1. How is a wage claim different from filing a lawsuit?
If an employer fails to pay wages or other compensation to an employee, the employee can always file a lawsuit against the employer. If the employee chooses to sue, then all of the usual rules relating to lawsuits apply.
However, Texas law provides a special administrative remedy for employees. The employee can file a claim with the Texas Workforce Commission. The TWC will investigate and determine the merits of the employee’s claim. This is referred to as a “wage claim.”
2. What are the advantages of filing a wage claim?
First and foremost, wage claims are an efficient means of pursuing claims for relatively small amounts of money. Suppose that the employer fails to pay $500.00 in wages. It may be difficult to retain an attorney to pursue such a small claim. In fact, the filing fee for the lawsuit would be a sizable percentage of the amount of the claim. Wage claims, by contrast, are free.
Second, if the employee wins on the wage claim, an agency of the State of Texas will be in charge of making sure that the employer pays up. Employers will usually be more sensitive to pressure from the government than from a private litigant.
3. What are the disadvantages of filing a wage claim?
First, the employee gives up the right to have the case decided by a judge and jury. The case will be decided by a TWC investigator, with a right of appeal to a TWC hearing officer and then to the Commission itself. It is possible to seek judicial review of the TWC’s final decision, but the standard for overturning a TWC decision is very tough. Once the TWC has issued a decision, the employee is deemed to have “elected” the administrative remedy, so the employee cannot turn around and file a lawsuit.
Second, while the employee can hire a lawyer to help pursue the claim, the employee cannot recover attorneys’ fees through a wage claim.
Third, this can sometimes be a slow process. During the recent economic downturn, the TWC’s resources were devoted to processing the huge number of unemployment compensation cases. It appeared that the wage claims were receiving lower priority, and in some cases the process took longer than it would have taken in court.
4. When can you file a wage claim?
A wage claim must be filed within 180 days after the wages are due.
5. How do you file a wage claim?
6. Can an independent contract file a wage claim?
No, but the TWC tends to take a narrow view when it comes to classifying a person as an independent contractor. Generally speaking, the TWC is more likely than the courts to view a person as an employee as opposed to an independent contractor.
David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes