There are federal regulated guidelines that protect employee rights as it relates to salary or wages. The U.S. Department of Labor, Wage and Hour Division (WHD) was created by the Fair Labor Standards Act of 1938. WHD is responsible for the administration and enforcement of a wide range of labor standards laws. One of the basic rule of WHD is that an employee should be compensated promptly for the time worked.
Federal vs. State Rules
Although the Federal government enforces the rule that employees should be paid for hours worked, the payment time frame is enforced at the state level, so it varies from state to state. Several states mandate that employers pay employees within one of the these periods: weekly, biweekly (every other week), once per month or twice per month (15th and 30th). Overtime rules vary by state, as well. California, for example, requires overtime wages be paid at one and a half times the regular rate. This is payable at the next pay cycle from which it was earned. Arizona and Alabama has no overtime rules.
Holidays are no excuse for not paying an employee on time, therefore, if a company's payday falls on a holiday, the company is responsible for paying the employee before the holiday. In the event of a termination, the company should have the former employee's check ready to be handed over; if not, the employee has to be immediately paid in the next pay period. It is illegal for an employer to hold on to an employee's paycheck as a way of punishing the employee.
If an employee is not paid on time, the employee has the right to contact the Department of Labor's Wage and Hour Division, or they have the right to get a private attorney. An employee may receive waiting time penalties, which is an amount equivalent to an employee's daily pay rate, for each day that the employee remains unpaid for up to 30 days. This is in addition to the original wages.
Some of the contributing factors that cause employers to be late are: not having the money in the bank, missing direct deposit deadlines, poorly kept records and pay miscalculations. Chicago has the nation's toughest laws addressing employers who don't pay their employees on time. A second report of late payment is considered a felony and employers who violate wage theft laws are mandated to pay employees monies due from the date of nonpayment with interest and a $250 fine.
Debbie Duran is a human resources professional specializing in recruitment, cultural diversity and organization leadership analysis. She writes for GTJ HR Consulting and is also an adjunct instructor at Colorado Technical University. Duran holds a Bachelor of Arts in organizational leadership from Fordham University as well as a Master of Business Administration in human resources management from Colorado Technical University.