Penalty Wages: What Every Employee Should Know

June 10, 2009 at 5:53 pm Leave a comment

Let’s say Joe Blow works as a mechanic at a dealership and earns $17/hour. Fed up with “office” politics and inadequate support from upper management, Joe quits his job. He recently received his bi-weekly paycheck, so he is only owed four more days of pay. Livid at Joe’s inconvenient resignation, the dealership refuses to issue a final paycheck. This obstinacy, however, could cost Joe’s former employers more than they realize.

Colloquially know as the “penalty wage law,” ORS 652.150 requires the timely payment of wages upon termination of employment. If the “employer willfully fails to pay any wages or compensation of any employee whose employment ceases, as provided in ORS 652.140 and 652.145, then, as a penalty for such nonpayment, the wages or compensation of such employee shall continue from the due date thereof at the same hourly rate for eight hours per day or until action therefor is commenced.”

While there are some exceptions and limitations, the bottom line is that Joe’s former employer owes him up to $4,080 ($17/hour x 8 hours x 30 days) more than they bargained for. In Oregon, an employer who refuses to issue final payment in a timely manner owes the former employee up to thirty days of pay in addition to the money withheld. Other states have similar wage and hour laws, but Oregon is known for being particularly “employee-friendly” in such cases. An important thing to note is that “30 days of pay” is not the same as “one month’s pay”; it’s more! (30 days = 30 business or work days)

Some people may wonder why employers who understand such wage and hour statutes continue to cheat employees out of money owed, especially if the potential penalty could be costly. The answer is simple: Most people don’t completely understand their rights as workers. In the long run, corrupt employers profit off of this unawareness because, for every person who acts to recover his pay, many more simply write off the nonpayment as an unfortunate loss.

Entry filed under: Law, Ranting. Tags: , .

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