Thousands of businesses exist in California, some employing thousands while others may only have an employee or two. But in all cases, the issue of wages and paying employees can be contentious.
Wage and hour issues can stem from a variety of causes – A business falling on difficult financial times and disputed accounts between ownership and employees can lead to problems. And these problems can have legal consequences, as there are strict rules regarding employees paying their employees.
What the law forbids
Business owners are prohibited from certain actions when it comes to not paying their employees. As a general rule, all of the following are illegal:
- Paying employees below the minimum wage
- Withholding pay from employees as a punishment or disciplinary action
- Withholding or deducting money from an employee’s paycheck without their consent
There are nuances in all cases, such as differences between state and federal minimum wage laws or how tipped employees are treated. But violating any of these rules is likely to result in legal troubles.
Consequences for not paying employees
The consequences for failing to pay employees adequately can be serious, from financial judgments by the court up to fines and imprisonment in the most severe cases.
Most commonly, the Department of Labor or employees will bring a suit against a business due to unpaid employees.
Note that employees still maintain a claim on unpaid wages even if the business has declared bankruptcy. Employee wage claims are treated as priority unsecured debt in a bankruptcy proceeding, which allows employees to claim what they are owed.
The law is unambiguous regarding employee pay. If a business doesn’t pay its employees in full, it risks numerous legal and financial consequences.