QUESTION: Hawaii’s recent economic downturn and present slow recovery have challenged many businesses with survival. Some have had difficulty paying employees. How big of an issue is this, and are there state labor law enforcement specialists who investigate cases of unpaid wages?
ANSWER: There are five specialists throughout the state. These investigators handled close to 500 unpaid wage claims this fiscal year with another 150 still pending. Generally, about 55 percent of the claims are substantiated, and those claims average about $1,300 per claim in back wages found due.
Q: Is there a time frame between when employees work and must receive pay for that work?
A: The law generally requires employers to pay their employees at least twice a month and within seven days after the pay period ends. It is common to have pay periods from the first to 15th and the 16th to the end of the month. In that case an employer needs to provide employees with their earned wages by the 22nd and the seventh, or the following working day if either falls on a nonbusiness day.
Q: If an employer believes it might not have enough money to pay all employees, what can it do?
A: Employers should communicate with employees and must not have them work if they will not be able to pay them. Employers can renegotiate an employee’s wage temporarily as long as the employer does that before the work is performed, puts the new wage rate in writing, and the renegotiated amount is still at least minimum wage, which is $7.25 an hour.
Q: What should an employee do in response to not being paid?
A: First, they need to ask their employer for their wages. Then, if the employer refuses, they should contact the Department of Labor and Industrial Relations’ Wage Standards Division at 586-8777 to review their situation and possibly file a complaint. The employee also has the right to take their own legal action in court.
Q: Are there things employees should not do if they are not paid?
A: They shouldn’t wait. They should talk with their employer and understand the situation. Because a complaint might take some time to process, an employee should file with us soon after discussing with an employer that payment will not be made timely. If payment is made to the employee while we are processing the complaint, we will simply drop the case.
Q: Is there a way employees can help their employer get over a rough financial patch without forcing their employer to cease operating?
A: Of course, the department encourages a collaborative workplace, and good communications play an important role. However, employees’ economic health and survival should rightfully be a paramount concern for employees.
Q: What ways are there for employees to possibly recover unpaid wages?
A: Keep good records of their work schedule and paychecks. The U.S. Department of Labor recently came out with a "Timesheet App" that assists with this. You can find a link to that on our Web page Hawaii.gov/labor under "Tools." As discussed above, employees can file a complaint with the Wage Standards Division to assist in recovering their unpaid wages, or employees always have the right to file a complaint in court.
Q: Does the state have some kind of insurance fund?
A: No, Hawaii does not have a fund to cover employees’ wages that employers failed to pay them.
Q: Can an employee force their employer into bankruptcy?
A: I can’t comment on the bankruptcy law. If an employer is in bankruptcy, Wage Standards will refer all employees to the Bankruptcy Court to file a claim for recovery there.
Q: What penalties do employers face for not paying employees?
A: Employers could end up paying employees twice the amount owed plus interest if employers cannot show "equitable justification" for their failure to pay. This civil penalty was imposed in 1977, although employees rarely collect these penalties. A criminal penalty for those employers who willfully fail to comply is a misdemeanor punishable by a fine up to $10,000 or imprisonment up to one year. Criminal penalties are pursued by the Office of the Attorney General.
Interviewed by Andrew Gomes
Editor’s note: "Akamai Money" seeks out local experts to answer questions about business in Hawaii. If you have an issue you would like us to tackle, please email it to firstname.lastname@example.org and put "Akamai Money" in the subject line.