Although employers have some leeway about how and when they pay employees, strict federal laws regulate the payroll process. These laws provide clearly defined rights for every employee — but not necessarily every independent contractor and freelancer — in the country who collects a paycheck.
When a business considers someone an employee, it’s bound by federal regulations designed to protect workers from abuse or exploitation. In addition, many states supplement federal law regarding paychecks with rules of their own.
If you are concerned that your employer is breaking one of these laws, or if you have a question like, “Can an employer withhold a paycheck for any reason?” or “When should I receive my final check?” here are the basic rights and legal terms you need to understand. You can use this information to make sure you’re getting everything you’ve earned and to decide what to do with your paycheck next.
1. You Have the Right to Be Paid Promptly
Federal labor law doesn’t require employers to distribute pay in specific intervals, such as weekly or bimonthly, but your state’s laws might. The Fair Labor Standards Act — which outlines employee compensation regulations as well as severance, holiday and overtime pay — only requires employers to pay their workers in a “prompt” fashion.[x]
Although the wording is vague, it’s generally accepted that employers should pay their employees — in the form of either cash or a “negotiable instrument” like a check — as soon as possible after the most recent pay period ends. The FLSA also requires that employers pay employees their wages, including any earned overtime, on the regular payday for the pay period during which they worked those hours.[x]
An employer cannot withhold any payment, and employees can’t be forced to kick back any portion of their wages. Employers are also expected to give employees any overtime pay on the same day they receive their regular paychecks.[x][x]
See: How Much Money Gets Taken Out of Paychecks in Every State
2. You Have the Right to Be Paid Quickly After Leaving a Job
The “last paycheck” law states that employers aren’t required to give an employee his final paycheck immediately upon leaving a job, regardless of whether he quit or was fired, according to the U.S. Department of Labor. [x]An employer should, however, pay an employee by the next regular payday following the last pay period he worked.[x]
Many states have their own final paycheck laws. Missouri and California, for example, require that you get paid immediately if you were fired, but there’s no supplementary law if you quit.[x][x]
3. You Can’t Be Fired Because Your Wages Were Garnished
Courts can order a garnishment on an employee’s wages, tips, bonuses, commissions and other income to satisfy certain debts, such as child support or tax obligations. Title III of the Consumer Credit Protection Act forbids employers from firing employees because they had their wages garnished once, even if the business has to endure multiple levies or proceedings in pursuit of collection.[x]
The law does not, however, interfere with an employer’s right to fire an employee because their earnings are separately garnished for two or more debts. Most employees also have the right not to have their tips garnished.[x]
Related: How to Stop a Bank Levy
4. You Have the Right to Minimum Wage, Even If You Work for Tips
The minimum wage for employees who regularly earn more than $30 a month in tips is $2.13 an hour. If that wage combined with tips doesn’t equal or surpass the federal hourly minimum wage, however, the employer must make up the difference. Make sure you stay informed about labor laws that could affect your check.[x]
Some states — including Arizona, Colorado, Idaho and Wisconsin — require employers to pay tipped employees more than the federal minimum of $2.13. Other states — including California, Montana, Washington and Oregon — require employers to pay employees the full state minimum wage before tips.[x]
Check Out: State Minimum Wage Increases Across America for 2017
5. You Have the Right to Collect Ordered Back Pay
Back pay is the difference between what an employee is entitled to and what he was actually paid. If an employer is ordered to pay an employee back pay to settle a wage dispute, then the employee has the right to file a private suit for back wages, liquidated damages, court costs and legal fees. The FLSA also enables the Secretary of Labor to sue on the employee’s behalf for back pay and liquidated damages.[x]
6. Your Employer Cannot Dock Your Pay as Punishment
Employers can’t dock salaried workers’ pay for “variations in the quality or quantity of work” because salaried workers enter into an agreement to exchange labor for fixed compensation. Employers are required to pay salaried workers for the entire week if they work at all, regardless of the number of days or hours they put in, with some exceptions pertaining to paid or unpaid time off.[x]
