US Federal Penalties for Late Paychecks

February 28th 2024

In the United States it is a legal requirement that employers pay their employees in a timely manner. The US Federal government is invested in ensuring the prompt compensation of employees for the full amount of work completed, therefore there are regulations in place to protect workers’ rights. The violation of these employment rights can result in legal and financial consequences, such as penalties and lawsuits. In this article we will look into the laws and regulation, penalties and actions available to employees facing such issues.

This article covers:

Legal Framework for Late Paychecks in the US – The Fair Labor Standards Act (FLSA)

The main Federal law that governs labor standards in the US, such as wage and hour requirements, is the Fair Labor Standards Act (FLSA). This Act was introduced in 1938 and having undergone amendments over the years, remains the primary point of guidance for employment issues to safeguard workers. It sets out numerous standards on areas such as minimum wage, overtime pay and child labor. There are regulations outlining the requirement for employees to receive their paychecks promptly for all hours worked.

In addition, a late paycheck is seen as equal to refusing to pay wages under the FLSA and the ramifications are the same. If an employer willfully withholds paychecks, the severity of the penalties received for labor violations will increase.

Payday:

Although there is not an exact payment schedule required by the FLSA, employers are expected to implement consistent, regular paydays and timeframes. It is required that paychecks are delivered on the agreed upon payday in the employment contract. The wages for all the hours worked in a pay period must be delivered to the employee on the next payday, including overtime pay. Weekly, bi-weekly or monthly tend to be the most common payment schedules adopted by employers.

Final Paychecks:

There is no provision under federal law which requires employers to deliver the final paycheck immediately. However, a timely payment should still be made. Some states have established their own laws regarding this issue. If facing challenges with receiving a final paycheck and the regular payday has passed, it is recommended that employees contact the United States Department of Labor or the Wage and Hour Division.

Wage Deductions:

Under Federal laws, employers are allowed to make deductions to your paycheck but only for specific reasons and circumstances. One such reason to make wage deduction is if company property has not been returned by the employee at the end of the employment. As there is no Federal law requiring the immediate payment of the final paycheck, employers can withhold the final paycheck until the company property is returned.

Common deductions include:

  • Damage or loss to company property
  • Cash shortages
  • Equipment, tools, required uniforms etc.

Employee Rights against Paycheck Violations in the US under FLSA

The FLSA offers numerous rights and protections to employees, along with action options. It is important for workers to understand their rights and what to do when faced with violations. Employees have the right to receive their full paychecks on time, based on the agreed upon terms in the employment contract.

Under the FLSA, employees are encouraged to take action against unlawful employer actions, to hold them accountable and prevent future violations. If faced with paycheck violations, employees have the right to the following actions:

  • Pursue backpay: Employees are entitled to their rightful wages and compensation. It is important to firstly contact an employer in writing, requesting the wages owed.
  • File a complaint: If an employer refuses to pay the rightful wages, employees are entitled to file an unpaid wages complaint with the Department of Labor’s Wage and Hour Divisions (WHO). They may investigate the violations of the FLSA and take action.
  • File a lawsuit: If an employer is violating employment laws, filing a lawsuit is an alternative action option. It is key to seek the legal services of an experienced employment lawyer.

The FLSA also offers protection to employees who have taken actions due to the violation of their rights, such as late/undelivered wages. It is prohibited for employers to retaliate against an employee and further action can be taken if retaliation occurs.

Note: it is strongly recommended to seek legal advice from an experienced wage and hour lawyer when pursuing a paycheck violations case. The process can be complicated and attorneys are best situated to inform employees of their rights and options for different circumstances. The documentation of all information during this process is key to ensuring the best outcome and can be used as evidence in the case.

Penalties for Late Paychecks in the US under FLSA

If an employer violates labor laws by failing to deliver paychecks on time, they may face penalties and legal action under the FLSA. The enforcement of penalties by the Federal government is designed to protect the rights of workers by compensating them for monetary losses, whilst ensuring employers comply with laws and regulations.

