Is it illegal for my employer to issue payroll checks late?

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Is it illegal for my employer to issue payroll checks late?

My employer is issuing our payroll checks late due to “insufficient funds.” Depending on what time of the year it is we may get the make up check a week later or months later. Many employees feel there is embezzlement going on but our company deals with so much cash it would be almost impossible to prove. The employer will not borrow money to make payroll because he feels its a punishment to us.

Asked on February 13, 2012 under Employment Labor Law, Kentucky

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

No, it is not legal for an employer to issue paychecks late--it is a breach of contract (the contract or agreement by which employees work in exchange for pay) and often of state law, too.

As a practical matter, the key issue is whether or not you think the employer has the money and refuses to pay, or does not have the money.

If it simply does not have the money, then regardless of your legal rights, you can't force them to pay what they don't have (especially if the company is a corporation or LLC, which means that you could not sue the owner). In this case, while you should probably be looking for other work (since a company that can't make payroll probably will not last long), as a practical matter, you may not be able to do anthing to make them pay on time. You could, for example sue, and possibly win--but if the company is insolvent, you still won't be paid.

If you feel the company has the money and is refusing to pay, however, then you should take action to vindicate your rights. You could contact the state labor department to see if you could file a complaint; you should also speak with an attorney about suing. If you feel that embezzlement is going on, you should act quickly, before the money is gone--one possibility is to bring a lawsuit that also seeks "injunctive relief," such as in the form of a court order requiring the deposit of funds with the court or barring transfers of money out from the company, to ensure that funds will remain available. If a number of employees are affected, you could look to retain a lawyer and sue jointly.


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