An employer doesn’t have to pay a salaried employee if he doesn’t work at all during a workweek. Employers can never reduce pay for hourly workers below minimum wage. Although employers can’t dock pay as punishment for poor work quality, employees might be subject to performance reviews and ultimately be let go at the employer’s discretion if they are hired under an at-will employment contract.[x][x]
7. You Can’t Be Docked for Short Breaks
Employers don’t have to compensate employees when they’re on meal breaks, which usually last at least half an hour, according to the Department of Labor. Shorter, undocumented breaks — often called “coffee breaks” — are categorized differently.[x]
Employers aren’t required to allow these breaks — which generally last five to 20 minutes — but if they do, they must consider them compensable and include them as part of the employee’s wages. In other words, employers don’t have to give employees coffee breaks, but if they do, they have to pay them for that time.[x]
Frequently Asked Questions
Whether you have questions about what to do with your first paycheck or you’ve been reviewing your pay stubs for years, paycheck laws can be confusing. Here are the answers to two commonly asked questions about getting paid:
- How long does an employer have to correct a paycheck error? Underpayment within a pay period is technically a violation. If it wasn’t intentional fraud and the employer makes a good faith effort to pay it back before the next pay period, then he’s generally safe from penalty.[x]
- What do I do if my paycheck is short? It’s likely an honest mistake, which is why you should keep your own detailed records and learn how to read your pay stub. Report the error immediately to your boss, supervisor or human resources. Talk to your co-workers to see if they’ve noticed any discrepancies in their paychecks. If so, approach your boss or human resources department as a group. If you can’t satisfy the issue internally, file a complaint or contact an attorney.[x]
Find Out: How Paying Yourself First Can Help You Save More Money
How to Deal With a Paycheck Law Violation
If you feel that your employer is violating your FLSA rights and you can’t come to an agreement to resolve the matter, contact the Department of Labor’s Wage and Hour Division, an agency that helps recover owed wages in the case of an employer withholding pay. If you think you’re owed back wages, search the WHD database “Workers Owed Wages” to see if your employer is on it.[x][x]
Employers are bound by strict federal laws that regulate paychecks and employee compensation. These laws govern everything from how employees must be paid and how records should be kept to how withholdings need to be itemized on pay stubs. Make sure you are paying close attention to your pay stub to catch any processing errors and ensure you’re receiving your full paycheck.
This article originally appeared on GOBankingRates.com: Meet the Laws Protecting Your Paycheck
A smiling young female barista stands at the counter in her coffee shop and looks down as she counts paper bills that she has just pulled from her tips jar.
You Have the Right to Be Paid Promptly
If your tax withholding is too high, you might be losing money in your paycheck. According to IRS data, about 74 percent of taxpayers received a refund in 2017, and the average amount was $2,769. That means taxpayers let Uncle Sam hang on to too much of their hard-earned money during the year.
“The government says you have to pay taxes, but nowhere does it say you have to overpay taxes,” Bachrach said.
Lower your withholding so you can get more money in your paycheck. Then, have that amount automatically deposited into your 401k or an IRA, so that it can earn interest and grow, Bachrach said.
File a new W-4 form with your employer to claim additional allowances and ensure that less tax is withheld. The IRS website has a withholding calculator you can use to figure out how many allowances to claim.
You Have the Right to Be Paid Quickly After Leaving a Job
Businesspeople walking in corridor
You Can’t Be Fired Because Your Wages Were Garnished
Gavel and hand holding money in wallet on wooden background
You Have the Right to Minimum Wage, Even If You Work for Tips
Young barista counting cash tips after shift in coffee shop.
You Have the Right to Collect Ordered Back Pay
businessmen pay a lot of money to their customers for a return on their investment. The concept of rewarding return on investment or the return of insurance.
Your Employer Cannot Dock Your Pay as Punishment
Businessman as an employer paying cash in US dollar bills, wage, loan and bribery concepts.
You Can’t Be Docked for Short Breaks
multicultural businessmen talking and holding cups of coffee
Frequently Asked Questions
Close-up Of A Businessperson’s Hand Signing Cheque In Office
How to Deal With a Paycheck Law Violation
Make an offer that at least meets the seller’s base price or else you might find your bid rejected. When a seller has more than one offer on the home, you need to make your bid as competitive as possible.
Find Out: How Long Does it Take to Buy a House?