Paying and Withholding Wages During Employment or Upon Termination and Other Issues Answered by the Utah Payment of Wages Act

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Wage claims and disputes between Utah employees and employers are fairly common, unfortunately. The Utah Payment of Wages Act contains many of the statutes and guidelines that any employee or employer should understand when a payment question or dispute arises. This article explains some of the requirements under the Utah Payment of Wages Act by answering various common questions.

These answers do not address every issue an employer or employee should be aware of when dealing with wage issues or conflicts, but they give a basic overview of many topics addressed by the Utah Payment of Wages Act. There are also other federal and state laws that an employer or employee should be aware of. It is always helpful to talk with an attorney about your specific issues.

When must an employer pay wages during the employee’s employment?

In Utah, under the Utah Payment of Wages Act, an employer must pay wages at regular intervals, but at least twice a month, which is probably the most common timing. Also, the employer must pay the wages owed to the employee within ten days of the close of the pay period. For employees who are paid on a yearly salary basis, payment can be a little more drawn out. Payment once a month is proper, but it must be made within seven days of the month after the money is earned. So, for January’s monthly wages, payment can be made any time before February 7.

Obviously, an employer and employee can agree to more frequent payment intervals than what is required by Utah’s laws or what is customary.

Once the employee is terminated, when are wages due?

The timing of payment discussed above changes, however, when employment ends. When an employer fires an employee and takes that employee off payroll, unpaid wages are due immediately, and the employer has 24 hours to make payment. (This requirement may not apply to certain sales agents who are paid in whole or part on a commission basis, but this depends on the facts.)

To give teeth to this requirement, an employee can make a written demand to an employer to make the final payment of wages, and if the employer does not comply within 24 hours, payment of the employee’s wages continues for up to a 60-day period, so long as the employee files a lawsuit against the employer within 60-days of being fired.

What notice must an employer provide regarding payment terms?

Employers need to keep their employees informed about payment terms. The Utah Payment of Wages Act requires each employer, at the time an employee is hired, to notify that employee of the timing and rate of pay—and to notify the employee of any future changes to these payment terms before they are implemented. An employer can provide that notice by posting (and keeping posted) notice of the required information in a conspicuous place that each employee will see while coming to and from work.

Employers are wise to comply with these notice requirements because failure to do so is a class B misdemeanor.

When can an employer withhold wages from an employee?

The Utah Payment of Wages Act explains that an employer can only deduct, divert, or withhold an employee’s wages in the following limited circumstances:

  • The employer is required to withhold or divert wages based on a court order or state or federal law.
  • The employee has expressly authorized the deduction in writing (for example, an employer may get approval to deduct wages for the costs of a uniform).
  • The employer has evidence that would warrant an offset or deduction (for example, evidence of theft, misappropriation, or negligence that has damaged the employer).
  • Wages are deducted under a specific program, contract, or plan established by the employer and agreed to by the employee, such as a 401(k).

Also, the employer must, when it pays wages, provide the employee a statement showing any deductions.

What must an employer do when there is a dispute about the amount of wages due?

Generally, an employer cannot withhold all payment from an employee based on a dispute regarding a portion of that payment. Rather, the Utah Payment of Wages Act requires the employer to give the employee written notice of the portion of the payment that the employer admits to be owed, and the employer must also timely pay the employee that undisputed amount pursuant to the timing requirements discussed above.

Even if the employee accepts the admittedly owed portion from the employer, the employee can still seek the disputed portion of the wages. Acceptance does not act as a waiver.

What remedies does an employee have when an employer does pay wages in full?

Sometimes, an employer and employee cannot resolve a wage dispute, and administrative or legal action is necessary. As far as administrative routes, an employee can file a complaint with Utah’s Division of Antidiscrimination and Labor (the UALD), which investigates the claim for the employee. The employee must file a claim with the UALD within a year of the date the disputed wages were earned, and the UALD only accepts claims between $50 and $10,000.

The UALD can assess a daily penalty of 5% of the unpaid wages for a period of up to 20 days and other civil fines, and the employer can also be forced to pay attorney fees incurred by the UALD, so employers are wise to avoid and quickly resolve any dispute with the UALD.

Before suing an employer in a normal court (i.e. a district court), an employee must first seek the administrative remedy provided through the UALD, unless the employee’s claims against the employer are more than $10,000 (or if multiple employees’ claims who sue together are more than $10,000). In a lawsuit in a normal court, the employee can seek the unpaid wages plus 2.5% of the unpaid wages, a penalty that is assessed daily after obtaining an order from the court ruling in the employee’s favor. This penalty stops accruing after 20 days or when the employer pays.

What other penalties can an employer face?

An employer should be careful to steer clear of any violation of the Utah Payment of Wages Act. Any failure to comply with its provisions—including but not limited to failing to pay wages on time, fraudulently delaying wages, or failing to properly advise new employees of their wage rights—is a class B misdemeanor. It may be true that many employment laws in Utah and the United States favor employers over employees, but the Utah Payment of Wages Act certainly has teeth.

Can I get legal help?

The above information is not a comprehensive list of all laws relevant to wage claims and wage payment compliance. There are other federal and state laws that each employer and employee should be aware of. Talking with an attorney can be very helpful. If you are an employer who is facing wage payment disputes or attempting to ensure compliance with laws related to wages, or if you are an employee seeking information or assistance on a wage dispute, we are happy to help.

Skoubye, Nielson, Johansen Attorneys Salt Lake City Utah

If you need help or would like to speak with an experienced attorney, please call (801) 365-1030 or click here to contact us.