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Payment of Wages: District of Columbia

Payment of Wages requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Authors: Stuart R. Buttrick, Susan W. Kline and Ryann Ricchio, Faegre Baker Daniels LLP

Summary

  • Employers in the District of Columbia may pay wages in cash, by check or by direct deposit to an employee's checking or savings account. See Wage Payment Methods.
  • Nonexempt employees must be paid at least twice a month, on regular paydays designated in advance. Exempt employees must be paid at least once per month. See Pay Frequency.
  • With an employee's consent, an employer is permitted to make various deductions from an employee's pay. See Permitted and Prohibited Wage Deductions.
  • Employees may file wage claims with the Department of Employment Services, Office of Wage-Hour, or in civil court. See Wage Disputes.
  • An employer must provide a pay statement to each employee with every wage payment. Each pay statement must include specific information. See Pay Statement Requirements.
  • Employers must provide written notice of specific employer and pay-related information to all employees when they are hired, and when any employee's information changes, under the District of Columbia Wage Theft Prevention Act. See Employee Notification Requirements.
  • Wages that are unclaimed for one year are considered abandoned property. Employers are required to file an annual report of unclaimed wages with the state. Penalties are imposed for noncompliance. See Unclaimed Wages.

Wage Payment Methods

Cash or Check

Wages must be paid in cash or by check. +D.C. Code § 32-1002(8), +D.C. Code § 32-1302.

Direct Deposit

There is no law in the District of Columbia that addresses the payment of wages by direct deposit. However, according to the Department of Employment Security (at FAQ #7), an employer is permitted to pay employees by direct deposit and make it a condition of employment.

Penalties

An employer that negligently fails to pay an employee via a permitted wage payment method is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $2,500 per affected employee for the first offense; and
  • Up to $5,000 per affected employee for any subsequent offenses.

An employer that willfully fails to comply with the wage payment method requirements is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $5,000, and/or imprisoned for up to 30 days for the first offense; and
  • Up to $10,000, and/or imprisoned for up to 90 days for any subsequent offenses.

These penalties may be in addition to other administrative penalties provided by law.

+D.C. Code § 32-1307.

Pay Frequency

An employer must pay nonexempt employees at least twice during each calendar month on regular paydays designated in advance. If, however, an employer has customarily paid wages at least once a month, or has done so pursuant to a contract, the employer may continue to do so. +D.C. Code § 32-1301(2).

Exempt employees must be paid at least once per month. +D.C. Code § 32-1302.

Lag Time Before Pay

An employer must pay employees no later than 10 working days after the end of the regularly scheduled pay period, except where a different period is specified by a collective bargaining agreement. +D.C. Code § 32-1302.

Penalties

An employer that negligently fails to comply with the pay frequency requirements is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $2,500 per affected employee for the first offense; and
  • Up to $5,000 per affected employee for any subsequent offenses.

An employer that willfully fails to comply is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $5,000, and/or imprisoned for up to 30 days for the first offense; and
  • Up to $10,000, and/or imprisoned for up to 90 days for any subsequent offenses.

These penalties may be in addition to other administrative penalties provided by law.

+D.C. Code § 32-1307.

Permitted and Prohibited Wage Deductions

Permitted Deductions

An employer may make the following deductions from an employee's wages:

  • Those specifically authorized by law or a court order;
  • For lodging furnished to an employee, deductions that do not exceed 80% of the rental value of the lodging; and
  • For meals provided to an employee, if the deductions do not exceed $2.12 for each meal received. An employer may take one meal deduction for four or fewer hours of work and two meal deductions for more than four hours of work.

+CDCR 7-904.

Prohibited Deductions

Under District of Columbia law, an employer cannot make deductions from an employee's wages to pay for the following items, if the deductions would reduce the employee's wages below the minimum wage:

  • Cash shortages;
  • Losses due to breakage, damage and acceptance of bad checks; or
  • Walkouts.

+CDCR 7-915.

Penalties

An employer that negligently fails to comply with the law on pay deductions is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $300 and/or imprisonment for up to 30 days; and
  • Up to $1,000 and/or imprisonment for up to 90 days for subsequent offenses.

An employer may also be liable for an administrative penalty ranging from $300 to $500.

+D.C. Code § 32-1307.

Wage Disputes

In the event of a bona fide wage dispute, an employer must give an employee written notice of the amount of wages the employer concedes is due and pay the undisputed amount to the employee. +D.C. Code § 32-1304.

