What Happens When You Don’t Pay Employees: Part 1
We have spoken at length about how important payroll is. Why you should pay employees on time, keep records organized, and so on. We haven’t gone into detail about the consequences of an ineffective payroll. Especially when it doesn’t pay employees on time. The consequences can be minor if handled or get to be severe. What are these consequences and how should you handle them? Let’s explore a bit and find out.
Not Paying Employees On Time: Legal Consequences
First, we should clarify what we mean when we say not paying employees on time. This doesn’t only mean their paycheck. It also means any overtime or vacation pay they are due. Everything must be paid on time to avoid consequences. We should also note we are only talking about the legal aspects of not paying employees on time.
If an employee is not paid on time they can file a wage complaint. A wage complaint or wage claim goes through the state employment agency. This can prompt a formal investigation into your company. This is where those proper records come in handy. They will want to see all records about the employee’s wages. You will be held liable for any wages owed to the employee and can face a lawsuit over them. That is when things get expensive. You become liable not only for missing wages but also attorney costs if you lose in court. One attorney commented on such a case he was involved in. The amount due was less than $5,000. By the time they went to court and the employee won, the employer owed them well over $80,000 dollars. This included lost wages, attorney costs, and other fees.
A few things to know about employees filing a wage claim:
- An employee can not have their employment terminated because of a wage claim.
- You must continue paying their normal wages while a wage claim is underway.
- Many employees can file a class action lawsuit over missed wages.
- When filing for Chapter 13 Bankruptcy, employee wages must still be paid on time.
Can This Be Avoided?
Outside of paying your employees on time, the only other option is to speak with your employees. If you must delay their payment take time to explain why. Make sure you discuss the following.
- Why their paycheck is being delayed.
- When they will get their compensation.
- What steps you will take to ensure this doesn’t happen again.
There is no guarantee this will prevent them from filing a wage claim. It might, however, be enough to make them hold off on filing one. Make sure you make good on your promises if they do delay filing a wage claim.
Any Other Consequences?
That summarizes the legal aspects of not paying their employees on time. There is also the issue of employee morale and productivity to consider. Which we will talk about further in What Happens When You Don’t Pay Employees: Part 2
If you have concerns about your own payroll, feel free to contact Vision H.R. A Daytona Beach Payroll Company. We can help answer any questions you might have. To make you feel even more secure, we can walk you through the benefits of outsourcing payroll. With a team of experts behind your payroll, you won’t have to worry about employees getting paid on time. We will handle that for you.
Daytona Beach Payroll Solutions
