North Carolina Wage Law Explained
Table of Contents
- 1 North Carolina Wage Law Explained
- 2 Understanding North Carolina Wage and Overtime laws
- 3 Minimum Wage
- 4 Overtime Pay
- 5 Misclassification of Independent Contractors
- 6 Statute of limitations
- 7 Penalties for Violations
- 8 Lore Law Firm in On your side
a table of contents
If you believe you’ve been deprived of the compensation to which you’re legally entitled, please contact the Lore Law Firm. Our overtime rights lawyers represent North Carolina employees who have been subjected to workplace wage and hour violations and take cases on a contingent fee basis – no fee if no recovery of backpay.
Understanding North Carolina Wage and Overtime laws
While North Carolina does have certain state labor laws that differ from the federal Fair Labor Standards Act (FLSA), the state law applies only in instances where it provides greater rights or protections than federal law. Whichever law (state or federal) is more favorable to the worker will apply. In most instances, however, federal law will cover issues involving overtime pay and minimum wage.
The current North Carolina minimum wage and the federal minimum wage is $7.25 per hour.
North Carolina state labor laws do not include a provision regarding the payment of overtime. However, as most employers are covered by the FLSA, generally the FLSA will apply and requires employers to pay time and a-half for all hours worked over 40 per workweek, unless an employee is properly classified as exempt.
For minimum wage workers in North Carolina, the overtime pay rate amounts to $10.88 per hour (1.5 x $7.25).
North Carolina labor laws do not require reporting pay or show-up pay when workers show up for a scheduled shift but are sent home due to no available work. Employers are not required to pay a minimum number of hours to hourly paid employees or to non-exempt salary employees, even if they are called back in. Employers must only pay hourly employees and non-exempt salary employees for the actual hours worked.
An employer doesn’t violate overtime laws by requiring employees to work overtime, (ie “mandatory overtime”), as long as they are properly compensated at the premium rate required by law.
Which Employees are Entitled to Overtime Pay
Most workers in North Carolina are entitled to overtime pay when they work more than 40 hours per week. In certain circumstances, however, there are exemptions.
Employees engaged in executive, administrative, or professional capacities (and paid at least $455 per week on a salary basis) are exempt from the overtime requirement. Note that new minimum salary requirements for these overtime exemptions take effect in January 2020 and increase the minimum salary threshold to $684 per week (or $35,568 annually). This change in federal law will also apply to most workers in North Carolina when making the determination of whether they are classified as exempt or non-exempt from the overtime pay laws.
Are You Owed Back Overtime Wages?
Misclassification of Independent Contractors
Misclassification occurs when a business treats its workers as independent contractors (or subcontractors) rather than employees to avoid legal obligations such as social security taxes, worker’s compensation, unemployment insurance and overtime pay.
While there are situations in which workers are legitimately running their own business and properly treated as independent contractors who are not entitled to receive overtime, employers are not allowed to mischaracterize employee roles to avoid paying overtime compensation.
Merely labeling a worker as an independent contractor, or even entering into a written agreement, is not enough to avoid the labor laws on overtime pay.
There are several factors to be considered in determining if a worker in North Carolina is an employee or independent contractor (a/k/a 1099 employee)
If properly classified as an independent contractor under North Carolina law, workers are typically eligible for only the specific compensation bargained for in a contract.
Employers may not withhold any portion of an employee’s wages unless:
- Required to by North Carolina or federal law.
- The amount of a proposed deduction is known and agreed upon in advance and the written authorization is: (a) signed on or before the pay day in which the deduction will be made, (b) includes the reason for the deduction, and (c) states the actual dollar amount or percentage of wages that are to be withheld.
- For further information regarding North Carolina labor laws regarding deductions from wages consult the N.C. Department of Labor.
North Carolina employers MUST pay at least $2.13 an hour to tipped employees as long as each employee receives enough in tips to make up the difference between the wages paid and the minimum wage ($7.25).
Employers MUST pay more than the $2.13 hourly cash wage if the tipped employee earns less than the credit in tips per hour, as it is the employer’s responsibility to make sure that all tipped employees earn at least the minimum wage in cash wages and tips.
