For most of us, payday can’t come soon enough. We rely on our employer to pay us accurately, based on our hourly wage or annual salary. But sometimes mistakes do happen. It’s not entirely uncommon for workers to look at their paystub or checking account and see a different amount than they expected. In some cases, you might have been overpaid. This article, however, is all about what you should do if your employer underpays you. The good news is that it’s often nothing more than an innocent mistake. Even still, it can be a stressful situation. You may even feel cheated if your employer unexpectedly withholds part of your paycheck that you think is rightfully yours. Luckily, there are steps you can take to peacefully handle these disputes.
Above all else, remain calm. Going into a panic or storming into your bosses office will not help the situation. Mistakes do happen and payroll staff are only human beings. If you’ve legitimately been underpaid, it’s almost always the result of a small clerical error. In most cases, it can be quickly and easily corrected. The worse case scenario is that you might have to wait until the next payday for the missing money to be tacked on your next paycheck. However, if it’s a larger sum, you may be able to convince payroll to cut you a second check.
The important thing is to remain calm when you notice a mistake has been made with your pay. The worst thing you can do is fly off the handle at your boss or the payroll department and make unfounded accusations. Remember that you are dependent on your boss and the payroll department to fix the error, so take a deep breath and relax. The underpayment can likely be fixed quickly.
Check and Check Again
Like we said, mistakes can happen. That also means you could be the one making the mistake. Before you raise a stink about the size of your paycheck, make absolutely sure that you’re right. Check your paystub, recall your hours, and then do some math. Then do it again, just to double check. Make sure your pay isn’t lower than unexpected due to something you forgot, like time off, an unpaid holiday, or higher taxes.
Whatever the reason for the pay discrepancy, it’s important to make sure there’s actually something to correct before you start the process of correcting it. Stop to consider all the possible reasons your pay might be lower than you expected. If you can’t come up any good reasons, then go ahead and take the steps to fix it. If need be, ask a colleague if their pay was also lower. You may discover you’re not the only worker affected. In that case, see if you can collectively come up a legitimate reason for it.
Make An Inquiry (In Writing)
Once you’ve centered yourself and are certain a mistake was made, go ahead and take the next steps. Your best bet is make an official written inquiry with the co-workers in charge of payroll. You could type out a physical letter, but an internal email will often be sufficient. Be polite, but let them know you believe a mistake has been made in your pay. Give them any relevant details, such as how much money is missing or how many hours you worked for that period. The goal is to make fixing the mistake as easy as possible.
In most cases, email is probably the best bet. It leaves behind a digital record of your letter, so no one can claim they didn’t see it. Above all, make sure your letter is professional worded. Be calm and rational. Remember, you’re simply pointing out a mistake (that you assume was unintentional) and asking that it be corrected. In most cases, you’ll get an apology and the mistake will be fixed fast. Be sure that your boss is copied on the message, so that they are also aware of the issue.
Be Patient and Helpful
While most underpayments are resolved quickly and efficiently, there can be situations when there is a bigger issue impacting payroll. Perhaps multiple employees’ pay has been affected. Sometimes, a computer system malfunction, banking problem, or other issue can impact an entire organization. These situations might take longer to resolve. That will require a lot of patience on your part.
In addition to being patient, it also helps for you to try and be helpful. Work with your employer to resolve the payroll situation. If you are asked to provide information, do so right away. Don’t complain too loudly. Trust that your employer will do what they can to make you whole financially as soon as possible. In the meantime, you can hopefully stay financially afloat with your emergency fund.
Escalate Matters (At The Appropriate Time)
If problems with your pay persist (and you are the only one impacted), then you will eventually want to escalate matters to try and get the issues resolved. This may require you to move beyond your employer’s payroll or finance department. The next step is to approach your human resources representative. You may also need to bring the problem to the attention of more senior people within the organization, including higher managers or executives, or even the CEO or owner. It all depends on how large the company is.
Always put everything in writing to ensure there is a record of the problem (and your attempts to resolve it). Continue to be polite and copy your boss on all correspondents within the company. The more people who are aware of the pay issue you are having, the better for you. However, you shouldn’t email the CEO at the first sign of the issue. Go through the appropriate channels first. Then, only escalate the matter if nothing is getting solved.
Talk To Your Boss
If need be, you may also want to have an in-person conversation with your boss. You can plead with them to help get the pay problem taken care of. If you have a good boss (and a good relationship with them), then they should advocate on your behalf. They may even need to confirm your claims of hours worked or tasks performed in order to prove you were undercompensated.
