Calculating Interest on Unpaid Wages


When your employer fails to pay you for the work you have done, you may be owed unpaid wages. Failure to pay employees their due wages is a violation of California and federal labor laws. In addition to back pay and other compensation, employees are also eligible to receive interest on the unpaid wages that are owed to them – amounting up to 10% a year. If your employer owes you unpaid wages, you can recover them by filing what is known as a wage and hour lawsuit.

Common Types of Unpaid Wages

Unpaid wages generally stem from employers' failure to follow wage and hour laws. Typically, they involve the following types of wage violations:

Overtime wages: Under California law, employers are required to pay hourly or non-exempt employees overtime pay for any work they do over their agreed-upon hours each day, which is typically eight hours a day or 40 hours a week. If you have worked more than eight hours in a workday or 40 hours in a workweek, you are eligible to receive time-and-a-half pay for every hour you have worked over time.

When you work more than 12 hours in one workday, you are eligible to receive double the regular hourly rate of pay. Employers owe employees overtime even if they did not require them to work those hours. If your employer allowed you to perform the additional work, they are required to pay you for those hours.

Minimum wage: When employers fail to pay workers the legal minimum wage, that amounts to a serious violation. Under California labor laws, it is illegal to pay workers below the minimum wage. In 2023, the statewide minimum wage rate in California is $15.50 per hour. However, there are cities and counties such as San Francisco and Los Angeles, which have a higher rate than the state minimum. Therefore, if you receive your paycheck in one of these jurisdictions, your employer is required to pay you the higher local minimum wage rate.

Rest and meal breaks: If you are a non-exempt employee in California, you are entitled to a 30-minute meal break if they work more than five hours in a day. Hourly employees are also entitled to a 10-minute rest period for every four hours worked in a day. When employers fail to provide these breaks or require employees to work through these breaks, they owe them unpaid wages.

Other violations: Other types of unpaid wages include failure to provide an employee with a final paycheck; unpaid sick leave or vacation time; illicit payroll deductions; failure to pay tips, bonuses or commissions; and failure to reimburse work-related expenses. There are also situations when employers illegally classify hourly employees as "independent contractors" or as "exempt employees" in order to circumvent the law and paying them overtime wages.

Calculating Interest on Unpaid Wages

California law, specifically Labor Code 98.1 (c), provides for interest to accrue on all unpaid wages from the date the wages were due, payable at the rate of 10% a year. The date on which wages "were due and payable" refers to the payday when those wages were originally due. If your are owed unpaid wages, you may be able to file a wage claim with the labor commissioner or by filing an unpaid wages lawsuit against your employer.

An experienced Los Angeles employment attorney can help you with filing the lawsuit and holding your employer accountable. It is important, however, that you act quickly because under California law, the statute of limitations to file an unpaid wages lawsuit is three years from the date of the most recent violation.

Can I Collect Interest in an Unpaid Wages Lawsuit?

The damages you can collect in an unpaid wages lawsuit typically depends on the types of labor laws your employer violated and the egregiousness of those violations. You may be able to recover interest on outstanding wages (up to 10%) as well as back wages, attorney's fees and court costs. If your employer deliberately violated the labor code and failed to pay you due wages, you may be able to receive twice the damaged. Liquidated damages include an amount equal to the wages you are owed in addition to interest.  View our average settlements for unpaid wages to read more.

Retaliation by Employers

California law prohibits employers from retaliating against employees when they exercise their rights under the state's wage and hour laws. It is unlawful for an employer to take retaliatory action against you including firing, demotion, cutting pay, denying training opportunities and so on.

What Our Wage and Hour Attorneys Can Do for You

If your employer owes you unpaid wages, our experienced Los Angeles unpaid wage lawyers at Kingsley Szamet & Ly can help you better understand your legal rights and options. We understand the financial and emotional stress employees undergo as a result of not getting paid the wages they are do. We work on a contingency fee basis, which means we don't charge any fees unless we secure compensation for your losses. Call us today for a no-cost consultation and case evaluation.

Obtain Your Free Case Evaluation

Our unpaid wage lawyers will take the time to thoroughly review your situation to determine if your employer is treating you fairly. If action is needed, we will act on your behalf, contacting your employer and moving the case forward if he or she does not amend the situation. Call 888-500-8469 or fill out our contact form to speak with one of our legal professionals for free.

Need Help? We're Here For You.

If your employer is not paying you your owed wages, we're here to help. Contact us today to receive a free unpaid wages case evaluation and get your questions answered. We've helped employees recover more than $300,000,000. All consultations are free.