Legal Question in Business Law in Michigan

Is it leagl for an employer to hold part of the staffs payroll checks, with the excuss there is no money available?


Asked on 3/20/10, 11:47 am

1 Answer from Attorneys

Audra Arndt Audra A. Arndt & Associates, PLLC

I presume you mean an employee's paycheck for X amount, let's just say $300, was due on X date, and the employer said "sorry, I can only give you $200 right now, and will make up the difference soon."

Technically, wages are due when wages are due. If the paycheck was somehow for work to be performed in advance, or in a situation where the work hadn't yet been performed, and therefore the money wasn't earned, then the money wasn't due yet. But for the standard paycheck, which I believe you're talking about, an employer is required to pay employs when the money becomes due and/or according to the company's standard payment schedule. A lot of employers operate on a 1-week delay, wherein you get a check on Friday, that was really for the week preceding that Friday.

While technically illegal not to pay someone when the money becomes due, most employers would pay the employees the balance as quickly as possible. Furthermore, it wouldn't make much sense for an employee to go out and file a lawsuit for the balance, unless the employer never paid it, and several months had passed. This is also not a situation wherein the police would take any action - they would laugh if only a few days or a week had passed. Employers having to delay payments happens more often than you might think, especially now. Sometimes it's beyond the employer's control (depends what kind of business they are operating and their cash flow operations) - perhaps someone's check bounced and they didn't have enough to cover payroll on that exact day, but will within a day or two. Actions such as this fall under the "generally acceptable business practice" theory wherein it is "okay" or "common" for an employer to have to occasionally delay payment to employees.

The delay should be very short and not a common occurrence. If the employees were given at least part of their pay, that is better than nothing at all. It is a huge inconvenience to employees, because they are expecting X amount on X day, and we all have bills to pay. When an employee doesn't get the amount they were expecting, this creates stress and more work.

Did the employer indicate when the balance would be paid, and offer anything to make up for the delay?

If this becomes a common occurrence with the employer, i.e., more than 1-2 times per year, then something may be wrong with the employer's financial status or accounting & business practices.

The employee should also do some research & checking with the appropriate state departments to determine if the employer has been making the requisite tax contributions/payments to the state. Unfortunately, when employers are having financial problems, they sometimes do not remit the appropriate payments to the state or gov. for workers' comp, SS, 401Ks, etc., and employees are unaware of this activity until it is too late.

Depending on the employer's track record, there may or may not be a need for concern in this situation. I hope that the employees get paid the difference, and this type of activity is a 1-time occurrence.

I know I provided a longer explanation than you were expecting, but hopefully it makes sense to you, and provides you with some guidance.

Read more
Answered on 3/25/10, 1:03 pm


Related Questions & Answers

More Business Law questions and answers in Michigan