The federal Fair Labor Standards Act of 1938 provides that in Alabama, as well as the other states, employers must not decline to pay their workers on payday.  Companies are allowed to decide which day of the week, or the frequency of the pay period. However, after that is determined in company policy they must abide by that pay period.  If a company does not pay their employees on the day they expect to receive their paycheck the company has violated the federal minimum wage law.

The minimum wage law is enforced by the Wage and Hour Division of the U.S. Department of Labor.  By not paying a worker on payday they have essentially paid the employee nothing, which violates the Fair Labor Standards Act.  The federal minimum wage is currently $5.85 per hour.  On July 24, 2008 it will increase to $6.55 per hour.  Employees who are not receiving the minimum wage should contact the Wage and Hour Division toll-free at 866-487-9243. 

As an example, John has a struggling body shop. By company policy, he pays the workers every Friday.  He has enough work to keep his staff busy but he counts on insurance payments to come through to meet his payroll.  The payments have lagged behind and he cannot meet payroll.  John tells his crew that if they can wait until Monday he should have the money.  Even if his staff agreed to this decision this would not be legal because it means that they have worked for no wages for the week, which violates the FLSA. 

There are states that require an employer to make good on promised benefits as well as wages  If John, because of his struggling business, decided that he would have to cancel health insurance for his crew this would be illegal because they took the job with the understanding that they would have that benefit.  John would have to notify the employees in advance of the change. In states that have this law, often the Department of Labor will investigate and pursue the case on the employee’s behalf.

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This entry was posted on Wednesday, June 18th, 2008 at 8:29 pm and is filed under Business Laws, Employment Laws for Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.