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Feb 11, 2015

Don’t mix wages and conduct when it comes to paying employees


Category: Employment

One of the more common wage and hour violations seen by the Department of Labor is illegal wage deductions and failure to pay employees when their employment ends.  The law that applies to deductions from checks is 26 M.R.S.A. § 626.  According to the law,

An employee leaving employment must be paid in full within a reasonable time after demand at the office of the employer where payrolls are kept and wages are paid . . . and any loan or advance against future earnings or wages may be deducted if evidenced by a statement in writing signed by the employee. . . .

According to § 626, the term "employee" means any person who performs services for another in return for compensation, but does not include an independent contractor.  A “reasonable time” means the earlier of either the next day on which employees would regularly be paid or a day not more than 2 weeks after the day on which the demand is made.

If an employee sues, the employer may not deduct as a setoff or counterclaim any money due the employer as compensation for damages caused to the employer's property by the employee, or any money owed to the employer by the employee.  An employer found in violation of § 626 is liable for the amount of unpaid wages and, in addition, a judgment rendered in favor of the employee must include a reasonable rate of interest, an additional amount equal to twice the amount of those wages as liquidated damages and costs of suit, including a reasonable attorney's fee.

What if an employee tells her employer to just go ahead and make the deductions and not to worry about the signed agreement?  If money has already been loaned to the employee, the offer is tempting but the employer shouldn’t make the wage deductions.  An oral agreement will not be enough under the law and the employer becomes dependent on relations never souring with the employee.

What if an employee has just been fired for damaging company equipment due to sheer inattention or sloppiness?  The employer would really like to hold his check, or deduct the cost of the damage . . . .  but shouldn’t do it.  While the employer’s reaction may be justified, it needs to separate payment of wages due to an employee for hours worked from any money an employee may owe.  There are other avenues rather than wage withholding for recovering money owed.  Deducting will give the employee a wage and hour claim that will multiply the amount owed plus include the employee’s attorney’s fees.  When in doubt, pay it out – or at least give us a call to find out what to do!

This article is not legal advice but should be considered as general guidance in the area of employment and corporate law.  Rebecca Webber is an employment attorney; others at the firm handle business and other matters.  You can contact us at 784-3200 (telephone).  Skelton, Taintor & Abbott is a full service law firm providing legal services to individuals, companies, and municipalities throughout Maine.  It has been in operation since its founding in 1853.