Penalties

An employer that negligently fails to comply with the law on wage disputes is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $2,500 per affected employee for the first offense; and
  • Up to $5,000 per affected employee for any subsequent offenses.

An employer that willfully fails to comply is guilty of a misdemeanor and, if convicted, will be fined:

  • Up to $5,000, and/or imprisoned for up to 30 days for the first offense; and
  • Up to $10,000, and/or imprisoned for up to 90 days for any subsequent offenses.

These penalties may be in addition to other administrative penalties provided by law.

+D.C. Code § 32-1307.

Pay Statement Requirements

Employers in the District of Columbia must provide a pay statement to each employee on every regular payday. Statements must include the following information:

  • The date of the wage payment;
  • The gross wages paid;
  • Deductions from and additions to wages;
  • The net wages paid;
  • Hours worked during the pay period; and
  • Any other information required by regulation.

+D.C. Code § 32-1008.

Electronic Pay Statements

District law contains no provisions regarding electronic pay statements.

Recordkeeping Requirements

An employer must make, keep, and preserve certain pay-related records for three years (or for the prevailing federal standard time, if identified in regulations issued pursuant to the Wage Theft Prevention Act, whichever period is longer). +D.C. Code § 32-1008(a)(1); +CDCR 7-915. For recordkeeping details, see Recordkeeping for Employee Compensation Purposes: District of Columbia.

Penalties

Any person who willfully or negligently violates the law regarding pay statements will, if convicted, be subject to a fine of up to $10,000 and/or imprisonment for up to six months. Imprisonment is only available as a remedy if the offense was willful, or after the individual has been convicted of a prior offense under the law. In addition, the Mayor can assess and collect administrative penalties of:

  • $500 for each failure to maintain or retain payroll records for the legally required period of time;
  • $500 for each failure to allow the Mayor to inspect payroll records or perform any other investigation pursuant to certain statutory provisions; and
  • $500 for each failure to provide each employee an itemized wage statement.

+D.C. Code § 32-1011.

Employee Notification Requirements

An employer must provide specific pay-related information in writing to each newly hired employee at the time of hiring. An employer must also provide an updated notice to an employee anytime information in the employee's notice changes. +D.C. Code § 32-1008(c), +D.C. Code § 32-1008(d).

Slightly different notice requirements apply to temporary staffing firms. +D.C. Code § 32-1008.01.

Penalties

Any person who willfully or negligently violates the employee notification requirements will, if convicted, be subject to a fine of up to $10,000 and/or imprisonment for up to six months. Imprisonment is only available as a remedy if the offense was willful, or after the individual has been convicted of a prior offense under the law. In addition, the Mayor can assess and collect administrative penalties of:

  • $500 for each failure to maintain or retain payroll records for the legally required period of time;
  • $500 for each failure to allow the Mayor to inspect payroll records or perform any other investigation pursuant to certain statutory provisions; and
  • $500 for each failure to provide each employee an itemized wage statement.

+D.C. Code § 32-1011.

In addition, an employer may also be subject to an administrative penalty of $500 per employee for failure to comply with the employee notification requirements. +D.C. Code § 32-1011(d)(1)(E).

Termination Pay

Employees who are fired must be paid on the next working day, which excludes Saturdays, Sundays and/or legal holidays. If an employee was responsible for money belonging to the employer, the employer has four calendar days from the date of the employee's discharge to pay the wages owed to the employee. Employees who quit or resign must be paid by the earlier of the next regularly scheduled payday or within seven days from the employee's termination date. +D.C. Code § 32-1303.

Accrued Vacation Time

Terminating employees must be paid their accrued vacation pay according to any company policy.

Penalties

An employer that fails to pay a terminated employee his or her wages is liable for:

  • The amount of the unpaid wages, or liquidated damages equal to 10% of the unpaid wages, whichever is less, for each working day the wages remain unpaid; or
  • An amount equal to triple the unpaid wages, whichever is less.

Liquidated damages do not apply if the employer files a bankruptcy petition and is thereafter adjudicated bankrupt.

+D.C. Code § 32-1303(4).

Unclaimed Wages

Wages that are unclaimed for one year are considered abandoned property. +D.C. Code § 41-116.

