North Carolina Wage Payment Laws Summarized
In North Carolina, the legal requirements for the payment of wages are set forth in the North Carolina Wage and Hour Act, N.C. Gen. Stat. §§ 95-25.1, et. seq. ("N.C. Wage Act"). As an initial matter, the N.C. Wage Act, which is administered by the North Carolina Department of Labor, applies to all businesses operating in North Carolina that have at least one employee (with some limited exceptions not relevant here). Under the N.C. Wage Act, "[e]very employer shall pay all wages and any promised wage supplements due every employee on regular paydays designated in advance by the employer." Thus, the employer must comply with (1) a pay period and (2) a payday frequency.
Under the N.C. Wage Act, "[t]he regular pay period for an employer’s employees shall be established in advance." An employer that follows the "weekly" pay cycle must pay its employees "within seven calendar days following the end of the pay period . " An employer that follows "bi-weekly," "semi-monthly," or "monthly" pay cycles must pay its employees by whichever of these deadlines is the shortest: within 14 calendar days after the end of the pay period, within 30 calendar days after the end of the previous pay period, or on or before the regular pay day of the next pay period. Finally, an employer that pays its employees on a "daily" cycle must pay its employees "on the business day following the end of the work day."
The N.C. Wage Act makes clear that if an employer has designated a payroll period and payday, then it is not in compliance with the law if the employer, "without prior notice to the employee, pays any employee later than the regular payday for the pay period during which the wages were earned." In this regard, the Department of Labor has indicated that it will follow a "strict reading" of the statute and that "[i]f the wages were not paid by the regular payday, the period of time between the designated payday and the actual payday is considered a late payday."
Defining the Late Paycheck Scenario
With regard to statutory tardiness, North Carolina requires employers to pay employees at least once every month (with some exceptions of more frequent pays in some workplaces). If payments are not received on regular paydays, the issue of compliance comes into play. However, it is not enough to merely point to late or untimely pay—the state regulates what constitutes a "late paycheck." Common examples involve issues like: employees received paychecks after the previous pay period when they should have received paychecks with that specific pay period; paychecks are returned or not returned as may be the case with checks written and failing to clear the bank; employees are not being adequately compensated as the employer stipulates; payment is short or absent altogether. In short, late paychecks must arise from clear action on the part of the employer or its designees – the consequence of nondeduction, delayed disbursement, or wages otherwise withheld or improperly meted out. The state defines this tardiness as occurring "when any employer fails to pay . . . wages due [to] any employee for that period on or before the date when the wages are due to be paid." The state statute goes on to stipulate that such wages will be considered delinquent if not actually paid within 5 days of the date they were due. In other words, if an employer is consistently paying later than once a month, as the law requires, it would be unlikely that penalties could be assessed on the employer’s behalf for those delinquencies. However, after five days past due, however, an employer is clearly reneging on the contract. The statute outlines what specifically constitutes "wages due." For the most part, this is defined as "all monetary compensation payable for the hours worked by an employee" but can be ill-defined in some industries. For instance, for some the computation of wages depends on overtime while for others, tipping or other forms of payment may be applicable in certain cases. In short, "overtime compensation" is defined by the Fair Labor Standards Act but "wages due for the pay period" is defined by "written or implied employment agreements." This type of wording allows for a great deal of flexibility in determining when late paychecks become an issue even in special cases. For example, workers under law enforcement are not compensated according to the state’s legislation on wages, although the legal challenge for many companies will be demonstrating that these laws do not apply in their particular case, even when there are gray areas in documentation.
Legal Options for Employees with Late Paychecks
When an employee in North Carolina doesn’t receive their paycheck timely, there are a number of options available to them. The first step is to contact their employer. It might have been an oversight, it might be a question of processing due to a holiday or other circumstance. However, if no satisfying answer is received reasonably quickly, the employee should consider filing a complaint with the North Carolina Wage and Hour Bureau. It’s best to do this within 180 days, but the statute of limitations is as long as three years.
This agency investigates non-payment of wages in creditable terms, including late payment. How long counts as late? As with any question of a legal term, the answer with regards to late check payment is "it depends." If a company’s normal pay schedule is the 1st of every month, then arriving two days late is probably going to constitute late payment. If an employer has stated its pay period ends on the last day of the month, yet fails to issue a paycheck for the entire month, that’s probably going to be considered a violation.
Wage payments in North Carolina are under the purview of the North Carolina Industrial Commission, which is the state’s wage and hour compliance agency. Employees with concerns can file Wage and Hour Complaint forms online.
