Work and Employment

Average Settlement for Unpaid Wages

When your employer doesn't pay you what you're owed by law, it can really set you back. Whether you were paid below your state minimum wage or didn’t receive your promised commission, tips or overtime pay, it's frustrating and can impact your ability to pay bills, rent and cover the cost of living for you and your family.

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By:

Chelsea Spinos

Chelsea Spinos is a contributing writer for Manifest Law. She covers all topics related to U.S. visas and green cards. She is passionate about helping people navigate their immigration journey with clarity and confidence.

Reviewer:

Timothy Lenahan, Esq.

Timothy R. Lenahan is the lead Employment lawyer at Manifest Law. He has experience with all facets of employment law.

9 min read • Jul 16, 2024

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Key takeaways

You can lose your job for various reasons, but if you were fired as a result of discrimination in the workplace or retaliation, you have the right to challenge the termination.

Since there's no federal law requiring employers to give you a termination letter, it’s usually up to your employer.

If you were offered a severance package after leaving the company, you may be able to negotiate a more favorable outcome.

You should receive your final paycheck either on your last day of work or by the next scheduled payday.

After exhausting all options to get their owed wages, many people are forced to start considering legal remedies. Often, hiring an employment lawyer for unpaid wages remains to be the only way to get back what you've rightfully earned. The average settlement for unpaid wages can vary widely—from smaller payments for individual claims to much larger sums in bigger lawsuits involving many employees. Ultimately the average settlement for unpaid wages is a function of how much you were underpaid by your employer.

Let's explore what factors affect these settlements and what you might expect in unpaid wage cases.

What are unpaid wages?

Unpaid wages refer to the money you should have received from your employer for work you've already done but haven't been paid for yet. These unpaid wages can include regular hourly pay, salaries, overtime, commissions, bonuses, and other benefits you were promised.

Legally, not paying employees what they're owed may rise to a level of a substantial legal liability for your employer. Many laws require employers to pay workers on time and in full for the work they've done. If your employer doesn't follow these rules, they could face legal action, including fines, penalties, and orders to pay back the wages with interest. In certain instances your employer may be individually liable (responsible) for your unpaid wages.

As an employee your rights are protected by various government agencies including EEOC, Department of Labor and through the US court system where a skillful labor attorney may be able to prove that you were underpaid and may force your employer to pay what you’re owed. Common types of wage violations

Unpaid overtime

Unpaid overtime happens when you're not paid for the extra hours you work beyond your normal schedule. Many laws require that overtime hours—usually anything over 40 hours a week—be paid at a higher rate than your regular pay. This amount is commonly referred to as “time and a half”, and is 1.5x your regular hourly rate.

Check out our comprehensive guide on time and a half pay, where you can easily calculate your overtime pay amount.

Minimum wage violations

Minimum wage violations occur when you're paid less than the legal minimum hourly wage. Federal law requires all employees to receive a minimum wage of $7.25/hour. Local state laws may have a higher amount set for your specific state. For example in the state of New York, the minimum wage in 2024 is $15.00 an hour, except in New York City, Long Island and Westchester Counties, where the minimum wage is $16.00 an hour.

If your rate of pay does not meet the minimum wage requirements you may be entitled to additional compensation. There are many nuances and details when it comes to minimum wage laws and a skillful labor attorney can help evaluate your situation and possible damages you may be entitled to.

Lucia

Scenario: Lucia started working at a NYC bistro in January 2024. According to New York State labor laws, the minimum wage for tipped workers in the food service industry in New York City is $10.65 per hour, with a required additional $5.35 per hour in tips to reach the standard minimum wage of $16.00 per hour. However, Lucia was only getting paid $8.00 per hour and her employer didn’t ensure she received enough tips to make up the difference. On average, Lucia received about $4.00 per hour in tips, meaning she was earning $12.00 per hour, $4.00 below the mandated minimum wage.

