Unpaid Wages, Part 2

In Part 1, I warned that financial inability to pay an employee's wages is insufficient to avoid a finding of willfulness and double damages.  But what is sufficient?  Washington courts have, so far, acknowledged only two instances when an employer's wage withholding was not willful, resulting in only single damages:

1. When the employer was careless or erred in failing to pay, or
2. When a bona fide dispute existed between the employer and employee regarding the payment of wages. 

Morgan v. Kingen, 166 Wash.2d 526, 534 (2009).  The typical case of carelessness or error is an inadvertent bookkeeping mistake.  In the case of a bona fide dispute, there must be a fairly debatable dispute over whether an employment relationship exists, or whether all or a portion of the wages must be paid.  Schilling v. Radio Holdings, Inc., 136 Wash. 2d 152, 161 (1998).  These exceptions are of no use to the employer who did not pay wages simply because there were insufficient funds to do so.

There is another route for avoiding double damages.  Double damages are not available to any employee who "knowingly submits" to the wage withholding.  RCW 49.52.070.  But, again, this is a narrow exception.  "A person knowingly submits to withholding of wages when he or she intentionally defers to his or her employer the decision as to whether, if ever, he or she will be paid."  Durand v. HIMC Corp., 151 Wn. App. 818, 836-37 (2009) (citing Chelius v. Questar Microsystems, Inc., 107 Wn. App. 678 (2001)).  In Durand, the court noted that staying on the job after the employer fails to pay does not constitute knowing submission.  The court also emphasized that the employee only agreed to temporary non-payment and always expected to be paid the full amount he had earned when the employer was financially able.  In other words, if an employer fails to pay its employees on time, but convinces them to continue working by making assurances that they will be paid in full later, the employees are not knowingly submitting to the withholding and the employer may still be liable for double damages.   

My esteemed colleague offers her two cents on wage withholding here.  For advice on your specific wage withholding issues, consult an attorney.