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Your Wages and What to Do if You're Paid Incorrectly

April 4, 2016

California jealously protects the wages of its workers for the most part. Paying workers correctly and on time is a fundamental public policy of our state.

When an employer doesn't pay all the wages that it owes its employee, severe penalties and interest can attach that are often as much or more than the unpaid wages themselves.

If you haven't been paid correctly, what can you do about it?

I.     What is a Wage?

I said that California protects its workers wages, and that's true. But what qualifies as a wage?

California defines "wages" as "all amounts for labor performed." It doesn't matter whether it's calculated by commission, piece rate, hourly, or some other method. If you're being paid for work that you're performing, it's a wage. Vacation and PTO (when the PTO is usable like vacation) is a wage. Bonuses can be wages, if they're based on performance in some way.

II.     Correcting Wage Problems Economically

If like most people you depend on your wages, and your employer shorts you somehow, it can be a real problem. For folks living paycheck to paycheck, a few hundred dollars can make the difference between paying the rent or not. Even for people making more money, getting shorted on your paycheck can make things tough.

     A. Consider the Labor Commissioner

I used to be able to tell people that the Labor Commissioner was a good option when a few hundred to a few thousand dollars is at stake. The Division of Labor Standards Enforcement (DLSE) is part of the Department of Industrial Relations. The head of the DLSE is called the Labor Commissioner. The Labor Commissioner will take a complaint free of charge, and one of the deputies will try to negotiate a resolution. If the parties can't agree, the deputy will hold a hearing and enter a judgment, which can be entered with the superior court and enforced just like any other judgment that the court issues.

Unfortunately, the Labor Commissioner has such a terrible backlog that it's no longer a viable option if you need your money immediately. I recently experience having to wait 8 months just to get them to schedule a resolution meeting. I can't tell you why it's taking so long. I don't know if it's a lack of resources or something else. What I can tell you is that, when it takes 8 months just to get a resolution meeting scheduled, the Labor Commissioner isn't doing what it's supposed to do, which is provide a quick method for workers to get paid correctly.

The sad truth is that, without the quick process that used to be available through the Labor Commissioner, there's no fast option in California anymore to get your wages.

Worse, if the amount of money that you're underpaid is a few hundred to a few thousand dollars, it often makes no economic sense to hire an attorney. An hourly rate would probably require you to pay the attorney more than you're owed, and a contingency arrangement doesn't make economic sense for the attorney.

If you have more money at stake, upwards of tens of thousands of dollars, then the Labor Commissioner might be the right place to go. Consider hiring an attorney, though. The Deputy Labor Commissioners who will hear your case are not attorneys; they have some training, but their abilities and decisiommaking are inconsistent. If you've been underpaid by that much, it might be worthwhile to seek an attorney on a contingency basis to help you out.

     B. Consider Suing in the Superior Court

There are several advantages to pursuing a wage claim in the Superior Court, instead of with the Labor Commissioner. One of the most important is that the Superior Court can award you attorney's fees if you win. That doesn't mean that, if you have a contingency-based agreement with your lawyer, that the amount you're paid will be marked up by the contingency percentage. It means that, if you go to trial and win, your attorney will tell the judge how many hours he or she worked on your case, his or her hourly rate, and ask the judge to tack that amount on to the judgment. That makes it a lot more likely that your case will settle sooner rather than later because the risk becomes too high for the company if they lose.

The other advantage to suing in the Superior Court is that your case is presided over by a professional judge who has likely heard many cases like yours and has a good idea of how to rule on the legal issues. If it gets that far, a jury will decide your matter, which can be helpful because most of them depend on their paychecks, too, so they're likely to have some sympathy for your position.

     C. Consider Exploring a Class Action

The whole purpose of class actions is to make it economically viable to pursue small wage claims. If lots of people have been paid incorrectly, but only in amounts of, say, a few hundred dollars, then putting them all together in a large class can start to make economic sense and be attractive to an attorney.

With the Labor Commissioner becoming a less viable option, class actions are becoming a more important instrument for people who haven't been paid correctly.

     D.  Consider Small Claims Court

For cases smaller than $10,000, small claims may be the way to go. I'm told on good authority that cases are heard within 70 days of filing, and any appeal takes another 60 days. The advantages are swiftness, and the fact that a judicial officer hears your case. The disadvantages include the fact that, if you lose, you can't appeal, but if the employer loses, it can appeal. Also, you can't have a lawyer in small claims court, but if the company has an employee who's a lawyer (say, an in-house counsel), then you could wind up facing a lawyer yourself. All in all, though, small claims may be the way to go for such cases. In fact, if your wage claim is just a little bit larger than $10,000 (say, within a thousand or two), you can even limit your claim to $10,000 so that it can be heard within the small claims court.

III.     Timing is Everything

Like every other type of legal right, your right to sue for unpaid wages has a time limit, called a "Statute of Limitations." For wages, the statute is 3 years, meaning that, if you sued today, you could sue for wages due you from up to 3 years ago. Sometimes, you can go back 4 years if the employer has engaged in a business practice of failure to pay wages, but assume 3 years to be safe.

That has an important implication for timing your suit. If you decide that you want to take legal action, but you're still working for the employer that underpaid you, you may have as long as 3 years before your statute of limitations runs out (remember it starts to run from when the wages weren't paid, so if you're owed money from 2 years ago, you have only 1 year to sue to get that money back). If your statute of limitations isn't close to running, consider finding another job and then pursuing your wage claim. It's illegal to retaliate against employees who reasonably complain about unpaid wages, but employers do illegal things all the time. That's what keeps me in business. If you can, wait until you're safely in another job before bringing the issue up. If it can't wait, then it can't wait, but talk to an attorney before bringing it up to your employer. There are things you can do to protect your rights if the employer retaliates against you.

People often apologize when they see me for the first time, saying things like, "I'm not a litigious person," or "I don't like to sue." You don't have to apologize for trying to get the money that you're owed. It's yours, you worked for it, and you deserve to be paid the wages they agreed to pay you. Now you have a better idea of some options to go about it.

 

 

 

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