Wage and Hour Blog
Dolley Law LLC

North Carolina

North Carolina Wage and Hour Law

The attorneys with Dolley Law have the knowledge and experience to help you with your wage and hour issues. Compliance with federal and state wage and hour laws is our specialty. If you are looking for legal representation or have questions pertaining to these matters, contact us.

Who is covered?

In general, several factors may determine whether an employer-employee relationship exists under federal or state wage and hour laws. See 29 U.S.C. § 203(s)(1); N.C.G.S. 95-25.14. Under federal law, Fair Labor Standards Act (“FLSA”) coverage extends to employers who gross at least $500,000 annually or otherwise engage in interstate commerce. See 29 U.S.C. § 203(s)(1). However, in North Carolina, employees who work for an employer who is “engaged in commerce of in the production of goods for commerce” are exempt from state minimum wage and overtime laws. N.C.G.S. 95-25.14(a)(1). Because of this, when the FLSA covers employers because they engage in commerce, the employers do not fall under the purview of state law. See N.C.G.S. 95-25.14(a)(1); Luna-Reyes v. RFI Constr., LLC, 109 F. Supp. 3d 744, 752 (M.D.N.C. 2015).

North Carolina Overtime Law

North Carolina’s overtime laws mirror the rules of the FLSA. 29 U.S.C. § 207; N.C.G.S. 95-25.4(a). Nonexempt employees should be paid one-and-one-half times their regular rate of pay for every additional hour worked over 40 in each workweek. Id.

North Carolina’s wage and hour laws frequently reference the FLSA, especially when defining exemptions to state overtime and minimum wage laws. See N.C.G.S. 95-25.14. When North Carolina wage and hour laws cite the FLSA, North Carolina courts show deference to the interpretations of the federal statutes. 13 N.C.A.C. 12.0103; Kornegay v. Aspen Asset Group., LLC, 693 S.E.2d 723, 744 (N.C. Ct. App. 2010). For example, when determining whether certain employees (such as those in executive, administrative, or professional roles) are exempt from certain wage and hour requirements like overtime and minimum wage, courts will reference the interpretations of the same exemptions under federal law. Id.

North Carolina Minimum Wage Law

North Carolina uses the FLSA as the standard for minimum wage. 29 U.S.C. § 206(a)(1)(C); N.C.G.S. 95-25.3(a). Currently, the FLSA states that employees must pay nonexempt employees a minimum of $7.25 per hour. Id.

Employees who regularly receive tips may be paid a reduced hourly rate under certain conditions. 29 C.F.R. § 516.28 (2019); N.C.G.S. 95-25.3(f). Both North Carolina law and the FLSA allow employers to pay tipped employees an hourly rate less than the applicable minimum wage rate on the condition that the employee earns sufficient money through tips to maintain an average hourly rate above the minimum wage for each workweek. Id. The FLSA and North Carolina law have the same hourly rate for tipped employees, currently $2.13 per hour. 29 C.F.R. § 516.28.

North Carolina provides additional opportunities for underprivileged individuals looking for employment. N.C.G.S. 95-25.3(d). For example, for those who have been unemployed for 15 or more weeks and are “economically disadvantaged” or those who receive social security benefits can receive a subminimum wage. Id. Employers may reduce the minimum wage by up to 85% for workers in this category. Id. This motivates employers to hire workers who rely on unemployment because they can pay them less for up to one year after the start of employment. Id.

Wage Payment

North Carolina has additional liabilities for employers who do not pay employees in a timely manner. N.C.G.S. 95-25.6. Employers should establish regular paydays no less than once a month. Id. If employees do not receive wages owed, they may file an action against the employer and receive damages, unpaid wages, and attorney’s fees. N.C.G.S. §§ 95-25.22(a), (d).

North Carolina courts consider wage payment actions as separate and distinct from minimum wage and overtime claims. DeHoll v. Eckerd Corp., No. 1:18CV280, 2018 WL 5624150, at *5 (M.D.N.C. Oct. 30, 2018). These types of claims result from an employee looking to collect for hours worked that went uncompensated, not due to neglect of minimum wage and overtime laws. Lima v. MH & WH, LLC, No. 5:14-CV-896-FL, 2019 WL 2602142, at *15 (E.D.N.C. Mar. 8, 2019).

Potential Wage and Hour Liabilities

The wage and hour requirements of state and federal law provide for liabilities of employers who do not comply. See 29 U.S.C. § 216(b); N.C.G.S. §§ 95-25.22(a), (d). Employers in violation of the FLSA or state law can be held liable for unpaid wages, statutory interest, attorney’s fees, and liquidated damages. Id. An additional cause of action exists under North Carolina state law for violations of the wage payment requirements in which the same damages can be recovered. N.C.G.S. 95-25.22(a). While the courts typically award liquidated damages to prevailing plaintiffs, a good-faith defense exists for employers who can show objective and subjective good-faith efforts to comply with FLSA and state guidelines. See 29 U.S.C. § 260; N.C.G.S. 95-25.22(a1); Garcia v. Frog Island Seafood, Inc., 644 F. Supp. 2d 696, 712 (E.D.N.C. 2009). The court, in its discretion, may refuse to award, or may reduce the award of, liquidated damages. Id.

North Carolina law limits the amount of time an employee may bring an action against an employer to two years. N.C.G.S. 95-25.22(f). The FLSA also has a statute of limitations of two years; however, under the FLSA, it could extend to three years if the employer violated the FLSA willfully. See 29 U.S.C. § 255(a).

Contact Us

The attorneys at Dolley Law have represented clients throughout the United States, including in North Carolina. If you are in or around Wake, Mecklenburg, Guilford, Forsyth, Cumberland, Durham, Buncombe, Union, New Hanover, Gaston, Cabarrus, or Johnston counties and are looking for assistance with issues regarding minimum wage, overtime, recordkeeping requirements, or FLSA compliance in general, contact us directly at 314-645-4100 or by email at kevin@dolleylaw.com.