When an employer fails to properly pay an employee wages after termination of the employee’s employment, the employee can assert a claim for unpaid wages against the employer. In a wage claim against the employer, the employee can recover the employee’s unpaid wages and a statutory penalty. The statutory penalty is either 30 days of unpaid wages or 100 percent of the employee’s unpaid wages, whichever is greater. In most circumstances the 30 days of unpaid wages is a larger penalty.
For example, an employer refuses to pay his employee her final paycheck because she’s a terrible employee and caused damage to one of the employer’s machines. The employer terminates her employment without paying her final paycheck. The employee is paid $10.00 per hour and works 8 hours per day. However, she only works three days a week. Her final paycheck is supposed to be for three days work or $240.00. The employee could receive an additional $240.00 as a statutory penalty or the 30 day statutory penalty which totals $2,400.00.
In order for an employee to receive the 30 day statutory penalty, the employee must follow the requirements of ORS 652.150, which have been modified by the 2011 Oregon legislative session.
In the past, employees only needed to provide the employer with written notice that the employer failed to pay all of the employee’s wages following the employee’s termination. Some employees would do this by text message or email simply saying “you didn’t pay me, I am going to sue you.” Prior to the legislative changes, that would have been sufficient notice to trigger the 30 day statutory penalty since the notice did not need to state the amount of wages the employee believed that the employer owed or any sort of explanation. If the employer failed to pay the employee’s unpaid wages within 12 days from the date of the notice then the employee would have been entitled to receive the 30 day statutory penalty.
However, HB 2040 adds a requirement to ORS 652.150(2)(c) that the employee, or the employee’s representative must provide the employer with written notice that includes “the estimated amount of wages or compensation alleged to be owed or an allegation of facts sufficient to estimate the amount owed” to be able to recover the 30 day statutory penalty. If the employer does not pay the amount stated in the notice within 12 days of submission of the notice, then the employer is entitled to receive the 30 day statutory penalty.
If the written notice does not include the estimated amount of wages or compensation owing or an allegation of facts sufficient to estimate the amount owed, then the maximum penalty assessed will be the amount of unpaid wages. This change to the notice requirement does not apply when the employer has unlawfully withheld, deducted or diverted a portion of the employee’s wages. For example, if the employer withholds $200.00 from an employee’s final pay check to cover damage to a vehicle caused by the employee, the employee would not need to provide the detailed notice required by ORS 652.150(2)(c). The bare bones written notice would be sufficient since presumably the employer knows (or should know) the amount illegally withheld.
The moral for employers is to remember to pay your employees all wages due and owing at the end of the employee’s employment. If you don’t and receive notice of a wage claim, it generally is more cost effective to pay the disputed amount, at least to cut off penalties. Swallow your pride and pay the disputed amount or you may owe significantly more plus the employee’s attorney fees and costs. You may be upset with the former employee, but you will really be upset when you have to pay the employee penalties, attorney fees and court costs.
© 09/01/2011 Kevin J. Tillson of Hunt & Associates, P.C. All rights reserved.