My Employer Can’t Pay Me: Now What?
NEW YORK (MainStreet) — Saab, a Swedish car company, announced Wednesday that is doesn’t have enough money to pay wages to 3,700 employees.
The announcement follows months of financial struggles, including product shortages and problems with paying suppliers that indicate the company is in route to filing bankruptcy. While Saab’s fate still remains to be seen, MainStreet wondered what recourse an employee might have when their company just can’t pay them.
According to John Hancock, a Detroit-based employment attorney with Butzel Long, how employees should respond to such a situation depends largely on what their employer does after it discloses that its accounts are empty.
While the exact terms may vary, companies are in violation of federal and state wage and hour laws when they allow their employees to work while they cannot pay them.
David Morrison, a labor and employment lawyer with the firm Steptoe & Johnson LLC, tells MainStreet these employers will be held liable for any back wages owed as well as “liquidated damages” such as penalties for failing to pay workers and coverage for an employee’s attorney fees, among other things – if they don’t pay the employee within a state’s specified timeframe.
For example, the state of Virginia stipulates that companies must pay back wages within a two-week timeframe before incurring penalties.
A crucial step to getting your owed wages is filing a complaint with your state labor department when the pay gap first occurs. Once the labor department is involved, they will conduct an investigation and determine whether a company actually is completely tapped for funds and what is the best way to legally recoup your money.
When a company is completely tapped, a company’s CEO, CFO, board of trustees or other official can be held personally liable and forced by the courts to pay employees using the money in their own bank account, Morrison says.
Of course, these funds won’t always be recouped readily,