The Fair Labor Standards Act (“FLSA”) requires employers to pay minimum wage, and to pay overtime to non-exempt employees who work more than 40 hours in a workweek. In Gordon v. Maxim Healthcare Servs., Inc., Docket No. 13-7175 (E.D. Pa. July 15, 2014), a court in the Eastern District of Pennsylvania held that failure to pay an employee on time can violate the FLSA as well.
The court’s decision drew heavily on an earlier Third Circuit decision, Martin v. Selker Bros., Inc., 949 F.2d 1286 (3d Cir. 1991). In Martin, the court concluded that liquidated damages were appropriate, doubling the amount due to the employee. The court stated that the liquidated damages “compensate employees for the losses they may have suffered by reason of not receiving their proper wages at the time they were due.” From this, the court in Gordon found that the Third Circuit “clearly contemplated that injury from lost wages under the FLSA is to be measured from the payday on which wages are ordinarily to be paid.” After looking at precedent from another jurisdiction, the court concluded that “late payment of wages is the equivalent of nonpayment for purposes of the FLSA.”
While the court acknowledged this to be a “harsh” result for otherwise diligent employers who miss a payday by a day or two, it noted that the FLSA is to be liberally construed to achieve the purpose of protecting employees.
What Does This Mean for You? This case serves as a reminder to make certain that procedures are in place that will ensure employees are paid on time on their regular paydays. Failure to pay on time may subject an employer to liability under the FLSA, as well as other laws, such as the Pennsylvania Wage Payment and Collection Law (“WPCL”). Under these laws, employees can collect liquidated damages in addition to their actual damages. Remember that, under the WPCL, officers and directors may, in some circumstances, be personally liable for damages.
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