Unpaid Wages And Overtime – Damages And Penalties

Failure to pay wages and overtime is a serious legal offense. Both federal and state law allow employees to recover the full amount of unpaid wages, plus significant monetary penalties. The employer may also be required to pay the employee’s attorney’s fees, meaning that the employee gets legal representation for free.

Full Amount of Unpaid Wages or Overtime

Both federal and state law allow an employee to recover the full amount of unpaid wages, unpaid overtime, or unpaid minimum wage that he or she is owed. Whether the claims is based on the Fair Labor Standards Act (FLSA), the Louisiana Wage Payment Act, or a breach of contract claims, the employee is entitled to be paid for all hours worked as well as any commissions, bonuses, or other payments actually earned, along with any accrued but unpaid vacation. In most cases, employees can recover up to three years’ back wages, although that may vary depending on the circumstances of the case and the specific type of claim asserted.

Liquidated Damages

An employee may also recover liquidated damages, sometimes called double damages, from an employer who fails to pay the overtime or minimum wages under federal law. As the name suggests, this doubles the amount of money the employee receives. For example, if the amount of unpaid wages is $1,000, the liquidated damages penalty will be another $1,000, for a total award of $2,000.

The theory behind liquidated damages is simple. If an employee were only allowed to recover back wages, the employer would suffer no penalty for its wrongdoing — the employer would have had to pay those wages anyway.  A liquidated damages award ensures that an employer feels a sting from its violation the law.  While liquidated damages are not awarded in every case, it is safe to say that most successful FLSA claimants are entitled to liquidated damages.

Attorney’s Fees

The FLSA also requires an employer to pay a successful claimant’s reasonable attorney’s fees. In other words, an employer sued under the FLSA faces the very real possibility of paying both sides’ attorneys. Congress passed this law in order to make it easier for employees to recover the wages they are owed. Many individual employees would otherwise have difficulty paying for legal representation, but this law ensures that those fees are paid by the company who underpaid wages in the first place.

This provision ensures that an employee will receive his full recovery, not reduced by a percentage as is common in some other types of lawsuits. Because the attorney’s fee award is separate, the employee gets to keep the entire unpaid wage award.

Penalties for Failure to Pay Wages on Termination

Louisiana law imposes additional penalties if an employee’s full wages are not paid at the end of his employment. The Louisiana Wage Payment Act states that if an employee resigns or is terminated, the employer must pay the full amount of all wages owed by the next regular payday. If the employee demands payment, and the employer does not pay, the employee is entitled to receive up to 90 days’ continuing wages as penalty for nonpayment. This can be a significant amount of money, and in most cases this penalty will far exceed the amount of unpaid wages at issue. The Louisiana Wage Payment Act, like the federal FLSA, also requires employers to pay the claimant’s reasonable attorney fees.

Collective Actions

Finally, the FLSA permits employees to join together in a collective action against a non-paying employer. A collective action allows all employees who are “similarly situated” press their claims in a single lawsuit. These lawsuits are very useful where the employer has an unlawful pay policy that affects all employees, or a specific group of employees. The collective action process means that it often makes sense to pursue a lawsuit even if one individual employee’s claim is relatively small, as the amount owed to the entire group, combined, will usually be significant.  It only takes one employee to start a collective action — the court will usually order that written notice of the lawsuit be provided to the similarly situated employees, who will then have the opportunity to join in the suit.

Employers must take their payroll obligations seriously, and the penalties for unpaid or underpaid wages can be significant. Even relatively small amounts of unpaid wages can lead to significant penalties and award.  If you have not been paid all money you are owed, or if you would like help in determining whether your company’s pay practices comply with the law, call me today at (504) 267-0777 or email me at this link.