Ask HR: “Can I hold employee wages?”

In the world of human resources, nothing is off-limits. Despite it being pigeonholed as the complaint department, HR is chock-full of tricky and questionable work situations that, if handled poorly, can create potentially costly liabilities for a company.

That’s where simplicityHR’s Ask HR series comes in! From serious to seriously strange, we’re here to simplify all your burning HR questions.

We reached out to Michele Kauinui, Director of HR Services at simplicityHR for her expert answer.

Ask HR: “Due to COVID-19, we had to put a hold on our business operations. Can I wait to pay my furloughed employees until we receive a federal relief loan or resume operations?” 

Michele: No; despite unexpected events that may affect the operations and cash flow of your business, you cannot legally withhold earned wages from your employees. Under Section 388-2, HRS, Hawaii employers are required to pay employees at least twice each calendar month and pay all wages earned within seven days after each pay period.

Wage and hour laws remain in place amid the coronavirus pandemic. Therefore, it is important to pay your employees by the required pay day, even when shutting down, furloughing, or laying off employees. For employees who voluntarily resign or abandon their job, wages must be paid in full by the next pay day; those who give at least one pay period’s notice of resignation are due all wages on their last day of work. Employees who are involuntarily separated must be paid at the time of discharge, or no later than the next working day.

Employers who fail to pay their employees on time risk facing legal consequences. A national hair salon chain is currently facing a class action lawsuit for withholding pay of at least 100 stylists after shutting locations due to the pandemic.

To say that the current situation is tough for everyone may seem like an understatement. As employers are trying to balance their business and employees’ needs, there’s no doubt federal assistance will be essential for Hawaii businesses affected by the pandemic. However, without a definite timeline on when individual businesses will be able to access those funds, it would be wise to come up with a backup plan in order to avoid potential wage claims for failing to pay employees on time.

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This article is for informational purposes only and does not constitute legal advice. Readers should first consult their attorney, accountant or adviser before acting upon any information in this article.