Delaware Business Lawyer Blog

An employer in Delaware refused to pay his employee wages in the amount of $624.16. The employee hired a Delaware attorney and sued the employer under a statute known as “Delaware’s Wage Payment & Collection Act.” After a trial, the Court ordered the employer to pay the following amounts:

(1) unpaid wages of $624.16
(2) liquidated damages of $624.16
(3) court costs of $584.50
(4) interest

AND, the kicker, (5) attorney’s fees of $6,100.00!

That’s right, in a case where the employee was owed only $624.16, the employer had to pay the employee’s attorney $6,100.00! The Court explained that the attorney’s fees should not be reduced just because there was a difference between the judgment and the request for attorney’s fees. According to the Court, “without reasonable attorney’s fees, employees would not be able to find lawyers to try cases where the amounts are relatively small.” By refusing to pay the wages that were owed, the employer took the risk that the employee will sue under Delaware’s Wage Payment & Collection Act, and one of the risks is that the employer will have to pay the fees charged by the employee’s attorney.

It’s bad enough to lose your job, but it adds insult to injury when your employer refuses to pay you the final wages, salary or other compensation you earned. In Delaware, we have a law called the Wage Payment & Collection Act. In a nutshell, here’s what it provides.

Whenever an employee’s job is terminated, even in those cases where the employee resigns, Delaware law requires the employer to pay all wages earned by the employee on the next regularly scheduled payday. If the employer fails to pay the employee’s wages when due, the employer will also owe the employee a penalty equal to 10% of the unpaid wages for each and every day that the failure to pay continues. The highest the penalty can get is the amount of the unpaid wages, in which case the employee gets double his unpaid wages.

Of course there are exceptions and conditions that apply, but that’s the basics. Oh, there’s one more thing. The employer also has to pay the attorney’s fees that the employee incurs in collecting the unpaid wages.

As can be expected, disputes over unpaid wages sometimes end up in Court. The Court’s decisions in these cases interpret and analyze the law to give us a better understanding.

For example, the term “wages” sounds simple. And even though the Act gives us a definition of “wages,” that definition is not as clear cut as one would hope. Even figuring out when a payment is made can be difficult - is it made when the employer mails it or when the employee receives it?

Another area of dispute is the definition of “employee.”

In this series of articles, we’ll examine the issues that often come up, and we’ll talk about how the Courts have resolved them.

Times are tough enough these days. They’re even tougher when your employer fails to pay you for overtime work. Employees across the country are submitting complaints to the government or filing lawsuits against their employers to recover overtime pay.

As a Delaware attorney who helps workers collect the money they earned, let me share with you what the law requires. Under the Fair Labor Standards Act, an employer is required to pay overtime pay to employees who work more than 40 hours in a work week. The amount owed to employees for overtime pay must be at least one and one-half times the employee’s regular pay.

The general rule is: For covered, nonexempt employees, the FLSA requires overtime pay at a rate of not less than one and one-half times an employee's regular rate of pay after 40 hours of work in a workweek. There are exceptions to the general rule, hence the use of the term “nonexempt employees.” One of the exemptions is for employees who work in any of the following three capacities:
(1) bona fide executive
(2) bona fide administrative, or
(3) bona fide professional.

A "bona fide executive" is an employee (1) who is paid a salary of not less than $455 per week, (2) whose "primary duty is management of the enterprise in which the employee is employed or of a customarily recognized department or subdivision therof," (3) who "customarily and regularly directs the work of two or more other employees," and (4) who "has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees are given particular weight.

A worker is employed in a bona fide administrative capacity if she performs work "directly related to management policies or general business operations" and "customarily and regularly exercises discretion and independent judgment." Work directly related to management policies or general business operations consists of "those types of activities relating to the administrative operations of a business as distinguished from `production' or, in a retail or service establishment, `sales' work." Employment may thus be classified as belonging in the administrative category, which falls squarely within the administrative exception, or as production/sales work, which does not. the border between administrative and production work does not track the level of responsibility, importance, or skill needed to perform a particular job

In order to qualify as a bona fide professional an employee's primary duties must consist of:
work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study, as distinguished from a general academic education and from an apprenticeship, and from training in the performance of routine mental, manual, or physical processes. Examples of professions included in the "learned professional" exemption are the fields of law, medicine, nursing, accounting, actuarial computation, engineering, architecture, teaching, various types of physical, chemical, and biological sciences, including pharmacy.

As a Delaware business owner, what would you think if one of your employees who quit her job applied for unemployment compensation? At first, you’d probably think that there’s no way she could possibly qualify for benefits. But then you check with your Delaware business lawyer and learn that there are situations where an employee who resigns can in fact collect unemployment compensation.

The case is usually decided on a finding of whether she voluntarily quit her job with or without good cause. Under Delaware law, in order to be eligible to collect unemployment compensation benefits, the employee must show that (1) she either voluntarily quit her job with good cause or involuntarily quit, and (2) that she’s eligible to work.

If the employee quit her job involuntarily and is available for work, she can collect unemployment benefits. If, however, she quit her job voluntarily, in order to be eligible for unemployment compensation, she has to show that she had good cause to quit her job.

What’s considered “good cause to quit?” Good cause has been defined as such cause as would justify one in voluntarily leaving the ranks of the employed. It can include a substantial reduction in wages, work hours or a substantial deviation in the working conditions from the original agreement of hire to the detriment of the employee. The burden to show good cause is on the claimant. Good cause does not exist, however, just because the employer created an undesirable situation. The employee must first exhaust her administrative remedies by, for example, notifying the employer of the undesirable situation.