While there is no guarantee of payment upon review, there is substantial authority that means contractors and labor organizations should have issues of non-payment and late payment of wages at the top of their priority list. Under North Carolina General Statutes § 95-25.21, civil penalties of $50 may be assessed for each violation of the payment schedule.
The pertinent part of § 95-25.21 reads:
If an employer fails to comply with the provisions of G.S. 95-25.6, the Commissioner may assess a civil penalty of up to fifty dollars ($50.00) for each employee so affected. Penalties collected by the Commissioner, pursuant to this section shall be remitted to the Civil Penalty and Forfeiture Fund to be used in accordance with G.S. 115C-457.2(a).
Employer Liability for Delinquent Paychecks
Employers who violate North Carolina’s late paycheck law face the distinct possibility of statutory damages and attorney fees. As explained above, N.C. Gen. Stat. § 95-25.22 provides that "[i]f an employer discharges an employee and fails to pay the employee’s final earned wages as required by G.S. 95-25.6, the employee shall recover the unpaid wages plus interest on the wages at the rate of one and one-half percent (1½%) per month, the costs of collection and reasonable attorneys’ fees." The language "discharges an employee" includes a termination caused by what is commonly known as a "constructive discharge." See Gallamore v. Smith, 81 N.C.App. 192, 343 S.E.2d 569 (1986) (holding that a constructive discharge is equivalent to a "discharge" within the meaning of the Wage and Hour Act and concluding that a constructive discharge may be found even if the employee did not terminate his employment). To be entitled to the statutory damages and reasonable attorneys’ fees contemplated by the statute, the employee must be able to show that he or she was discharged (either through termination or a constructive discharge) and the employer failed to pay all final earned wages required by N.C. Gen. Stat. § 95-25.6.
An employee can elect to recover lost wages (including overtime) or a statutory penalty. Under the statute , if an employee seeks to recover lost final wages and overtime, "the employee shall be paid the full amount of unpaid wages computed at the rate agreed to by the employee and the employer." N.C. Gen. Stat. § 95-25.22. On the other hand, if the employee elects to recover a statutory penalty, the statute provides that "[t]he employee shall be paid the greater of: (1) One hundred fifty percent (150%) of the wages the employee was entitled to receive; or (2) Three thousand dollars ($3,000)." Id.
Under the statute, North Carolina employees may file a private cause of action in the trial court to recover unpaid wages and/or statutory damages. See N.C. Gen. Stat. § 95-25.22. Alternatively, an employee can file a complaint with the North Carolina Department of Labor, which has the option either to determine the amount of unpaid wages due, and attempt to collect the amounts due, or issue a written opinion holding that no wages are due. See N.C. Gen. Stat. § 95-25.21. Under either option, however, "[i]f any unpaid wages are found to be due to any employee, there is imposed upon the employer a penalty equal to the amount of unpaid wages plus interest on the wages at the rate of one and one-half percent (1½%) per month, the costs of collection and reasonable attorneys’ fees." N.C. Gen. Stat. § 95-25.22.
Recent Amendments or Revisions to the Wage Laws
As of September 1, 2019, North Carolina employees who are not paid for work may sue to recover triple the amount of damages. Previously, unpaid wages were subject to only double damages. The increased damages were a provision of HB 259, "Modify Statutes for Recovery of Wages." Interests and attorney fees are also recoverable by law if the employee prevails. The new penalties will not apply in any pending court action or any listed dispute resolution programs (e.g., mediation) filed or initiated prior to the effective date. It is also important to note that statutory penalties are not available for any claims on behalf of individuals or in a class or collective action.
Your Rights as an Employee
One way to protect yourself is to keep a record of when you worked and what you were paid. This record will serve as evidence in case you get into a dispute with your employer about whether you were paid properly or not.
If you are ever in doubt about whether your employer is going to pay you accurately and on time, you should keep a record of when and how long you worked. In addition, you may want to add to your records (or create them) the rules in your company handbook or any other documentation showing your company’s policy on pay and paydays. That way, if you’re not paid properly, including for overtime, you can have sufficient evidence to make a claim for unpaid or lost wages .
Keeping these records is very important in North Carolina; it is an "acknowledgment" state under the law, meaning that if an employer does not pay wages then an employee may be owed not only his or her wages but also a 6% interest on the unpaid wages from the time the paycheck was due (not paid) until it is paid in full. Employers may try to argue that there is no interest owed if a company "disputes" that an employee is owed wages. However, since interest on unpaid wages may not be waived by contract, the company’s denial or dispute over when an employee was supposed to have been paid is likely not sufficient to avoid paying this interest. For that reason, if an employer disputes whether the employee has been paid, the employee must still be paid 6% interest for the time from the payday (the day after the payday under law) until the wages are finally paid.