Can an Employee Demand Payment of Wages After Being Fired?

It is inevitable: every employer is eventually going to have to discharge an employee. What many employers do not realize is that the employee can immediately demand all wages or commissions earned up to the date of termination. Even when employers have established a biweekly, semimonthly, or monthly payroll, they have only 24 hours to meet the discharged employee’s demand for payment. If the employer does not tender the final paycheck upon demand, the former employee can assess and collect a penalty against the employer each day the final amount owed is not forthcoming.[1]

What is a Wage?

The employee’s rights are not limited to hourly pay for purposes of this statute. Employers are obligated to pay any earned commissions[2], bonuses[3], and unused paid time off[4] to the employee. But, when employers choose to offer benefits, such as paid time off, employers and employees can define the circumstances under which employees have earned these payments through a contract, so long as the contract provisions are not prohibited by or otherwise in conflict with a statute.[5] Employers have discretion to choose how to compensate employees for vacation time,[6] they can define when a bonus is earned,[7] and they can establish when an employee has fulfilled all of the requirements to earn a commission.[8] It is absolutely essential that employers that offer payment to their employees in the form of vacation pay, bonuses, or commissions have an agreement in place that defines the when payments are earned. Failure to do so leads to uncertainty and unnecessary legal exposure.

What Can an Employer Do?

Consultation with an experienced employment attorney can minimize exposure and ensure that best practices are followed. Employers are advised to complete an accounting and prepare a final pay statement prior to discharging an employee. In order to limit confusion, employers are also advised to review their policies or handbooks. If there is no definition of when a commission or bonus is earned, or how unused paid time off is treated, then the employer is at risk of becoming embroiled in litigation to establish a definition. Is a commission earned when the employer is paid or when the customer signs a purchase order? What benchmarks must an employee reach to earn a bonus? Has he or she met those benchmarks? A simple review of a handbook can answer these questions, which can save time and money when compared to the costs and delay of litigation.

Employers must tread lightly. If they draft an agreement improperly, it could unintentionally create an employment contract that alters the employment at will relationship. In that event, employers have created unintended exposure to claims for breach of contract. It is always best to consult with an experienced employment attorney if there are any questions–feel free to contact an employment attorney today with any further questions.

[1] Minn. Stat. § 181.13
[2] Id.
[3] Kvidera v. Rotation Engineering and Mrg. Co., 705 N.W. 2d 416, 425 (Minn. Ct. App. 2005)
[4] Lee v. Fresenius Med. Care, Inc., 741 N.W.2d 117, 125 (Minn. 2007)
[5] Id. at 123
[6] Id. at 126
[7] Chambers v. Travelers Companies, Inc., 668 F.3d 559, 566 (8th Cir. 2012)
[8] Bull v. Midwest Fin. Corp., C3-00-1356, 2001 WL 185031 (Minn. Ct. App. Feb. 27, 2001)