The Louisiana Wage Payment Act, La. R.S. 23:631 (the “Act”) requires employers to pay employees all wages due upon termination of employment. Furthermore, all wages due must be paid on or before the next regular payday or no later than 15 days following the date of discharge or resignation, whichever occurs first.
Under the Act, accrued vacation pay is a “wage” and must be paid upon termination of employment. While Louisiana employers are not required to provide paid vacation to employees, employers with oral or written policies providing for paid vacation must pay employees all accrued, unused vacation pay upon termination of employment. It is illegal for an employer to require an employee to forfeit accrued vacation upon termination of employment.
Louisiana law permits “use it or lose it” vacation policies. See Wyatt v. Avoyelles Parish School Board, 01–3180 (La.12/4/02); 831 So.2d 906. A use it or lose it vacation policy generally requires employees to use all vacation time in the year it is available and prohibits employees from carrying over unused vacation time to the following year. While such policies are permitted, they must be carefully crafted and applied.
The consequences of violating the Louisiana Wage Payment Act can be harsh. An employer who violates the Act is liable to the employee either for 90 days wages at the employee’s daily rate of pay, or else for full wages from the time the employee’s demand for payment is made until the employer pays or tenders the amount of unpaid wages due to such employee, whichever is the lesser amount of penalty wages. See La. R.S. 23:632. To trigger liability for penalty wages, the employee must make a demand upon the employer for unpaid wages. However, courts have liberally construed what constitutes a demand for unpaid wages and have found even an oral demand made in person or telephone is sufficient.
In addition, the employer is liable for the employee’s reasonable attorney fees in the event a well-founded suit for any unpaid wages is filed by the employee after 3 days from time of making the first demand for unpaid wages following discharge or resignation.
It is possible for employers to escape liability for penalty wages. When the court finds that an employer’s dispute over the amount of wages due was in good faith, but the employer is subsequently found by the court to owe the amount in dispute, the employer shall be liable only for the amount of wages in dispute plus judicial interest incurred from the date that the suit is filed. This good faith defense does not relieve the employer of liability for attorney’s fees.
Finally, the Act also allows employees to file a “summary proceeding” to recover unpaid wages. Unlike ordinary proceedings, summary proceedings are conducted with rapidity and allow the employee to have a hearing set on the merits of the wage dispute immediately upon filing a petition for unpaid wages. This can leave employers with little time to prepare for trial.
Due to the potential for stiff penalties and attorney fees, wage payment claims are fairly common. Issues with wage claims can be avoided on the front end by implementing employment policies that comply with Louisiana law and responding appropriately to demands for wages.
Our attorneys have experience representing employers and employees in wage disputes. The intricacies of the Act, along with some conflicting case law, are good reason to hire an experienced labor and employment attorney when involved in a wage dispute.