Ask your boss to escalate matters on your behalf. It’s okay to make a personal plea here too, asking them to make it a priority. Appeal to your manager’s decency and explain how the underpayment is impacting you financially and personally. Having an advocate can help.
Move Beyond Your Employer
If you feel that you’ve exhausted all your internal options with your employer, but nothing has been fixed, you’ll need to move to external attempts. This is not an easy step and can be stressful. The process can start to feel very adversarial, which causes some employees to worry about losing their job altogether over the issue. Regardless, if you didn’t get anywhere by asking the company to fix your pay by yourself, you have other options. Most states have certain employment laws that come into play when a company owes you backpay (or stops paying you altogether).
Which option is right for you will depend on your individual situation and the relationship you have with your employer. Some methods are more aggressive than others. You should be aware that escalating the issue into a legal fight may damage your relationship with your boss or cause the organization to look for a reason to cut ties with you. However, if you are determined to get what is rightfully yours, we’ll walk you through the next steps.
A first step when escalating matters outside your employer would be to write a demand letter. This is a formal letter that spells out the terms of your employment agreement, the amount of money you are owed, a deadline for payment, and the steps you will take if you are not paid what you are owed by the specified deadline.
A demand letter might be seen as an aggressive step by an employer. You will want the language to be firm but professional. Be sure to spell out the previous steps you took to try and resolve the pay issue, before you felt compelled to send a demand letter. Also, give a realistic timeline for the employer to resolve the pay issue. A month would normally be reasonable.
File a Complaint
The U.S. Department of Labor enables employees who are owed money by their employer to file a formal complaint. On its website, the Department of Labor states:
“The U.S. Department of Labor’s Wage and Hour Division (WHD) is responsible for administering and enforcing some of the nation’s most important worker protection laws. WHD is committed to ensuring that workers in this country are paid properly and for all the hours they work, regardless of immigration status.”
Familiarize yourself of this complaint process. Then ask the U.S. Department of Labor intervene and advocate on your behalf. They will undertake a formal inquiry for you. Hopefully, they will put the appropriate pressure on your employer that resolves the pay issue. As an added bonus, asking the Department of Labor to handle things can help remove you from the process. That may prevent you from damaging work relationships from any hard feelings that arise.
Small Claims Court
Depending on how much money you are owed, you could always take your employer to small claims court. In general, small claims court is for money issues and disputes under $25,000. In small claims court, you can state your case, provide your evidence, and hopefully have a judge rule in your favor. This should only be necessary if your employer outright disputes that you were ever underpaid.
The advantage of small claims court is that you can represent yourself. So you don’t need to spend money on a lawyer. Judges in small claims court are used to people representing themselves. When it comes to the legal system, small claims court is usually the easiest, fastest, and most affordable way to resolve smaller financial disputes.
Hire A Lawyer
Depending on how serious the pay issue becomes (and how much money you are ultimately owed), you may want to consider hiring a lawyer. You should search for one who specializes in employment law. A lawyer can provide expert counsel to you on how to deal with your employer and help you navigate the legal process. If the legal proceedings are going to happen outside of small claims court, they can get complicated.
Keep in mind that hiring a lawyer can be expensive. Plus going through the courts to get satisfaction can be a time consuming process. In general, lawyers should be viewed as a last resort. You should only hire one when you truly believe that there is no other way to retrieve the money you’re owed. Chances are your employer will also have a lawyer of their own.
If the disputed money is a large amount, you may be able to hire a lawyer on a contingency basis. That means they only get paid by taking a percentage of any potential settlement.
Get Another Job
If you feel an employer is treating you badly or being unreasonable, you could (and probably should) look for another job. You can still pursue the employer for the money they owe you, but you can do so while working elsewhere. There is no point in staying with an organization that is not paying you fairly or accurately.
Make sure that the employer knows you are leaving because of the ongoing pay problems. You should also let them know that you plan to continue pursuing them for back pay even, after you leave the company. You could even have a lawyer write your resignation letter for you, as that might send a strong message to the company that you are serious in getting the money you are owed.
The Bottom Line
Pay disputes are never easy or fun. The entire situation can be extremely stressful, especially when you are the one owed money. However, by keeping a level head and remaining calm, you can take a number of steps to fix the issue. Hopefully, you’ll get back the money that you have rightfully earned — without a big fight or fuss.
Remember that in most cases, the law is on your side in these matters. It might take time, but you should eventually get the back pay your employer is legally required to give you. Just don’t let your emotions get the best of you during the process. Instead, stay calm, professional, and always planning your next move in your effort to be made whole.