Outcome: The lawyer filed a complaint with the New York State Department of Labor (NYSDOL) on Lucia's behalf. The settlement included:

Full payment of $8,320 in back wages to Lucia.
$8,320 in liquidated damages.
$3,000 for attorney's fees.
A written agreement to comply with all labor laws moving forward, monitored by NYSDOL.

Manifest Law©️. Learn more on www.manifestlaw.com

Misclassification of employees

Misclassifying employees under the Fair Labor Standards Act (FLSA) can lead to serious wage violations. The FLSA distinguishes between exempt employees, who aren't entitled to overtime pay based on their job duties and salary, and nonexempt employees, who must be paid overtime for hours worked beyond 40 in a week.

Misclassification can mean exempt employees might miss out on overtime pay they deserve, while non-exempt employees could be underpaid for their work hours. This can result in employers having to pay back wages owed, along with potential fines and penalties.

Read our guide on exempt vs nonexempt employees to understand which category you fall under, and learn more about the rights you have.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Do any of these characteristics fit a scenario you’re experiencing at work? If so, don’t hesitate to reach out to our team at Manifest Law. You can book a free consultation where we will listen to your story, assess the strength of your case, and get you the legal support you may need.

David

Scenario: David started working at a computer store in New York. Despite his role primarily involving sales tasks such as assisting customers, stocking shelves, and maintaining inventory, his employers classified him as an exempt employee under the Fair Labor Standards Act (FLSA), meaning David was not eligible for overtime pay. As an exempt employee, David was paid a flat salary of $40,000 per year, regardless of the number of hours he worked.

However, David regularly worked 50 to 60 hours per week, far exceeding the standard 40-hour workweek. Given his tasks and responsibilities, David should have been classified as a non-exempt employee, making him eligible for overtime pay (1.5 times his regular hourly rate) for hours worked over 40 in a week.

Outcome: The investigation and legal proceedings confirmed that David was misclassified as an exempt employee. To avoid further litigation and additional penalties, his employer agreed to settle the case. The settlement included:

Full payment of $22,503 in back wages to David.
$22,503 in liquidated damages.
$5,000 for attorney's fees.
A written agreement to comply with all labor laws moving forward, monitored by NYSDOL.

Manifest Law©️. Learn more on www.manifestlaw.com

Average settlement for unpaid wages

The average settlement for unpaid wages can vary, but generally, it depends on how much money you're owed, how long the issue has been going on, and the legal help you get. For straightforward cases where just a few hundred or a few thousand dollars are owed, settlements might cover just the back wages and some interest. But if there's a lot of money involved, or if your employer has been particularly unfair, settlements can be much higher and may include additional compensation for damages and legal fees.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Small claims

When an individual employee takes action against an employer, the average settlement for unpaid wages is often on the smaller side. This includes cases where just one or a few employees are owed money by the same company.

In these situations, the average settlement for unpaid wages typically is between $1,000 and $10,000.

Small claims court is typically quicker and less expensive than traditional court proceedings. You'll present your case with evidence like pay stubs or time sheets, and if you win, you can recover your unpaid wages along with any court costs and interest.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Large class actions

Large class actions for unpaid wages involve groups of employees banding together to file a lawsuit against an employer for widespread wage violations. Class actions can result in substantial settlements that not only compensate the affected employees for their unpaid wages but also include additional damages, penalties, and legal fees.

For these cases, the average settlement for unpaid wages can run into the millions of dollars, with high per-person settlement averages in the five-figures.

In 2008, the largest class action settlement for wage violations in U.S. history was approved against State Farm Insurance. More than 7,000 employees received payments averaging $38,000 each for being denied overtime wages. These employees have been paid over $135,000,000 total compensation in this instance which means that settlement amounts for unpaid wages may get very substantial if a large group of employees was impacted and the damages were severe.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Top class action settlement amounts

Here are some recent examples of how employees have been compensated for wage violations through class action settlements:

Uber: Settled for $20 million to resolve claims from 13,600 drivers who alleged misclassification, resulting in an average payout of around $1,475 per driver.
FedEx: In 2022, settled for $240 million with over 20,000 delivery drivers, each receiving approximately $12,000 on average due to misclassification claims.
Disney: Approved a $50 million settlement in 2022 for over 30,000 theme park and resort workers who were unpaid for hours worked, averaging over $1,500 per employee.
Morgan Stanley: Settled for $150 million for about 10,000 financial advisors who were improperly paid, resulting in an average payout of about $15,000 per person.