There are various types of penalties depending on the circumstances of the case and the outcome of the investigation by the Department of Labor. Possible penalties include back pay, civil penalties, liquidated damages and the payment of legal fees and costs:

  • Back pay: This is when employers pay back the wages that they failed to deliver on time to their employees. Due to the delay in payment, there can often be interest/compensation added to the original wage amount.
  • Civil penalties: The violation of the FLSA can result in a Department of Labor investigation into the employers actions. Civil penalties can be awarded for each violation. Frequent and intentional violations will cause more severe penalties.
  • Liquidated damages: Depending on the circumstances, employers may be liable to pay liquidated damages. This is a form of compensation for the delay in receiving a paycheck and add up to the same amount as the back pay/unpaid wages. Therefore, in total, the employee will receive double the amount of their missing paycheck. Liquidated damages may also be pursued when claiming unpaid overtime.
  • Legal fees & costs: When an employee takes legal action against an employer for the violation of employment laws under the FLSA, employers found guilty of such actions may be liable to pay the legal fees and costs of the employee.

Other Federal Laws and Penalties in the US

There are several alternative Federal laws usually for more specific industries and circumstances, which handle issues concerning the payment of wages and protect workers from exploitation.

Davis-Bacon and Related Acts (DBRA):

This Act refers to those working on federally funded or assisted construction projects and details the obligation of employers (contractors or subcontractors) to pay their employees prevailing wages. Prevailing wages, in this instance, means the basic hourly wage plus any benefits. Covered workers are entitled to receive weekly paychecks. If employers violate the DBRA, they may be liable to penalties, such as contract termination, civil penalties and the barring from future government projects.

Contract Work Hours and Safety Standards Act (CWHSSA):

The CWHSSA, under the Wage and Hour Division (WHD), enforces the regular payment for hours worked and overtime for laborers and mechanics employed on federal contracts. Workers have the right to take action if employers do not comply with the regulations. Contractors who are found to have violated this act, may be liable to pay civil penalties and back wages. In addition, they may have their contract terminated and be barred from receiving further contracts for 3 years.

Enforcement of US Federal Paycheck Laws

When there have been allegations of labor law violations, such as late/undelivered paychecks, the FSLA authorises the Department of Labor’s Wage and Hour Division (WHD) to investigate. The WHD are the main enforcer of federal wage laws, ensuring employers comply with the law.

The WHD are entitled to inspect the premises and records of employers, interview employees and gather data and information about the employment practices. This is used to determine if violations have been committed. For the safety of employees, all complaints are kept confidential. Following an investigation, the WHD may decide to take enforcement action. The employer may be required to pay back wages and penalties, or the WHD can choose to pursue legal action.

Additionally, WHD carry out more investigations in certain types of business and industries and in specific geographical regions, where violations have been particularly severe and frequent. For example, they often target low-wage industries. In this sector there tend to be higher levels of vulnerable workers, along with high levels of employment violations and noncompliance with the law.

State Paycheck Laws and Penalties

Many States have established their own laws concerning employment rights, including regulations that target late paychecks. Some State laws provide greater employee protection by having more rules for employers and more severe penalties for noncompliance with the laws. Other States have their own laws which are in line with federal laws. Some do not have separate regulations and rely solely on those of the federal government. Therefore, it is important for both employees and employers to be aware of the laws in place in their State, as well as the general Federal Laws, to avoid penalties and legal action and to protect employee rights.

Summing Up

The payment of wages in a timely manner is a fundamental right in the US and essential for the successful running of the economy. There are laws instilled by the Federal Government to prevent the violation of employment rights. The FLSA is the main law that governs labor standards including the late delivery of paychecks. Employees who face paycheck violations are able to take actions such as filing a complaint or lawsuit. The WHD are responsible for investigating allegations and forming conclusions. If found guilty of violating the rights of workers, an employer may be liable to pay back pay, liquidated damages, civil penalties and legal fees, in addition to facing contract termination. Such penalties are in place to properly compensate employees for their work and to hold employers accountable for illegal actions, creating a fair and equitable workplace.

Learn more about US Labor Laws through our detailed guide. 

Important Cautionary Note

When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.