North Carolina Unpaid Wages

If your employer has failed or refused to pay you what they owe you, the law is probably on your side. The North Carolina Wage & Hour Act protects your right to be paid for your work.  The law requires employers to compensate employees at the agreed upon rate. The definition of wages is quite broad, and generally includes hourly or salary pay, money owed for vacation time earned, and promised bonuses or commissions. Additionally, the law provides significant incentive for employers to correct unpaid wages, in the form of double damages and attorney fees for a wronged employee forced to resort to legal action to recover their pay.

The North Carolina Wage & Hour Act

The North Carolina Wage & Hour Act, N.C. Gen. Stat. Ch. 95 Article 2A (NCWHA), governs wage and hour standards for non-exempt employees in North Carolina. The law sets minimum wage, overtime pay, and other standards for workplace conditions, hours of work, and employee rights to be compensated for their labor.

The NCWHA broadly defines "wages" as inclusive of the following categories of payments:

  • Pay agreed to by time worked (for hourly employees)
  • Pay promised by the task
  • Pay agreed to by the Piece
  • Pay agreed to by the job
  • Pay agreed to by the day
  • Pay agreed to as commission
  • Sick pay
  • Vacation Pay
  • Severance Pay
  • Bonuses
  • Commissions
  • "Other amounts promised" when the employer has a policy or practice of making such payments

Employer's Responsibility to Keep Track of Hours Worked

Employers are required to keep accurate records of their employees' hours worked and wages paid, and to make these records available for inspection by the North Carolina Department of Labor. If an employer fails to keep accurate records, the law presumes that the employee's claim of unpaid wages or hours worked is true.

Retaliation Prohibited

The North Carolina Wage & Hour Act prohibits employers from retaliating against employees who file complaints about wage and hour violations or who cooperate with Department of Labor investigations. Employers who violate the act can face fines, penalties, and legal action from employees.

Furthermore, the law states that employers cannot withhold any part of the wages earned by their employees, except for deductions that are authorized by law or agreed to by the employee. This includes deductions for taxes, court-ordered garnishments, and voluntary deductions such as health insurance or 401(k) contributions.

Employers Must Pay Separated Employees For Earned Vacation Time

The law provides that employers must pay their employees for earned vacation days or earned compensatory time off when an employee leaves their employment or if the employee has earned vested vacation time. Moreover, employers must pay their employees all their earned wages upon termination of employment on the first regular payday after the amount becomes calculable.

Double Damages and Attorney Fees

The NCWHA provides a significant stick for an employee making a claim for unpaid wages. In addition to protections against retaliation for such claims, the North Carolina Wage & Hour Act provides that a successful complainant shall receive "liquidated damages" equal to the amount of unpaid wages. This means that an employee *could* recover twice what they are owed! The law makes clear that it is the Defendant/employer's burden to establish that liquidated damages would not be appropriate, because the violation was "in good faith" AND that the employer had reasonable grounds for believing the failure to pay was not a violation of the law. In that case, the court can rule that no liquidated damages, or any amount less than double, is appropriate.

The NCWHA also provides that a court may order the Defendant/employer to pay costs, fees and *reasonable* attorney fees for an employee (or former employee) who successfully pursues unpaid wages.Thus with the potential for a judgment for double damages, costs, fees and attorney fees on top of their own costs and attorney fees, an employer who has failed to pay wages has a significant legal incentive to avoid or settle legal action.

Statute of Limitations is Two Years for NCWHA Claims

The statute of limitations, after which a claim may not be brought, should always be a consideration when thinking about litigation. For NCWHA potential claims, that period is two years. This is significant, because if the failure to pay wages dates back past the two year period, you may only recover those wages that were unpaid during the past two years. Thus, for those types of claims, time is money! For a claim of persistent fail to pay wages that started over two years ago, the passage of every day until a lawsuit is filed is a potential reduction in the recoverable amount.

Federal Fair Labor Standards Act

Like the North Carolina Wage & Hour Act, the Federal Fair Labor Standards Act (FLSA) protects employees' right to be paid for their work. FLSA explicitly protects the right of non-exempt employees to be paid time and a half for overtime for hours worked over 40 in a workweek (defined as 168 hours during 7 consecutive 24-hour periods). The federal law also sets the floor for the minimum allowable wage paid. Like North Carolina law, FLSA complainants are protected from retaliation. A prevailing worker may recover their costs and attorney fees, and liquidated damages are available.

The law protects the rights of workers to be paid for their labor. If you think you have a claim for unpaid wages, give us a call or fill out our contact form to schedule a consultation. Attorney Sean Cecil has experience successfully negotiating and litigating claims for unpaid wages under the North Carolina Wage and Hour Act and the Fair Labor Standards Act, and is available for consultation and representation.