When to Pay Employees
The record-keeping provisions of the FLSA require that covered employers document certain information regarding the workweek for each nonexempt employee, including when the workweek starts and hours worked. Although the act defines a workweek as a fixed and regularly recurring period of seven consecutive workdays, it does not expressly say when wages for the workweek are due. However, prompt payment is implied.
Deliverance of Prompt Payment
The U.S. Department of Labor has long held the position that wages earned for the workweek must be paid on the established regular payday that covers the pay period for the workweek in question. If it's not possible to calculate certain wages, such as unplanned overtime, in time for the upcoming regular payday, payment must be made "as soon after the regular pay period as is practicable," which is typically by the next regular payday. Under no circumstances can an employer unreasonably delay payment.
State Payday and Overtime Laws
Most states have minimum payday requirements. While you can pay employees more often than the state-mandated minimum payday, you cannot pay less frequently.
Indiana requires at least biweekly or semimonthly payments. In Kentucky, payment must be made at least semimonthly. In Colorado, payment is due at least monthly. And in some states, such as California and Michigan, pay frequency also varies by occupation.
A few states have no regulations on the matter, leaving it up to the employer to designate paydays.
The state may have its own overtime pay requirements. California, for example, has very specific overtime rules, which mandate when employees should be paid for both overtime and double time.
Changing the Payday Frequency
You might want to change your payday frequency to save on payroll processing costs, to simplify payroll administration or to accommodate employees' requests for a different payday. This practice is not forbidden under the FLSA.
As found in the case of Rogers v. City of Troy New York (Docket 97-7120), employers can change their pay period start and end dates if the change:
- Is implemented for a legitimate business reason.
- Does not unreasonably delay payment.
- Is supposed to be permanent.
- Does not violate the FLSA's minimum wage or overtime provisions.
If you've decided to change your payday frequency, check for any requirements in your state to ensure proper implementation. Try to implement the change in a way that does not compromise employees' financial planning and be sure to give employees as much notice as possible.
Employees who are not paid on time can file a claim with the federal or state DOL or a lawsuit in order to recover unpaid wages and liquidated damages. Even if the employer is struggling to meet payroll due to financial problems, prompt payment or compensation by the state-mandated payday is required.