These cases show how employees have received significant compensation through collective legal actions for wage violations.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Factors that determine average settlement for unpaid wages

Several factors can influence the average settlement for unpaid wages, including:

Amount Owed: The total sum of unpaid wages you're owed is a key factor. Larger amounts generally lead to larger settlements.
Duration of Non-payment: How long your wages have been unpaid can also affect your settlement. Longer periods without payment may mean more money in your settlement due to added interest or penalties.
Type of Violation: The specific wage violation involved (like unpaid overtime or not receiving minimum wage) and how serious it is can impact your settlement. Some violations are seen as more serious and may result in higher settlements.
Number of Employees Involved: If your case involves multiple employees facing similar issues (like in a class action lawsuit), the number of people affected can influence the size of the settlement. More affected employees often mean a larger settlement.
Legal Costs: The costs involved in your legal representation, such as lawyer fees and court expenses, can impact your settlement amount. These costs may motivate employers to settle for higher amounts to avoid further legal expenses.
Evidence: Strong evidence, like pay stubs or records of your hours worked, can strengthen your case and potentially lead to a higher settlement.
Negotiation Skills: How well you and your legal team negotiate with your employer can affect your final settlement. Our employment lawyers at Manifest Law can help negotiate for more favorable settlement amounts.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

How to sue for unpaid wages

If resolving the issue of unpaid wages with your employer proves difficult, you may need to take legal action. If you’re looking to sue your employer for unpaid wages, having a lawyer by your side is essential. Labor laws can be complex, with nuances and exemptions that may not be easily navigated without professional guidance.

Here are the steps you should take if you want to sue for unpaid wages:

Consult an Employment Attorney: The first step you should take when seeking legal action for unpaid wages is to reach out to an employment attorney. Our team at Manifest Law can provide personalized advice based on your situation. Book a free consultation where you discuss your case details and learn about your legal rights.
Know Your Rights: The next step is to educate yourself about labor laws that protect your wages, such as the Fair Labor Standards Act (FLSA). Understanding your rights regarding minimum wage, overtime pay, and other compensation will empower you during the process.
Gather Your Evidence: Collect all documents that support your claim for unpaid wages. This includes records of hours worked, pay stubs, emails discussing your pay, and any other relevant communication with your employer.
Send a Formal Request: Consider sending a formal demand letter to your employer outlining the unpaid wages you're claiming. If your employer doesn't respond or refuses to pay, you Should contact an attorney.
Prepare Your Case: Whether you go to small claims court or pursue higher legal action, you will need to organize your evidence and prepare your arguments. Our employment attorneys at Manifest Law can assist in this process and represent you in court.
Explore Settlement Options: Before going to trial, you may have opportunities for mediation or settlement talks to resolve the issue outside of court. This can save time and effort while still getting fair compensation for unpaid wages.
Attend Court, if Needed: If negotiations fail, your case may go to trial. Our employment attorneys at Manifest Law will advocate for your rights and fight for the most favorable outcome.

Start by scheduling a free consultation with Manifest Law. Our team will evaluate your case, clarify your legal rights, and advise you on the most effective course of action moving forward.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Request free consultation with Manifest Law today

Request free consultation
with Manifest Law today

Reach out to get an evaluation the strength of your case.

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Unpaid wages claim time limit

If you're considering suing a company for not paying you, it's important to act within the statute of limitations, which varies depending on where you live and the type of wage violation. In the United States, under federal law like the Fair Labor Standards Act (FLSA), you generally have two to three years from when the wages were due to file a claim.

Specifically for New York State, the statute of limitations can vary:

Under the New York Labor Law (NYLL): You typically have six years to file a claim for unpaid wages.
Under the FLSA: The federal statute of limitations is generally two to three years.

