Unpaid Wages: What to Do If an Employer Refuses to Pay You

If you haven't been paid all the money you've earned at work, you might have a legal claim against your employer under state or federal wage and hour law.

This article explains some common wage violations, as well as what to do if you believe your employer has broken the law. For information on how to calculate your unpaid wage claim in your state, see Wage and Hour Laws by State.

Unpaid Wages

The federal Fair Labor Standards Act protects your right to earn at least the federal minimum wage, to be paid for every hour worked, to keep your tips (except those that are paid into a valid tip pooling arrangement), and to limit deductions from your paycheck, in certain circumstances.

State laws vary, but many provide more protections, including setting time limits within which employees must be paid (including deadlines for final paychecks), requiring employers to pay out unused vacation or paid time off, prohibiting certain paycheck deductions, and much more.

If you've earned wages but haven't been paid them, the first step is to alert your employer. If that doesn't help, you might need to file an unpaid wage claim with your state labor department.

Wages Earned But Not Paid: Minimum Wage Violations

Employees are entitled to earn at least the minimum wage for every hour they work. The federal minimum wage is $7.25; many states (and some local governments) have set a higher minimum. You are entitled to the highest minimum wage applicable to the state and locality where you work.

Of course, an employer that pays employees less than the minimum wage as a standard hourly rate has broken these rules. But even an employer that pays more than the minimum violates these rules if it takes certain deductions that bring the employee's pay below the required amount. Here are some examples:

Underpaying tipped employees. The FLSA allows employers to pay tipped employees a much lower minimum wage -- $2.13 an hour – but only if the tips the employee actually earns bring the employee's hourly compensation up to at least the regular minimum wage of $7.25. If the employee has a slow shift and doesn't earn at least $5.12 an hour in tips, the employer must make up the difference. Some states don't allow employers to pay tipped employees a lower minimum wage.

Taking too much in deductions. Under federal law, employers may withhold certain money from your paycheck to cover the cost of employment expenses or satisfy a debt owed to the employer. However, the employer may not deduct so much that the employee's earnings fall below the minimum wage. Some states don't allow these deductions at all, no matter how much the employee earns.

Hours Violations: What Counts as Working Time?

It's also a wage violation to fail to pay for every hour worked. Employers violate this rule by not counting certain time as work, including:

• time employees have to work "off the clock," before clocking in or after clocking our for the day
• meal or rest breaks that employees have to work through
• required training programs and classes
• travel time (see When Work-Related Activities Count as Hours Worked), and
• waiting time the employee must spend on the employer's premises.

State Laws on Paydays and Final Paychecks

The FLSA doesn't require employers to pay employees on a certain day or within a certain time limit, but many states do. Some states require that employees be paid no less often that twice a month or once every two weeks, for example.

Some states require employees to be paid within a certain date of performing the work for which they are being compensated. For example, California employees are entitled to be paid by the 26th of the month for wages earned between the 1st and the 15th of the month, and by the 10th of the month for wages earned between the 16th and the end of the previous month.

A number of states also have laws setting time limits for final paychecks, another topic not covered by the FLSA.

You can find the rules for your state on final paychecks at Nolo's Chart: Final Paychecks for Departing Employees.

State Laws on Vacation Time

Employers aren't legally required to give their employees paid vacation time. However, employers that choose to offer this benefit may be subject to state laws on cashing out this time.

Some states treat accrued vacation as a form of compensation that the employee has earned. This means that employers must pay employees for unused accrued vacation time when the employment relationship ends.

It also means that employers may not take away vacation once it has accrued (for example, pursuant to a "use it or lose it" policy). Even in these states, employers are free to cap how much vacation an employee may accrue in the first place.

For more information, see Paid Vacation: What Are Your Rights?

State Laws on Tips and Paycheck Deductions

The rules on what an employer may require an employee to pay for vary by state. Some states allow employers to charge employees for tools; others don't. Some states allow employers to charge employees for uniforms; some allow this only if the uniform can be worn as street wear; some don't allow this charge at all.

States also have different rules about whether and how an employer may withhold money from an employee's paycheck to pay back a debt owed the employer (for example, for an advance). Contact your state labor department to find out what rules your state follows for these issues.

State laws also vary on tips. Generally speaking, tips belong to the employee who receives them. Except for a reasonable amount the employee is required to contribute to a valid "tip pool," employees keep their own tips. And the employer may not share in the tip pool.

In some states, employers can't take a tip credit (pay a lower minimum wage to tipped employees).

These states, including California, require employers to pay tipped employees at least the minimum hourly wage, in addition to their tips. You can find information on state tip credit rules at Wage and Hour Laws in Your State.

What to Do If Your Employer Refuses to Pay You

If you believe your employer is violating state or federal wage laws, your first step is to raise the issue internally. Inform the HR or payroll department of the problem, following your company's procedures for bringing concerns to the attention of management.

If your complaints fall on deaf ears, consider consulting with an employment lawyer. In many states, employees have the option of pursuing unpaid compensation by either filing a wage claim with a state agency or by filing a lawsuit in court.

A lawyer can tell you whether either of these strategies makes sense, based on the facts of your situation. A lawyer will also tell you whether it makes financial sense (for you and the lawyer) to have legal representation or whether you should try to bring your claims on your own.

If your employer's wage policies affect a group of employees, a lawyer might suggest that you bring the claims together as a class action. That way, you can all use the same lawyer and stand together to vindicate your rights.