I get calls all the time from people who did not receive their last paycheck from their previous employer. It seems like employers can feel like they can “punish” employees they don’t like by withholding their last check. The assumption appears to be because the amount owed is usually relatively small the employee won’t bother, or won’t be able to afford to hire a lawyer to help them get their money.
I’m happy to say those employers are very, very wrong. There are a number of ways an employee can get their last paycheck that will cost the employer a lot more than just paying the money when it was owed.
Method One – A Contracts Claim:
The first way one can get their last paycheck is by bringing a contracts claim against their previous employer. In Georgia, an employment agreement is only a contract if it includes a term of service (e.g. “This agreement is to last from January 1st to December 31st of this calendar year.”) so without a specifying a term in the agreement an employer can change an employee’s pay, working conditions, hours, etc. moving forward at any time. However, an employer can’t change an employee’s pay retroactively. For example, if you were being paid $500 a week and paychecks were distributed on Friday afternoons an employer can’t tell you on the Friday that your paycheck will be $400 for the previous week. The employer would have to tell you on the Friday that starting next week you will be paid $400 instead of $500 a week.
If the employer changes an employee’s pay retroactively the employee can bring a claim saying essentially “we had an agreement that I would work a certain amount and you would pay me a certain amount. I did the work but you didn’t pay me the amount we agreed.”
A problem with bringing this kind of claim is, at least in Georgia, each side will probably be responsible for paying their lawyer. In the US the default rule is each side pays their own attorney as opposed to Britain for example where the loser pays the winner’s attorney’s fees. Because the employee would be responsible for paying their lawyer it is very possible it will cost more in attorney fees to get the final paycheck than the amount of money owed. It is also unlikely an attorney will work on a “no win, no fee” basis when the amount in question is small.
Method Two – A Minimum Wage Claim
Another type of claim that can help an employee get a final paycheck, or even more, is a minimum wage claim. Under the Fair Labor Standards Act (“FLSA”) most hourly workers and many salaried workers must be paid at least the minimum wage for each hour worked. If an employer fails to pay an employee their last paycheck then they failed to pay the employee at least the minimum wage for the hours they worked in the final pay period.
Because the national minimum wage in the US is only $7.25 an hour you might think anyone who makes more than that will receive less than they are owed for their final paycheck if they bring a minimum wage claim. But the FLSA has what is called a liquidated damages provision which requires an employee who has to go after their unpaid minimum wage an extra amount of damages equal to the unpaid minimum wage. Essentially, the employee is owed their unpaid minimum wage times 2.
This means if you earn less than $14.50 an hour (7.25 minimum wage times 2 = 14.5), you will receive more money if you bring a minimum wage claim than a contract claim.
The other reason a minimum wage claim is such a strong tool is because the FLSA has what is called a “shall pay” attorney’s fee provision. This means the employer must pay the employee’s attorney’s fees when the employee brings a minimum wage claim under the FLSA. Even if the employee is owed one hour of unpaid minimum wage the employer has to pay for what it cost the attorney in fees to collect that one hour.
Because of the strong attorney’s fee provision an employee may be able to find an attorney to help them even if the employee is only owed a small amount of money. The FLSA was designed to make sure lawyers had an incentive to help employees recover even the smallest amount of unpaid minimum wage or overtime.
Even if you are normally exempt from the minimum wage or overtime laws and are paid a salary you might still be able to bring a minimum wage claim. In fact, a minimum wage claim might be especially valuable to people paid a low salary.
To be exempt from the minimum wage and overtime requirements an employee must be paid at least $455 a week in salary and meet certain duties tests. Because an employee can (at the moment) be paid is little as $455 a week to be exempt, their hourly rate can get really, really low. For instance, $500 a week working 50 hours a week is an effective hourly rate of $10
Because most of the exemptions from the FLSA require the employee be paid at least $455 a week in salary, when an employee does not receive their final paycheck they can not be considered exempt. If the employee is not paid anything for a pay period then they could not have been paid at least $455 a week in at least one workweek, depending on the length of the pay period. So an employee who is not given their final paycheck is not exempt from the minimum wage requirements and must be paid at least $7.25 an hour for all hours worked plus an equal amount in liquidated damages.
That’s not all. If the employee who did not receive their last paycheck also worked more than 40 hours then they are also owed overtime. Overtime would be time and a half the hourly rate which is minimum wage. 7.25 *1.5 = 10.88. So the employee would be owed $10.88 for every hour over 40 worked in a workweek that is supposed to be covered by the missing paycheck. Finally, the employee would be owed liquidated damages as well in an amount equal to the unpaid overtime.
As you can see, there are a number of different ways to get your money when your employer won’t give you your final paycheck. It is also well worth your time.
If you are in Georgia, particularly the Atlanta metro area, and you did not receive your last paycheck call or email employment law attorney Ben Kandy.