Wage theft refers to the unlawful practice of employers not paying their employees the full amount of money for the work they have performed. It can be committed in a number of different ways, both by breaking the law and by not adhering to a contractual relationship. Wage theft law is a type of legal action usually associated with employment law cases.

Specifically, as previously mentioned, wage theft applies to situations in which an employer fails to pay its employees the wages that they are entitled to under both state and federal wage laws.

To elaborate, wage theft is an umbrella term covering a wide variety of improper pay practices. Some examples of wage theft include, but may not be limited to:

  • When an employer pays a worker too low of a rate for the work that they finish;
  • If the employer violates the minimum wage rate as dictated by their state;
  • If there has been an illegal deduction from a worker’s paycheck;
  • Forcing employees to work off the clock, and during breaks or meal times; and/or
  • When an employer withholds overtime rates, bonuses, commissions, or various other employee benefits.

Wage and hour disputes are one of the most common claims involved in wage theft cases, and in relation to labor laws. For every year that a wage theft case is not reported or discovered, it could result in a loss of millions for a business’s workforce. What this means is that the longer the issue goes unresolved, the larger amount of losses that an employee will suffer.

This also means that when unlawful wage theft practices continue for an extended amount of time and are finally reported or discovered, the employer will be held responsible for paying all of those losses back to its workers.

One illegal practice is if an employer intentionally misclassified an employee’s position in order to avoid paying them more money. An example of this would be if an employee does all of the tasks that a manager would do. However, the employee only receives the pay of a part-time hourly employee; that person is likely not being properly compensated for all of the responsibilities they are expected to take on. Violating employment contracts may also qualify as wage theft if the worker is not receiving the pay agreed upon in writing.

As demonstrated by a W2 form from the IRS, an employer takes some money out of an employee’s paycheck for tax purposes. Companies may illegally take more money than is necessary to pay their taxes out of their workers’ wages and pocket the rest. This would be another type of wage theft.

What Laws Control Wage Theft Violations? What Is the Difference between Wage Theft and Unfair Wages/Tipping?

At the federal level, wage protections are controlled by the Fair Labor Standards Act. This Act is also known as the FLSA. Although this law protects all employees, some companies attempt to incorrectly label their workers as independent contractors instead of full-fledged employees in order to avoid some of FLSA regulations. As wage theft is a crime, it is important to understand which laws control wage theft.

Another law to be aware of is the Wage Theft Prevention Act (“WTPA”). Although not all states recognize the WTPA, those that do must remain in compliance. The WTPA requires all private sector employers to provide every employee with a written notice. This notice details such information as pay rates and contact information.

If an employer has the ability to hire, fire, or discipline the worker and control the nature and amount of their work, the employer cannot deny those employees the protections provided under federal law. While federal law does control the majority of wages and worker rights, each state may have their own additional laws and protections.

There are some notable differences between wage theft and unfair wages/tipping. In legal terms, unfair wages refers more specifically to an employee being underpaid when compared to another worker in the same or very similar job. This pay rate is calculated according to the type of job and tasks being performed, the standard rate of pay in that area, and additional other factors. To put it simply, a claim of unfair wages is a type of wage theft that often ties into employment discrimination laws.

One large exception to the rule in terms of wage theft laws and the FLSA specifically refers to the minimum wage mandate. The FLSA states that in jobs in which “the employee customarily and regularly receives more than $30 a month in tips,” the minimum wage standard does not apply. The most obvious example of this is waiters and waitresses, who make the majority of their money from customer tips.

What Are Some Remedies for Wage Theft?

Generally speaking, wage theft violations are reviewed by a government agency known as the Wage and Hour Division (“WHD”). The WHD is responsible for investigating wage disputes, as well as offering potential resolutions to remedy an employee’s wage theft matter.

The two most common types of remedies include paying an employee’s back wages, and requiring the employer to change their wage policies.

If an employer is intentionally or willfully violating wage theft laws, they may face criminal penalties. Such criminal penalties could be having to pay fines of up to $10,000 and potentially serving a certain length of time in prison. This is especially true if the employer is a repeat offender, meaning they have violated these wage and labor laws more than once.

Violations of child labor laws can also result in fines of up to $11,000. In some cases, a wage dispute may award other damages such as those related to lost business opportunities or lost profits. However, in order to collect such additional damages, the plaintiff may be required to file an additional legal claim. Or, they may need to bring an entirely separate lawsuit.

How to Report Wage Theft

When filing wage theft claims with either the WHD or for a private lawsuit, an employee should ensure that they have already compiled specific work documents to be used as evidence to support their claim. Such documentation could include:

  • Pay stubs;
  • Employment contracts;
  • Witness statements;
  • Work logs;
  • Receipts; and
  • Any other documentation that may help them prove their case.

For those looking to report wage theft to the authorities, the Department of Labor’s Wage & Hour Division maintains offices all over the country in which you may file a formal complaint and submit evidence. Federal employees will then investigate to see if any laws have been broken. If so, they will collect back wages on your behalf.

To reiterate, every state has their own similar department to enforce state wage laws. Knowing whether the violation is at the federal or state level is very important. It is imperative to note that if you file a federal complaint, you are barred from pursuing a case in civil court as well. Most states maintain this same restriction.

Do I Need An Attorney For My Wage Theft Claim?

Due to the previously discussed reporting restrictions, as well as the complicated nature of legal matters in general, you should consult with a local employment lawyer. Consulting with an experienced employment lawyer before filing anything is the ideal way to preserve your rights, as a local attorney will be aware of your local state laws regarding the matter and how those laws may affect your case.

An experienced attorney can also help you decide your best course of legal action, and assist you in every step of the process while protecting your rights. Finally, an attorney can also represent you in court, as necessary.