If you’ve recently left your job, you may be wondering if an employer can hold your last paycheck. Based on federal law, the answer is no. However, you may not receive payment immediately, and it may not be the amount you expected.
Reasons to Withhold Your Last Paycheck
Federal law prohibits employers from withholding final paycheck for any reason. Some reasons where an employer might try to do so are theft, retention of property, or some other infraction by the employee. None of those are acceptable grounds. However, your employer can deduct money owed to the company, such as a salary advance or other contractual requirement.
Track Your Hours Worked
Keeping track of your work schedule is essential. Your employer can reduce your check to reflect the actual hours worked in a pay period. The Department of Labor (DOL) has timekeeper templates, and it even has a mobile application. You should review your check stub or leave and earning statement to ensure accuracy.
Also, you may be compensated for unused vacation time, bonuses, or commissions, all of which will be taxed accordingly. Keep in mind the extra income may place you in a higher tax bracket. This additional pay does not include severance pay which is negotiated separately and ongoing for a set period.
State Labor Laws
The date of the final payment varies by state. Some states have no statutes, such as Florida and Georgia. Most state labor offices direct employers to pay former employees on the next scheduled payday, whether the employee got fired or quit.
California has the most strict state law. It says that fired employees should be paid immediately and employees that leave voluntarily within 72 hours. Tennessee has the most lenient labor law that states that employers have up to 21 days to pay a former employee in either situation. You can find the contact information for your state’s labor office at the DOL site.
How to File a Complaint
If payday has passed with no payment, you can file a complaint on the federal DOL website or contact your state labor office. The statute of limitation is usually two years to recover owed wages, but sometimes it’s three for an intentional violation. The Fair Labor Standards Act (FLSA) has several laws within it and remedies for violations. An employer may pay damages in the amount of the owed wages in addition to back pay if the Secretary of Labor files the suit. If the employee files the lawsuit, he or she could also request court costs and lawyer’s fees.
Under FLSA, you can also report underpayment via the Davis-Bacon and Related Acts or the Service Contract Act. The Wage and Hour Division (WHD) will also investigate employers for violation of the FLSA. The WHD will collect unpaid wages and hold them for three years before sending them to the Treasury. There are over 200 regional offices in the country. You can initiate investigations by contacting a division office confidentially regardless of citizenship.
You can learn more about unpaid wages and how investigations work at DOL FLSA website.