By Benton M. Eskelsen
An unfortunate reality of an employee’s life is that employers often fail to pay employees earned wages. Employees often don’t understand the full amount their employers owe. This uncertainty discourages employees from pursuing unpaid wage claims. Employees mistakenly believe these claims are not worth the time and never recover the money they are owed. In this article, I describe legal penalties that an employee can seek against an employer who has not paid wages. Utah and the federal government have instituted certain penalties that seek to deter employers from violating wage laws. These penalties compensate employees for the financial harm they have suffered when such situations occur. This article discusses some, but not all, of these penalties.
Daily Penalty after Judgment
Under the Utah Payment of Wages Act (UPWA), an employee who successfully brings a civil lawsuit for unpaid wages can recover 2.5% of the unpaid wages daily for up to 20 days past the day the court issues an order requiring the employer to pay. This penalty stops accruing once the employer pays the full amount owed. It is in addition to any unpaid wages that the employee is entitled to receive. For example, let’s say your employer failed to pay wages in the amount of $15,000. 2.5% of $15,000 is $375. If you get a judgment against your employer, and the employer ignores the judgment for 20 days, the penalty is an additional $7,500. This example is not necessarily a typical situation, but it illustrates how much additional money an employee could be leaving on the table by not pursuing a wage claim.
Penalty Related to Pay at Termination
Additional penalties apply when an employer doesn’t pay an employee within 24 hours of terminating the employee. If the employer fails to do so, the former employee may be entitled to receive payment of his or her normal wages up to 60 days after the date of termination or until the employer pays the unpaid wages. Here is another example to illustrate how this particular penalty works. Let’s say you make $25 an hour at your job. If you are terminated and your employer fails to timely pay you your final paycheck within 24 hours and continues to fail to do so for an additional 60 days, you could be entitled to approximately $12,000 in damages on top of any amounts of wages that remain unpaid ($25 times 8 hours a day times 60 days equals $12,000). However, in order to take advantage of this penalty, a terminated employee must send a written demand to the employer for the unpaid wages and must file a civil action before 60 days after the date of their termination. Failure to do so will extinguish your ability to seek this penalty.
If an employee prevails in a wage claim lawsuit, he or she may also be able to recover attorney fees. But this remedy only applies if the employee made a written demand for payment at least 15 days before filing the lawsuit. Attorney fees can climb very quickly, so the ability to force the former employer to pay those fees will greatly increase the value an employee may receive from the wage claim. Ensuring the payment of attorney fees is another reason a person should write a written demand to their former employer as soon as possible. To ensure the letter is done right, an attorney can help.
Double Overtime Through Liquidated Damages
Many employees are entitled to overtime pay, which is time and a half regular pay after 40 hours in a week. If an employer has not paid overtime wages, the employee may be entitled to receive double damages for their unpaid overtime under the Fair Labor and Standards Act (FLSA). The employee will receive the amount of overtime wages owed to them, plus an additional amount equal to the unpaid overtime, which is called liquidated damages.” This doubles the value of an employee’s claim. Liquidated damages are typically interpreted to mean that the employee will receive twice the amount of unpaid overtime wages.
Example of Various Damages
Here’s an example of just how much the value of a wage claim may increase when considering all of the above penalties that may be due to an employee. Let’s say your employer owes you $15,000 in unpaid wages, $5,000 of which is overtime pay, and that you make $25 an hour. Let’s also assume that you were recently terminated from your job and your employer failed to pay you within 24 hours after your written demand for your unpaid wages. You then wait 15 days and hire a lawyer to file a lawsuit for you. You would be entitled to damages in the amount of $200 per day up to $12,000. You would also be entitled to 2.5% of your unpaid wages for up to 20 days past the day the final order of the court is issued. So, $375 a day up to $7,500. You also have a claim or unpaid overtime wages in the amount of $5,000, so you would be due liquidated damages of an additional $5,000. Your attorney fees will likely be ordered to be paid for by the court, so your $15,000 claim could potentially be worth upwards of $39,500. While this example may not be typical, it serves as a powerful example of how even a small wage claim can balloon into a relatively large claim.
As illustrated above, there are significant potential civil penalties that an employee can receive by pursuing a wage claim under Utah and federal law. This article discusses some, but not all, of those penalties. It is important to understand the laws and penalties associated with wage claims, so talking with an attorney is often crucial. Also, if you need free help with an employment claim, there are resources available at the UALD, which can help handle wage claims between $500 and $10,000. Also, the U.S Department of Labor can assist with unpaid overtime claims as well. If you have a larger wage claim or want help navigating a smaller claim I am happy to assist you. I am also available to help employers defend meritless wage claims or avoid the penalties discussed above. Whatever your needs, I am happy to help, and I offer free consultations.