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The North Carolina Wage and Hour Act Provides Strong Legal Remedies for Employeesby Andrew Whiteman

The North Carolina Wage and Hour Act regulates the payment of wages, disclosure of wage payment policies, and forfeiture of wages upon termination of employment. An employer who fails to pay wages when they are due may be held liable to the employee for double the amount owed and attorney’s fees.

North Carolina is an Employment-at-Will State

The Wage and Hour Act does not affect the employers’ right to terminate employees at will. North Carolina, like all states, recognizes the employment-at-will doctrine, under which employers may terminate employees without cause and without notice. As the Supreme Court of North Carolina stated in 1997:

This Court has repeatedly held that in the absence of a contractual agreement between an employer and an employee establishing a definite term of employment, the relationship is presumed to be terminable at the will of either party without regard to the quality of performance of either party.

Kurtzman v. Applied Analytical Industries, Inc., 347 N.C. 329, 331, 493 S.E.2d 420, 422 (1997). There are exceptions to employment-at-will. An agreement to employ a person for a definite period will be enforced. Id. Federal and state statutes prohibit employers from discharging employees based on age, race, sex, religion, national origin, or disability, or in retaliation for exercising rights protected by statutes. There is a public policy exception to the employment-at-will rule. In Sides v. Duke University, 74 N.C.App. 331, 328 S.E.2d 818, disc. rev. denied, 314 N.C. 331, 333 S.E.2d 490 (1985), an employee at will, alleged that she was discharged from her employment for her refusal to testify untruthfully or incompletely in a court action against Duke Hospital. The Court of Appeals held that the complaint stated a cause of action. 74 N.C.App. at 342, 328 S.E.2d at 826. In Coman v. Thomas Manufacturing Co., 325 N.C. 172, 381 S.E.2d 445 (1989), the North Carolina Supreme Court held that public policy prevented an employer from discharging an at-will employee for refusing to falsify driver records to show compliance with federal transportation regulations. 325 N.C. at 175, 381 S.E.2d at 447.

Wages Must be Paid

All employees, even those employed at-will, must be paid. The North Carolina Wage and Hour Act, codified at N.C. Gen. Stat. § 95-25.1, et seq., is an important source of workplace protection. Under the Act, an employee must be paid at least the state minimum wage of $7.25 per hour and time and one-half overtime pay for all hours worked in excess of 40 per workweek unless the employee is exempt. However, minimum wage and overtime are all that an employer is required to pay. An employer is not required to provide customary benefits such as vacation pay, sick leave, jury duty pay, or holiday pay to employees.

Under the Act, an employer must pay promised wages on the regular payday. Pay periods may be daily, weekly, bi-weekly, semi-monthly, or monthly. Wages based on bonuses, commissions, or other forms requiring calculation may be paid as infrequently as annually if the time of payment is prescribed in advance. N.C. Gen. Stat. § 95-25.6.

Employer Must Notify its Employees of Wage Payment Policies

Under section 95-25.13, an employer shall (1) notify its employees, orally or in writing at the time of hiring, of the promised wages and the day and place for payment; (2) make available to its employees, in writing or through a posted notice maintained in a place accessible to its employees, employment practices and policies with regard to promised wages; (3) notify employees, in writing or through a posted notice maintained in a place accessible to its employees, at least 24 hours prior to any changes in promised wages; and (4) furnish each employee with an itemized statement of deductions made from that employee’s wages under G.S. 95-25.8 for each pay period for which such deductions are made. Reductions to wages cannot be made retroactively. A notification of promised wages cannot take away pay or wage benefits that have already been earned as of the time of the notification.

Forfeiture of Wages upon Termination of Employment

A frequent point of dispute concerns the forfeiture of wages earned but not paid as of the time of termination. Earned vacation pay, commissions, and bonuses cannot be forfeited unless the employer has provided written notice to the employee pursuant to section 95-25.13 that vacation, commission, or bonus pay will be forfeited upon termination. N.C. Gen. Stat. § 95-25.7. All such wages must be paid “on the first regular payday after the amount becomes calculable when a separation occurs.” Id. Unused sick pay does not have to be paid at termination unless the sick pay policy states that sick leave will be paid at termination or there is a practice of making such payments at termination.

An Employer may not Withhold Wages that are Undisputed

An employer may withhold an employee’s wages only when the employer is required or empowered to do so by federal or state or, otherwise, when the employee has agreed in writing in advance to the deduction by withholding. N.C. Gen. Stat. § 95-28.8. If the amount of wages is in dispute, the employer must pay the portion of the wage which the employer concedes to be due without condition. N.C. Gen. Stat. § 95-28.7A. Acceptance of partial payment does not constitute a release of the balance of the claim, and “any release of the claim required by an employer as a condition of partial payment is void.” Id.

Employees’ Remedies Under the Wage and Hour Act

Section 95-25.22 provides for interest, double damages, and attorney’s fees in the event the employer violates the minimum wage, overtime pay, or wage payment provisions of the Act. Double damages, referred to in the Act as “liquidated damages,” are mandatory unless the employer carries its burden of proving to the satisfaction of the court that the violation was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of the Act. In such cases, the court may, in its discretion, order that no liquidated damages are due or may award any amount of liquidated damages up to the amount of wages due the employee. The court may in its discretion order the employer to pay the costs of the action and a reasonable attorney’s fee.

Statute of Limitations

Actions under the North Carolina Wage and Hour Act may be brought within two years. The two years begins to run from the date the wages were payable. Kornegay v. Aspen Asset Group, LLC, 204 N.C. App. 213, 234, 693 S.E.2d 723, 738 (2010)

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Whiteman Law Firm handles cases involving equal pay and unpaid wages under the North Carolina Wage and Hour Act. Please contact us for more information.

 

 

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