Can an employee sue for damages if an employer pays wages late?

Yes, according to a recent Court of Federal Claims decision that expands Federal wage and hour law to include a timeliness-of-pay requirement.  The case involves a class action by federal employees forced to work during the shutdown (such as prison wardens and border patrol officers) who were not paid until the shutdown was over.  Prior to this decision, the federal wage and hour laws generally only governed the amount of payment, while state wage payment law covered issues of untimeliness.  The change in the federal law particularly affects states like Virginia whose wage payment law contains few penalties.  In contrast, federal wage and hour laws have liquidated damages and fee-shifting provisions that seriously punish late-paying employers.  The case is Martin v. United States, No. 13-834C (Fed. Cl. July 31, 2014).

The government sought dismissal of the Martin lawsuit claiming that its faiure to pay “excepted” employees (those forced to work during the shutdown) on their normal payroll dates did not violate the Fair Labor Standards Act (FLSA).  Citing to a federal law called the Anti-Deficiency Act, the government claimed it would have broken this law if it had paid on time.  Drawing upon prior FLSA case law, the government argued that federal wage and hour law is not violated by a temporary delay in payment (in this instance, a two-week delay).

The Court of Federal Claims denied the motion to dismiss, relying upon federal court decisions concerning what constitutes an FLSA violation and when the statute of limitations starts running for FLSA cases.  These include a 1945 Supreme Court decision that states that an FLSA violation occurs when an employee is not paid on time.  The Court also relied upon a Ninth Circuit decision involving state workers whose paychecks were delayed due to a budget impasse, Biggs v. Wilson, 1 F.3d 1537 (9^thCir. 1993).  Citing that decision, the Court held that the FLSA violation must occur “when an employee is not paid on a regularly scheduled payday.”  The alternative, according to the Court, “would create sufficient uncertainty as to when a violation occurs and statutory enforcement would prove unworkable.”

This decision only denied the government’s motion to dismiss, and did not rule on the case as a whole.  By recognizing the availability of such a claim, however, the Court appears open to expanding the FLSA to include timeliness issues.  If this occurs, employers could face additional sanctions for delays in payroll payments, including liquidated damages and attorney’s fees.