In order for an employer to be able to count tips as wages and take a tip credit towards the minimum wage, N.C. labor law requires that tipped employees be notified in advance and be permitted to retain all tips, and requires that the employer maintains accurate and complete records of tips received by each employee and such tips must be certified by tipped employees monthly or for each pay period. Tip pooling is permitted as long as the tipped employees retain at least 85 percent of the tips they receive.
North Carolina law requires that all final wages be paid no later than the next regular payday. Wages based on bonuses, commissions or other forms of calculation shall be paid on the first regular payday after the amount becomes calculable.
The North Carolina Department of Labor’s Wage and Hour Bureau allows the payment of employees by “Debit/Payroll Card” as long as:
- The employee can withdraw all monies due on payday; and
- One-time use of the card by the employee on payday is at no cost to the employee.
An employer must pay all promised wages, including wage benefits, accruing to its employees based on any policy, agreement or practice that the employer has established. And pursuant to N.C. labor law, the employer must: “Make available to its employees, in writing or through a posted notice maintained in a place accessible to its employees, employment practices and policies with regard to promised wages.”
An employer must comply with its own wage payment agreements until such time as the employer changes its policy in writing in compliance with N.C. wage laws. Such reductions to earned wages, including earned wage benefits, cannot take away pay or wage benefits that have already been earned up to the date of the notification. Any reduction in pay or wage benefits must be prospective from the date of notification.
Meal and Rest Breaks
The North Carolina Wage and Hour Act does not require mandatory rest breaks or meal breaks for employees 16 years of age or older. Youths under 16 years of age have to be given at least a 30-minute break after 5 hours.
The federal Fair Labor Standards Act does not require that an employer give employees any mandatory rest breaks or meal breaks.
Vacation or Holiday leave
North Carolina doesn’t require employers to provide workers with paid or unpaid vacation leave.
Many employers choose to provide vacation leave as part of a benefits packages to attract employees, however. In these situations, employers may set the policies, terms and conditions as to how and when such a benefit is used – including “use it or lose it” policies that state that terminating employees forfeit accrued but unused vacation time.
Statute of limitations
North Carolina’s deadline for filing an overtime claim adheres to the FLSA, which requires those seeking to recover unpaid back overtime wages file a lawsuit within two years from the date of the employer’s wage violation. So, a lawsuit filed today would be able to seek recovery of back overtime for only the prior 2 (sometimes 3) years.
As an example, suppose you believe that your employer has failed to pay you proper overtime wages since January 1, 2016. Waiting until June 1, 2019, to file your lawsuit means you are only allowed to seek unpaid wages from June 1, 2017, to June 1, 2019.
The statute of limitations may be extended to three years if an employer’s violation of the FLSA was willful. An FLSA violation is deemed willful if the employer knew that its conduct was prohibited by the FLSA or showed reckless disregard.
Penalties for Violations
Under federal law, employers who fail to pay proper overtime wages may be liable for up to double the amount of unpaid back wages plus costs and attorney’s fees incurred by employees. These cases can be brought by overtime pay lawyers on a class or collective basis on behalf of all workers who were subjected to the same illegal pay practices.
Layoffs, Plant Closings and WARN Notices
The Worker Adjustment and Retraining Notification Act (WARN) offers protection to North Carolina workers, their families and communities by requiring employers to provide notice 60 days in advance of covered plant closings and covered mass layoffs. This notice must be provided to either affected workers or their representatives (e.g., a labor union).
An employer who violates the WARN Act by failing to provide appropriate notice is liable to each employee for an amount up to 60 days back pay and benefits for the period of violation.
Lore Law Firm in On your side
At the Lore Law Firm, we represent salaried, hourly, and day-rate workers in an array of employment litigation matters, including unpaid overtime compensation claims in North Carolina. Our attorneys, and the North Carolina overtime law attorneys we associate with, are passionate about protecting the rights of workers and have helped recover millions of dollars in unpaid overtime wages for our clients.
Contact us for a free and confidential review of your situation.