Employee Tip: Things to Consider If You Have Unpaid Wages

If you have been underpaid wages, you may want to consider the following.

Please note this post does not provide legal advice- if you want legal advice, you should contact an attorney and discuss your specific circumstances. If you are interested in legal assistance from attorney-author Michael Brown or his law firm DVG Law Partner for your matter, please contact them here:

  • Keep copies of your paystubs and pay-related documents.

This is simple but important.  Hold on to your paystubs, as well as any other documents that relate to your pay (e.g. copies of your timecards, employer’s bonus plan, emails about wages, etc.).  With that said, make sure you do not violate any employer policy, e.g. a proprietary information policy that prohibits you from copying/retaining a given document.

  • Calculate your unpaid wages.

It is important you estimate how much in wages you are owed.  If you are unsure, you should still come up with at least a ballpark valuation, based on whatever information is available.

  • Are the unpaid wages at issue less than $5,000?  If so, you should be mindful about hiring and paying an attorney more than the amount of wages at issue.  If the unpaid wages are greater than $5,000, you should consider contacting an attorney to see if they’ll offer affordable fees or a contingency fee.

In my opinion, an employee with a lower-dollar wage claim (less than $5,000) can usually best handle the issue by filing an agency complaint (e.g. a complaint to the Department of Labor, or to your State’s wage-enforcement agency), and letting that agency investigate your matter, without retaining an attorney.  I say this because when you are dealing with wages of less than $5,000, you could end up paying an attorney more than the amount of unpaid wages at issue.  With that said, every matter is different and there are some exceptions to this general principle (e.g. cases where proof is very good and repayment of attorneys fees very likely to be awarded, cases where multiple employees band together for collective action, etc.).

If you have a higher amount of lost wages (i.e. much larger than $5,000), the amount you stand to recover better justifies paying an attorney.

Also, if the amount of unpaid wages is significant, many employee wage attorneys (including myself) will work on a contingency basis where you pay no out-of-pocket legal fees.  That is, only if you win or settle your wage claim are legal fees paid, and they are paid as a percentage (typically 1/3) of your award/settlement.

But if the amount of your unpaid wages is low (e.g. $3,000), the contingency percentage (e.g. $1,000) will probably be far less than the value of an attorney’s legal work.  In other words, lawyers will not want to work on a contingency basis for a lower-value wage claim.  And if an attorney offers to work on an hourly basis (say, $200 per hour), you could end up paying more than the unpaid wages at issue.  That is not in your interest.

Bottom line: the lower the value of your unpaid wages, the more cautious you should be about paying high out-of-pocket legal fees to pursue those wages.  If you have a lower-value wage claim, check what your local agencies can do for you.  If you have a higher-value wage claim, consider calling an attorney to see if they charge affordable and/or contingency fees that make sense in light of the larger value of unpaid wages you stand to gain.

  • Be aware of legal deadlines (statutes of limitations), which are often two (2) years- they come up quick.

Several wage laws have a 2-year statute of limitations.  For example, say an employee was underpaid wages between June 5, 2006 and April 10, 2008.  The employee must file a legal complaint by June 5, 2008 (two years from the first unpaid date of June 5, 2006), in order to encompass all the unpaid wages at issue.  For each day the employee waits after June 5, 2008, he or she loses a day’s worth of unpaid wages (potential damages).

  • Before you file a legal complaint to an agency (e.g. a wage complaint to the Department of Labor or a wage complaint to your State’s wage-enforcement agency), ask about the potential timelines and success rates.

Before you file a wage complaint with an agency, you may want to ask the contact person what the agency’s success rate is in getting employers to pay unpaid wages.  Is there an 80% rate of employer compliance (wage-payment) when the agency demands unpaid wages from the employer?  50%?  It’s good to get an idea of how well the agency process works, and whether it has teeth in getting employers to pay employees what’s owed.

You should also ask your agency contact how long it typically takes that agency to process a complaint and enforce a decision.   A few months?  Six months to a year?  It is good to get an answer, even if it’s a ballpark estimate.  If the agency complaint is likely to take a long time, you could miss complaint deadlines and opportunities in civil court.

Along those lines, you should also ask your agency contact whether the civil statute of limitations (legal deadline) is frozen, or keeps ticking, while your agency complaint is processed.  For example, in Wisconsin, an employee has the option (on day 1) to file a wage complaint with an agency called the Equal Rights Division (ERD), or the option (on day 1) to file a complaint in civil court.  If the employee files the complaint with ERD, then ERD can pursue unpaid wages dating back 2 years before the date of the ERD complaint.  However, if the employee cannot get the wages via the ERD process and decides to file a civil wage complaint, the 2-year statute of limitations may apply from the civil complaint filing date, not the earlier ERD complaint filing date.  In other words, when a wage complaint is filed at ERD, the 2-year civil deadline may not be frozen and may keep “ticking,” so to speak.  So if a given ERD complaint is likely to take a long time, and/or if the ERD is unlikely to be successful in getting that employer to pay, you want to gauge these things as early as possible.

  •  Consider talking to a wage attorney, particularly if you can do so free of charge.

It can be very helpful to discuss your circumstances with an experienced wage attorney, especially if it doesn’t cost you anything.  Many attorneys (including myself) provide initial phone consultations for free, and can provide an preliminary assessment of whether you may have a valid wage claim, and what it’s potential value may be.  Sometimes, an attorney will tell an employee he or she does not have a good potential wage claim, or that a wage claim’s value is so low that it does not justify paying an attorney.  Sometimes, the news is much better, and the attorney may identify potential claims and damages/awards that are above and beyond what the employee anticipated.  The attorney may offer to be retained a on a reduced-fee or contingency basis.  Bottom line is that attorney feedback (particularly free-consultation information) can often be of help.

  • If you’re thinking of complaining to your current employer about wages, assess potential benefit versus potential retaliation.

Depending on the circumstances, it may or may not be worth talking to your current employer about your unpaid wages.  If your boss is a hothead and fired the last 3 employees who complained about work issues, then you must give the risk of retaliation great consideration.  (There are laws that prohibit retaliation, but hotheaded managers often don’t follow those laws, even when they’re familiar with them).

On the other hand, if the manager you are dealing with is generally reasonable and hears out employees who express concerns, then the risk of retaliation is lower.  In that event, you may be more inclined to approach the manager, bring up the wage issue, and try to work things out informally.

There are other unique factors to consider before you approach your employer about potential legal violations.  I describe these factors in greater detail in this post, at Sections 4-6.

If you have been underpaid wages and are considering legal options, considering the factors above will hopefully be of help.

Please note this post does not provide legal advice- if you want legal advice, you should contact an attorney and discuss your specific circumstances. If you are interested in legal assistance from attorney-author Michael Brown or his law firm DVG Law Partner for your matter, please contact them here:

 

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