An employee may not, however, file a private suit if a suit has been filed by the Secretary of State or if restitution of back wages is being currently supervised.
Limitations of these statutes do apply. An employee has two years to initiate an investigation or suit to recover back wages. If they violation of wage or overtime laws is considered willful the statute of limitations increases to three years. Additionally, civil penalties of each violation of minimum wage and overtime laws can be up to $1000 per violation. Willful violation of the Federal Labor Standards act can be even more severe with fines up to $10,000 and even criminal prosecution.
It's important to document in writing, either by letter or email, any requests that you have made for pay you believe you are owed. Make sure you give your employer a time limit to respond to your request. Many times, an employer will simply pay once confronted. If you are a member of a trade union you can also contact your representative to help you resolve the issue. If you are not a member of a union you may also try contacting a local worker's advocacy group to lobby on your behalf.
Many federal and state laws and regulations govern the payment of wages.
The rules can be extensive but here is an overview of some that may apply:
- Employer’s failure to pay wages may give staff grounds to bring other claims, such as claims of unfair competition.
- Employee may claim for unpaid wages if your employer has failed to pay the employee’s minimum wage.
- Employee may claim for unpaid wages if your employer has failed to pay the employee’s break time provided by law.
- Employee may claim for unpaid wages if your employer has failed to pay the employee’s “off-the-clock” work.
- Employee may claim for unpaid wages if your employer has failed to pay the employee’s time he need to put on or take off safety or other work-related gear or uniforms.
- Employee may claim for unpaid wages if your employer has failed to pay the employee’s untaken, accrued vacation time if required by state law.
- Employee may claim unpaid wages if you have worked over a 40 hour work week and not received overtime pay; in some states this will include exceeding an 8 hour work day.
- Employee may claim for unpaid wages if your employer has failed to pay the employee’s travel time during the workday that is related to work.
State Labor Departments
In addition to the Department of Labor governing federal labor laws, individual states also have labor department's governing labor law in their individual states or commonwealth’s. Laws and enforcement options will vary from state to state.
State law cannot supersede federal law when it comes to labor disputes but they will often have their own mechanisms, laws and fines that can increase the damages levied against an employer found in violation of the law.
Your state’s website will likely have contact information as well as rules and regulations governed by state institutions. Individual laws will vary so contact your state to help determine your rights and applicable laws.
A list of state labor offices, commissioners, and secretaries can be found on the website of the U.S. Department of Labor under the Wages and Hours Division (WHD).
Many employees are forcing their employers to sign mandatory arbitration agreements as a condition of their employment. These agreements essentially state that an employee must agree to outside arbitration instead of going to civil court in matters pertaining to their employment.
The legality of mandatory arbitration agreements with regard to employment law are still making their way through the courts. The Supreme Court has yet to fully weigh in on the matter and federal circuit court decisions vary by region. For instance, determining class action status in the Seventh Circuit Court of Appeals, which covers much of the Midwest, has determined that class action waivers to be unlawful. Even if an employee has signed a mandatory arbitration agreement they may still file regardless of the contract.
As of today, an employer may require you to enter mandatory arbitration if you signed a contract granting your consent. If you have signed a mandatory arbitration agreement that specifically covers the resolution of back pay and withholding of wages it’s important to contact a lawyer. Laws on mandatory arbitration will vary by jurisdiction and rulings will vary depending on your location.
Taking the Claim to an Employment Tribunal
If you live outside of the United States laws will vary from country to country. In England, Scotland and Wales you may take your claim to an Employment Tribunal. These tribunals have the jurisdiction to hear disputes between an employer and an employee.
Time limits can expire so if you were due wages by your employer you must get in touch with ACAS before those limits expire. It's a good idea to get advice from your local union representative, workers’ rights group or other advocacy organizations before registering a claim.
Fortunately, there are no fees to make a claim with the Employment Tribunal, though the form may say otherwise. Employment Tribunal claims are sometimes dismissed upon withdrawal and never make it to a final hearing. Often this is due to an employee and employer reaching an agreement or settlement before the hearings are concluded.
What Can a Lawyer Do?
Disputes between an employee and employer over unpaid wages can be contentious. The laws are varied and can be complicated especially for a layman. A lawyer can help you understand your rights and what legal avenues are available to you. If you believe your current or previous employer has violated wage or overtime laws you can sue that employer. Often times, lawyers will offer you a free assessment to determine the validity of your case.
A lawyer is more likely to understand when federal or state law has been violated and determine the validity of your case and whether it is worth pursuing. They can give you options when challenging your employer's illegal conduct.
If your employer is in violation of wage and hour laws they can help you bring suit against them.
Over and above filing a private suit a lawyer can help file claims with the US Department of Labor’s Wage and Hour Division. They will also be well versed in state law and can help filing a claim with your state's labor department.
Even just the threat of a lawsuit may bring your employee to the negotiating table and a lawyer may be able help you reach a settlement without having to file a lawsuit or a formal complaint.
If the accusation against an employer is from more than one employee an lawyer can help you determine the correct course of action. They can help determine if you meet the requirements for a class action lawsuit, which is a procedure that allows multiple plaintiffs to conduct a joint legal action.
A lawyer can also determine the likelihood of achieving your goals and how much different forms of litigation will cost. You'll receive an assessment of legal fees that the attorney will charge in relation to the damages you may recover. It’s a good idea to sit with an attorney to get a full understanding of your legal rights and the damages you may be able to recover.
If you need help learning more about unpaid wages, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.