Why Is Pay Held Back in Unemployment?

While unemployment can be difficult, not receiving pay due can create an additional burden and increase the financial strain already present. Workers who are unemployed may be expected money from several different sources, including unemployment benefits from the company, benefits from state programs designed to help laborers that have been laid off and last paychecks that have been earned but not yet deposited into the worker's account. These types of pay can be held back for a variety of reasons, often only temporarily but sometimes permanently.

When an employee is laid off, the company usually has a last paycheck that the employee has earned, possibly for a partial pay period. The employer is not required to give this final paycheck immediately according to federal law. State laws, however, have different requirements. Many states allow employers to wait until the regular pay period occurs or allow employers to hold onto the last paycheck for a certain amount of time, such as 30 days.

As far as unemployment benefits offered by government programs are concerned, these programs often depend on money from governments, especially federal funds allocated for the purpose. However, problems with funding can delay payments for more than three weeks, which is legally the time limit for paying the unemployed people who participate in the program. This occurs at high levels of government due to budget cuts, a large number of applicants and other funding difficulties.

In many cases, if an insurance company, employer or government agency suspects that the employee does not meet the requirements for receiving unemployment pay, it will delay the payment while it investigates the issues and asks for more information. Sometimes payments can be retroactive, such as when teachers work between schools and do not get paid immediately or when benefits apply to vacation time that was taken.

Wage garnishment occurs when the government or a creditor gets a judgment lien to collect money due from assets owned by the debtor. If an employee loses a job and is expected a final paycheck but is also under a wage garnishment order, the employer will withhold pay from that last paycheck for the garnishment. The employer can only hold back a portion of the check legally, but it will be permanently garnished by the court order.