Employers must file reports by November 1 for property abandoned as of the preceding June 30. Remittances are due with the report. Not more than 120 days before filing the report, the employer must send written notice to any employee with unclaimed wages of at least $50 if the employer has a record of an address for the employee, and the employer's records do not show the address is inaccurate. +D.C. Code § 41-117, +D.C. Code § 41-132.

Reporting Requirements

Employers with fewer than 25 unclaimed property accounts must file Form UP-1, Report of Unclaimed Property Verification and Checklist, and Form UP-2, Property Information, with the Office of the Chief Financial Officer (OCFO). Employers with 25 or more accounts must submit the reports on a diskette or CD.

Electronic files should be formatted to the NAUPA II Electronic Reporting Standard specifications. These specifications are found at UPExchange,a free web application for creating and submitting unclaimed property reports. Employers that have no unclaimed property to report must file negative reports.

+CDCR 9-3004.

Reimbursement

If an employer pays unclaimed wages to an employee, it must be reimbursed by the OCFO. To receive reimbursement, the employer must submit the following documentation:

  • Form UP-4, Report of Unclaimed Property;
  • Proof of payment to the employee; and
  • Proof that the employee was entitled to payment.

If the employer turns the unclaimed wages over to the OCFO rather than paying the amount to the employee, the employer should refer the employee to the OCFO to claim the unpaid wages.

+D.C. Code § 41-120; +CDCR 9-3010.

Recordkeeping Requirements

Employers must retain records of each employee's name and address for 10 years after the date wages become reportable as unclaimed property. +D.C. Code § 41-132(a).

Penalties

If an employer refuses to deliver unclaimed wages to the OCFO, the OCFO can sue the employer. +D.C. Code § 41-133.

An employer may be liable for:

  • A penalty of $200 per day, up to a maximum of $10,000, for failing to report, pay or deliver unclaimed wages within the time provided by law; and
  • An additional penalty of $1,000 per day, up to a maximum of $25,000, plus 25% of the value of the wages that should have been paid or delivered, for willfully failing to report, pay or deliver unclaimed wages.

An employer is also liable to pay monthly interest on the value of the unclaimed wages from the date the wages should have been delivered.

+D.C. Code § 41-135.

Future Developments

Tipped Wage Workers Fairness Amendment Act of 2018

By January 1, 2020, employers of tipped employees (except hotels) must use a third-party payroll provider to prepare their payroll under the under the Tipped Wage Workers Fairness Amendment Act of 2018 (the Act). Covered employers also must submit a quarterly report online (an online reporting portal will be created) certifying that each employee has been paid at least the minimum wage, including tips. Third-party payroll providers and hotel employers must begin submitting the quarterly reports as of January 1, 2020 (not by that date).

Quarterly reports are due no later than 30 days after the end of each calendar quarter (i.e., April 30, July 31, October 31 and January 31). An employer may submit paper reports if it claims that online reporting would be an undue hardship.

Quarterly reports must include the following information:

  • Name of each employee;
  • Number of hours each employee worked each week during the quarter;
  • Total pay, including tips, received by each employee each week during the quarter;
  • Average weekly wage for each employee during the quarter; and
  • The employer's current tip-out policy that the employer supplied to the third-party payroll provider for calculation of wages during the quarter.

+2017 Bill Text DC B. 913 (D.C. Act 22-489; L22-0196), to be codified as D.C. Code § 32-1009.01(a)(1).

The Act also requires covered employers to include the following additional information on pay statements as of January 1, 2020:

  • A separate line for tips; and
  • Each tipped employees' tip-declaration form for the pay period, delineating cash tips and credit card tips.

+2017 Bill Text DC B. 913 (D.C. Act 22-489; L22-0196), to be codified as D.C. Code § 32-1008(a-1).

The Act defines a tip-declaration form as a printed form provided by an employer to an employee that shows the total tips received, including the amount of the tip outs or share of a tip pool that an individual employee provided to or received from another employee and the calculation by which the amount was determined, such as total tips received and hours worked.

Tip outs is defined as the amount or percentage of directly tipped employees' tips shared with other employees such as bussers, bartenders, back waiters, hosts and hostesses.

The Act also includes requirements for covered employers to provide wage-and-hour and sexual harassment prevention training.

Additional Requirements

D.C. Department of Employment Services, Wage and Hour Compliance

D.C. Office of the Chief Financial Officer, Unclaimed Property