Together we navigated operational challenges caused by the pandemic, and together we will weather this. What follows is information and practical advice for employers concerned with satisfying their payroll obligations in the near term in the face of their bank falling into receivership.
- Identify the “universe” of employment-related expenses. This will include payroll, benefits, bonus and commission comp, insurance, and severance obligations.
- Understand that liability for unpaid wages can be significant. For example, liability in California includes:
- Back payment of any unpaid wage amounts that employees prove they were legally entitled to.
- Interest of up to 10% of the unpaid wages.
- Penalties for late payment of wages equal to: (i) $100 for the first violation; and (ii) for each subsequent violation, $200 plus 25% of the amount unlawfully withheld. Penalties may apply for each pay period that wages remain unpaid.
- If any employees leave the company after the payday date, the company can be liable for waiting time penalties for late payment of final wages. Waiting time penalties are equal to 1 day’s wages for each day an employee’s final wages are unpaid, up to a maximum penalty of 30 days’ wages.
- Companies may be required to pay employees’ attorney’s fees if the employees prevail in litigation.
- Criminal liability for wage theft if the act is “intentional.” Felony cases are punishable by up to 3 years in prison.