Why Withholding Wages is a Costly, Bad Idea

December 6th, 2017 - Lisa M. Keeler

Wages are simply the compensation due to an employee by reason of employment. [i] This includes hourly wages and salary, but also includes commissions and deferred compensation/pensions. Basically, all work must be paid for with limited exceptions.

It is against the law to withhold or divert any portion of an employee’s wages (unless required by state or federal law, specifically agreed to by the employee and employer, or for medical care pursuant to a rule or regulation).[ii] Willful withholding of wages is a crime, specifically a misdemeanor.[iii]

Willful means “a knowing and intentional action that is neither accidental nor the result of a bona fide dispute…”[iv] It is a fairly simple, broad definition. It includes withholding any part of the employee’s wages or paying the employee lower wages than is required by law or contract. [v] For example, an employer must comply with the minimum wage laws.[vi]

If an employee is not paid, she can file a wage complaint with the Department of Labor & Industries.[vii] L&I can also investigate employers if it receives information–potentially from non-employees—that wages are not being paid.[viii] L&I has the authority to issue civil penalties against employers for willful violations of the wage payment requirement.[ix]

The employee can also file a lawsuit against the employer. Not only can the employee sue the employer, he can sue the individual(s) responsible for paying and therefore withholding their wages.[x] This means anyone responsible for paying the employee’s wages—anyone who exercises control over the direct payment of the funds—needs to make sure the employee is getting everything he is owed. And, it means even if a company goes out of business, the employee could still collect his wages from the owner or governing officer or whomever was responsible for payroll (i.e. this is a situation where the corporate veil can be pierced).

Most importantly, in a lawsuit the employee can recover twice the amount of unpaid wages owed and she can recover their costs and attorney’s fees.[xi] This means a $1,000 wage claim could quickly become a $5,000-10,000+ judgment against the employer, not including the costs and attorney’s fees the employer may have paid to their own attorneys.

There certainly may be times where an employee or former employee’s claim is without merit. But, if the employee’s claim is valid, the law is squarely on her side and the employer may have a much bigger check to write.

[i] RCW 49.46.010(7).
[ii] RCW 49.48.010; 49.52.050.
[iii] RCW 49.48.020; 49.52.050.
[iv] RCW 49.48.082(13).
[v] RCW 49.52.050.
[vi] RCW 49.46.005, et seq.
[vii] RCW 49.48.082, et seq.
[viii] RCW 49.48.040.
[ix] RCW 49.48.083; 49.48.125 (repeat violators)
[x] RCW 49.52.050 (“Any employer or officer, vice principal or agent of any employer, whether said employer be in private business or an elected public official…”); Ellerman v. Centerpoint Prepress, Inc., 143 Wn.2d 514, 22 P.3d 795 (2001); Allen V. Dameron, 187 Wn.2d 692, 389 P.3d 487 (2017) (officer, vice principal, or agent may be held liable even if the payday date for wages came after the filing of a chapter 7 bankruptcy).
[xi] RCW 49.52.070; 49.48.03

Disclaimer: This article and blog are intended to inform the reader of general legal principles applicable to the subject area. They are not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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