Late Paychecks Violate Fair Labor Standards Act (FLSA)
From start-up to the most experienced small business, companies of all sizes can run low on cash due to late receivables or unexpected large expenses. It is in those situations, that some employers may delay payroll to ease the burden created by cash flow problems. If the poor financial condition of your employer's business caused you to receive a late paycheck or no paycheck at all, your employer may have violated the Fair Labor Standards Act (FLSA), also known as the wage and hour law.
Case in Point – The Federal Government
In Martin v. United States, the federal government paid its workers approximately two weeks late because of the government shut down in October 2013. A week after the shutdown ended, a group of federal government employees filed suit alleging violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201-219. On July 31, 2014 the U.S. Court of Federal Claims ruled that late paychecks resulted in a violation of the FLSA. The court concluded that the FLSA is violated when an employer fails to pay its employees all wages due on the regular pay day. And while the employees got their paychecks, they were entitled to liquidated damages in an amount equal to the late payments, plus attorneys' fees.
“No Harm, No Foul” is Not an Applicable Defense
The court's decision in the Martin case demonstrates that the “no harm, no foul” rule does not apply to the FLSA. The court acknowledged that the FLSA “contains no explicit timeline” for paying the required wages. However, the court concluded from U.S. Supreme Court cases and from other authorities that an employer violates the FLSA when it does not pay its workers the necessary FLSA minimum wages or overtime compensation on the regular paydays for their work performed. The court noted a U.S. Labor Department interpretation saying, “The courts have held that a cause of action under the [FLSA] for unpaid minimum wages or unpaid overtime compensation and for liquidated damages ‘accrues' when the employer fails to pay the required compensation for any workweek at the regular payday for the period in which the workweek ends.” 29 C.F.R. § 790.21(b). The court further relied in part upon U.S. Labor Department's general FLSA interpretation that “overtime compensation earned in a particular workweek must be paid on the regular pay day for the period in which such workweek ends.” 29 C.F.R. § 778.106.
The Bottom Line
This is not the first time that a court has found that the untimely payment of FLSA-required wages in itself violates the FLSA, notwithstanding that the wages were eventually paid, or that FLSA liquidated damages can be awarded for such a violation. And while the case described above consists of government employees, neither are these concepts are limited to government employment. Employers should not assume that “close enough is good enough” where the timely payment of wages is concerned. Employees should not assume they will be compensated in a timely manner, regardless of the size, history or type of organization for which they work.
If you believe that you have been denied minimum wage or overtime, or unfairly received a late paycheck, an experienced employment lawyer may be able to help. If you have questions or concerns about your rights, contact the experienced employment lawyers at Kingsley & Kingsley by calling us toll-free at (888) 500-8469 or by clicking here to contact us via email.