Legal Claims for Unpaid Wages

Find out whether you’re entitled to unpaid wages.

If your employer has not paid you properly for every hour worked, you may have a legal claim for unpaid wages. Federal, state, and even local laws govern wages and hours. These laws determine how much employees must be paid, which hours count as work time, how meal and rest breaks are treated, and much more. This article describes some common wage and hour violations and provides information on what to do if you believe your employer broke the law.

Failing to pay the minimum wage is a common violation of wage and hour laws. Under federal law, you must be paid at least the minimum wage for all of your work time. The Fair Labor Standards Act (FLSA) sets the federal minimum wage, which is currently $7.25 an hour. Many states – and a number of cities and counties – have their own minimum wage laws, often setting a higher hourly minimum. If your state or city has its own minimum wage law, your employer must pay you whichever minimum wage is the highest. (You can learn your state’s minimum wage by selecting it from the list at Nolo’s Wage and Hour Laws page.)

Some employers violate the minimum wage laws by designating workers as unpaid “interns” rather than employees. Although employers may use interns for certain types of work and in certain circumstances, there are a number of restrictions on this practice. For example, the intern must receive training, must be closely supervised, must not perform work that provides an immediate benefit to the employer, and must not displace any regular employees. Practically speaking, this is a difficult test for many private employers to meet. If an internship doesn’t meet every legal requirement, the intern is in fact an employee, entitled to at least the minimum wage per hour. (Learn the rules for internships here.)

Employers can also violate minimum wage rules by failing to properly pay employees who earn tips. Under the FLSA, employers are legally allowed to pay tipped employees a lower minimum wage – currently $2.13 an hour – as long as the employee earns in enough in tips to bring the employee’s total hourly wage up to $7.25 an hour (called a “tip credit”). In other words, you must earn at least $5.12 an hour in tips. Otherwise, your employer must pay you the difference. However, not all states follow this rule. Some states set a minimum wage for tipped employees that is higher than the federal rate of $2.13. And some states don’t allow a tip credit at all. If you work in one of these states, you must be paid the full minimum wage per hour. To find out the rules for tipped employees in your state, including rules on tip credits, tip pooling, service charges, and more, see State Laws for Tipped Employees.

Even if your employer pays you the proper minimum wage, it might be violating the law if it takes deductions from your paycheck, leaving you with less than minimum wage per hour. Under federal law, employers may deduct certain costs from employee paychecks, such as the cost of uniforms and tools. However, these deductions may not bring your hourly pay below the minimum wage. Otherwise, your employer has violated the minimum wage laws. (And, some states either place limits on these deductions or don’t allow them at all.) To learn more, see Paycheck Deductions and the Minimum Wage.

Some employers violate wage and hour laws by failing to pay employees for every hour they work. This often happens when employers fail to count some of an employee’s hours as “work time,” for which he or she is entitled to be paid. Typical violations include:

• requiring employees to work through their unpaid meal breaks or failing to pay employees for shorter rest breaks (federal law generally requires employers to pay for short breaks of 20 minutes or less)
• making employees work “off the clock” (for example, before clocking in or after clocking out for their shift)
• not paying employees for time they spend on call or waiting at the work site (for more information, see our article on paying employees who are on call)
• requiring employees to attend classes or training sessions for which they are not paid, and
• failing to properly pay employees for time they spend traveling for work. (See Travel Time: Are You Entitled to be Paid?)

Perhaps the most common legal violation involving work hours, however, is failing to pay employees overtime. Under the FLSA, an employee must be paid an overtime premium of one-and-a-half times the employee’s usual hourly rate – for every hour worked over 40 in a week. (In a few states, employees are also entitled to overtime when they work more than eight hours in a day, or when they work seven consecutive days in row). Common overtime law violations include:

• not counting hours worked (for example, requiring employees to begin work an hour before clocking in, so that their official time cards don’t reflect that they worked overtime)
• misclassifying workers as exempt employees who aren’t entitled to overtime (by, for instance, calling them exempt managerial employees when they actually have no supervisory or oversight responsibilities), and
• miscalculating an employee’s hourly wage in order to pay less overtime (an employer could, for example, fail to include required bonuses, shift premium pay, or commissions when calculating an employee’s hourly rate, which would make the time-and-a-half rate lower than it should be).

To learn more about these rules, see our articles on overtime.

As noted above, many states have their own rules regarding minimum wage, overtime, paycheck deductions, tips, and more. In addition, some states require employers to pay for certain time or provide certain time off. For example:

• Paid sick leave. A few states require employers to provide paid sick leave. If an employer fails to properly pay employees for this time off, the employer has broken the law.
• Meal and rest breaks. A number of states require employers to provide employees with meal and rest breaks. Meal breaks typically do not have to be paid, as long as the employee does not do any work. However, some states require employers to pay for these required rest breaks. An employer who violates these rules is subject to liability and penalties.
• Final paychecks. In some states, an employee’s final paycheck must include all accrued, unused vacation time. In these states, an employee who doesn’t receive payment for all vacation hours has a legal claim against the employer. And in most states, the final paycheck must be provided to the employee by a certain date. Employees may be able to collect a penalty (sometimes called a “waiting time” penalty) when their employers violate these rules.

If your employer has failed to pay you properly for all hours worked, you should use your company’s complaint procedure to put the company on notice. Check your employee handbook or ask someone in your HR department to find out how to make a complaint. Employers are not allowed to retaliate against employees for asserting their rights to minimum wage and overtime.

If you aren’t satisfied with your company’s response, or if you face any workplace retaliation for complaining, you should talk to a lawyer. A lawyer can help you assess the strength of your claims and explore your options for enforcing your rights. The lawyer may recommend that you file an administrative charge with your state labor department, for example. If your employer has clearly broken the law, the lawyer might recommend that you file a lawsuit, either on your own or as a representative of all employees who were improperly paid (called a “class action”).

If you win your wage and hour lawsuit, you can generally collect lost wages, attorneys’ fees, court costs, and in some cases, penalties from the employer. However, there are time limits (called “statutes of limitation”) for filing a claim. An experienced wage and hour lawyer can help you understand the available strategies and file your claims in a timely manner.