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My company is going through rough times. Long story short the two owners are feuding with each other as they attempt to part ways and split up ownership. This has created a very hostile work environment. A co-worker was terminated last week for what appears to be no reason other than not getting along with one of owners. The company owes him for the past two weeks of work as well as unused vacation time. The owner is now refusing to give him what's due unless he signs a disclosure agreement stating that he will not take legal action against the company. Can they legally withhold his pay until he signs something?
I know the owner is trying to cover himself because pretty much every employee would have a legit legal case against the company right now for various things that have happened in the workplace.
No. They cannot withhold payment for work already performed, or for vacation hours already accrued.
They can however--and often do--offer severence pay in exchange for signing a waiver agreeing not to sue.
Note that nearly every state has 'at will' employment laws which means an employer can fire you for any reason--and for no reason at all. Not getting along with the boss is a perfectly legitimate reason to fire a person. Now that person would be eligible for unemployment, because the reason for their termination was not an action they did wrong or could have prevented. But they would have no grounds to sue.
Not sure on vacation, even accrued payment laws vary by state, but for time worked, they must pay up. There is a difference b/w vacation time one is allowed to take per year, versus the amount earned during a prorated portion of a year.
Let's not leave out the possibility that someone could leave the company with money owed to the company via personal accounts (like a company credit card) or if they had a negative sick/vacation balance. Then the company could certainly withhold pay.
Let's not leave out the possibility that someone could leave the company with money owed to the company via personal accounts (like a company credit card) or if they had a negative sick/vacation balance. Then the company could certainly withhold pay.
Or if you received some sort of disbursement of funds through a program like tuition reimbursement, they can withhold money if you don't follow through with your commitment to the company. For our company, I believe it's one year after receiving the funds. After that, you can do whatever you want.
Let's not leave out the possibility that someone could leave the company with money owed to the company via personal accounts (like a company credit card) or if they had a negative sick/vacation balance. Then the company could certainly withhold pay.
Yes under these circumstances company can withhold pay, infact one of my friend when went on an outstation assignment and spent more that what was budgeted and then decided to quit job after some time, there were lots of problem between him and company and it took quite some time to get sorted.
Thank you all for your input and responses! I've done more research for the state of Arizona about this and given the situation the employer is illegally withholding his funds. Should be interesting...
Thank you all for your input and responses! I've done more research for the state of Arizona about this and given the situation the employer is illegally withholding his funds. Should be interesting...
Sounds like a powder coating company that I worked for out there.
Thank you all for your input and responses! I've done more research for the state of Arizona about this and given the situation the employer is illegally withholding his funds. Should be interesting...
Well now your coworkers has to face reality. It may be illegal for them to withhold his/her pay, but it doesn't mean they will just hand it over. Is your coworker willing to pay an attorney to fight for his pay? Is it enough money to be worth a legal battle? Does he have money to tide him over while fighting for it? If the answers to these questions are no, then he may need to suck it up, sign the agreement and get on with his life.
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