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Unpaid wages laws

As companies grow ever larger and more international, it can be difficult for a worker to find the person ultimately responsible for lost or unpaid wages.

This process may be even more difficult when the employee is a contracted worker; often these workers feel they have no recourse other than court to retrieve their unpaid wages. Fortunately, there are several laws designed to protect individuals and groups in the event of a company denying their claim to unpaid wages.

Wage and Hour Division

For disputes between employers and their workers concerning unpaid wages, the authority to mediate conflict rests with the Department of Labor’s Wage and Hour Division. Often, the Wage and Hour Division will audit the payroll of the employer and match it with funds received. If there is a discrepancy between actual hours worked and money received, the Wage and Hour Division will supervise the payment of wages and can be called in by employees to ensure speedy payment in the event of a difficult employer.

Statute of Limitations

Because of the many records necessary to investigate unpaid wage claims, the statute of limitations on unpaid wage claims is two years. This falls well within the time period during which businesses are supposed to keep detailed records of payroll and hours.

This law also protects the companies from many fraudulent claims. In cases where the employer has withheld wages from his employee in a wilful manner, the statute of limitations can be extended to three years on a judge’s word.


Occasionally, the Wages and Hour Division and other methods fail to recover wages from an employer.

If all else fails, the law allows employees to sue for “Back Pay” or pay owed to them.

Lawsuits brought against companies must be brought between two and three years, depending on the circumstances, after non-payment. There is no legal support for suing an employer for additional money, e.g. interest or damages, due to unpaid wages, only the money not paid by the employer.

Sovereign Immunity

The United States Back Pay Act of 1966 granted the United States government sovereign immunity from other unpaid wage laws and freed the United States government from litigation concerning unpaid wages in many circumstances.

This act was amended in 1978 to conform with the Civil Service Reform Act and now provides arbitration concerning unpaid wages for federal employees. The government’s immunity will be applied based on the decision of a committee which reviews each case before granting immunity.