It's crucial to understand these time limits because missing the deadline can prevent you from taking legal action to recover the wages you're owed. Our employment attorneys at Manifest Law can help ensure you meet any deadlines and provide guidance tailored to your situation.

In the context of sexual harassment in the workplace, quid pro quo harassment is defined by several characteristics. These include…

Conditioned benefits: An employee is offered job benefits — like promotions, raises, or favorable assignments — in exchange for sexual favors. Conversely, an employee might face negative consequences — like demotion, dismissal, or retaliation — for rejecting sexual advances. Sexual advances does not mean sex, but could mean going out on dates, kisses and romantic touching.
Power imbalance: Typically, quid pro quo harassment involves a person in a position of authority — such as a supervisor or manager — who has the power to influence the victim.
Direct impact: This form of sexual harassment in the workplace directly affects the employee’s job status, benefits, and ability to do their work well.

Frequently asked questions

What are my rights if my employer doesn’t pay me?

If your employer doesn’t pay you for the work you've performed, you have several rights protected by employment laws. These laws ensure fair compensation and include:

Minimum Wage Laws

Overtime Pay

Pay Frequency and Final Paycheck

Deducations

Federal and state laws mandate a minimum wage that employers must pay per hour worked. If your employer pays less than the minimum wage, it violates these laws.

Non-exempt employees are entitled to overtime pay for hours worked over 40 in a workweek, typically at a rate of time and a half their regular pay rate. This protection is governed by the Fair Labor Standards Act (FLSA) at the federal level and state equivalents.

Employers must pay employees on a regular schedule, such as bi-weekly or semi-monthly, and issue a final paycheck promptly after an employee leaves the company.

Deductions from wages must comply with legal requirements, and it is illegal for employers to retaliate against employees who assert their rights under wage and hour laws.

Manifest Law©️. Learn more on www.manifestlaw.com

If you believe your employer has violated any of these rights by not paying you correctly or on time, you have the right to file a complaint with government agencies or pursue legal action to recover unpaid wages and any applicable penalties.

How long until you can sue a company for not paying you?

You can typically sue a company for unpaid wages within a certain time limit known as the statute of limitations. In New York, for example, you generally have up to six years under state law (New York Labor Law) to file a lawsuit for unpaid wages. Under federal law, like the Fair Labor Standards Act (FLSA), it's usually two to three years.

How much can you sue for unpaid wages?

The amount you can sue for depends on factors like how much you're owed, the type of wage violation (like unpaid overtime), and any additional damages allowed by law. Settlements and court awards for unpaid wages vary widely, ranging from hundreds to thousands of dollars per employee, depending on your specific situation.

How Manifest Law can help

At Manifest Law, we're here to support you in resolving unpaid wage issues. Our team of employment attorneys can fight for fair compensation and ensure your rights are respected. Whether we're negotiating a settlement with your employer or representing you in court, our goal is to secure the best possible outcome for you.

Book a free consultation to learn more about how we can help you with unpaid wages.

Speak to us today

Learn how much you may be owed!

You deserve to be fairly treated at your workplace

All calls are confidential and can be anonymous

You are not obligated to hire us or proceed with the case

Request a consultation

Fast response. Same day free consultation.

Avi Goldenberg

Principal attorney at Manifest Law

Speak to us today

Learn how much you may be owed!

You deserve to be fairly treated at your workplace

All calls are confidential and can be anonymous

You are not obligated to hire us or proceed with the case

Request a consultation

Fast response.
Same day free consultation.

Avi Goldenberg

Principal attorney at Manifest Law

Speak to us today

Learn how much you may be owed!

You deserve to be fairly treated at your workplace

All calls are confidential and can be anonymous

You are not obligated to hire us or proceed with the case

Request a consultation

Fast response. Same day free consultation.

Avi Goldenberg

Principal attorney at Manifest Law

In this blog article:

What are unpaid wages?

Average settlement for unpaid wages

Factors that determine average settlement for unpaid wages

How to sue for unpaid wages

Unpaid wages claim time limit

Frequently asked questions

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