What Is Wage Theft?

Wage theft is the unlawful act of employers not fully compensating their employees for the work they have performed.

This practice can take various forms, including breaking the law and not adhering to contractual agreements. Wage theft law is a specific area of legal action often associated with employment law cases.

Below we will explore a broad range of improper payment practices that encompasses wage theft.

Paying Workers at an Insufficient Rate for the Work They Complete

An employee working in a warehouse is responsible for packing and shipping products. The industry standard for this type of work is $15 per hour, but the employer pays the employee only $10 per hour. The employee may be a victim of wage theft, as they are being paid significantly less than the standard rate for their job.

Violating the State-Mandated Minimum Wage Rate

A retail cashier in a state with a minimum wage of $12 per hour is paid only $10 per hour by their employer. In this case, the employer is committing wage theft by not adhering to the state’s minimum wage requirements.

Making Illegal Deductions From a Worker’s Paycheck

An employee working in a restaurant has $100 deducted from their paycheck each month for “uniform maintenance” fees. However, there is no legal basis for such deductions, and the employer does not provide any actual uniform maintenance service. This scenario would be an example of wage theft through illegal deductions.

Forcing Employees to Work off the Clock

An employee at a call center is regularly asked to stay 30 minutes after their shift ends to wrap up any remaining calls, but they are not paid for this additional time. Additionally, they are expected to take calls during their lunch breaks without any compensation. This scenario constitutes wage theft, as employees are not paid for all their hours.

Withholding Overtime Rates, Bonuses, Commissions, or Other Employee Benefits

A sales representative works 50 hours a week, but their employer only pays them their regular hourly wage for all 50 hours without providing the required time-and-a-half rate for the 10 hours of overtime. Also, the employer does not pay the sales representative their earned commissions and bonuses. This is an example of wage theft, as the employee is not receiving the full compensation they are entitled to for their work.

Wage and hour disputes are common claims in wage theft cases and are closely related to labor laws. Unresolved wage theft cases can result in significant losses for a business’s workforce over time, with the employer ultimately being held responsible for reimbursing these losses to the affected employees.

What Laws Govern Wage Theft Violations? What Is the Difference Between Wage Theft and Unfair Wages/Tipping?

Federal wage protections are governed by the Fair Labor Standards Act (FLSA). Some employers may try to misclassify workers as independent contractors to avoid FLSA regulations.

The Wage Theft Prevention Act (WTPA) is another law that some states recognize, which requires private-sector employers to provide written notices detailing pay rates and other information to employees.

While federal law primarily controls wages and worker rights, individual states may have additional laws and protections. Unfair wages, a type of wage theft, refer to employees being underpaid compared to other workers in similar positions. The FLSA has specific provisions for tipped employees, such as waitstaff, who customarily receive more than $30 a month in tips.

What Are Some Remedies for Wage Theft?

The Wage and Hour Division (WHD) is a government agency investigating wage disputes and proposing resolutions for wage theft issues. Common remedies include paying back wages and requiring employers to change their wage policies. Intentional or willful violations of wage theft laws can result in criminal penalties, including fines and imprisonment.

Steps to Getting Remedies for Wage Theft

1. Identifying the issue: The first step in addressing wage theft is for the employee to identify the problem and gather evidence. Evidence can include pay stubs, employment contracts, time records, and any other relevant documentation.
2. Reporting the violation: The employee should report the wage theft to the appropriate government agency, such as the WHD, or to a state labor department. In some cases, employees may also consult with an employment attorney before taking further action.
3. Investigation: Once the violation has been reported, the WHD or the state labor department will conduct an investigation. This process may involve reviewing the evidence provided by the employee, interviewing witnesses, and examining the employer’s records.
4. Resolution: If the investigation finds evidence of wage theft, the WHD or state labor department will work to resolve the issue. Resolving this issue can involve negotiating with the employer to ensure the employee receives the back wages they are owed or requiring the employer to change their wage policies to prevent future wage theft.
5. Legal action: In cases where the employer refuses to cooperate with the WHD or state labor department, the employee may need to pursue legal action. Pursuing legal action can involve filing a lawsuit against the employer to recover back wages and any additional damages, such as lost business opportunities or lost profits.

Criminal Penalties and Scenarios for Wage Theft

Intentional or willful violations of wage theft laws can result in criminal penalties. Some examples of these penalties and scenarios when an employer might face them include:

1. Fines: Employers who are found to have willfully violated wage theft laws may be required to pay fines, which can range up to $10,000 for each violation. For example, an employer who deliberately underpays multiple employees for an extended period might face significant fines as a penalty.
2. Imprisonment: In severe cases, employers who engage in intentional wage theft may face imprisonment. For instance, an employer who systematically misclassifies workers as independent contractors to avoid paying overtime, benefits, and minimum wage might face jail time if the violation is deemed willful and egregious.
3. Repeat offenders: Employers with a history of wage theft violations may face more severe penalties, including increased fines and potential imprisonment. An employer who has already been penalized for wage theft in the past and continues to engage in these practices could face heightened penalties.

How to Report Wage Theft?

Employees should gather relevant work documents as evidence to file wage theft claims with the WHD or in a private lawsuit, such as pay stubs, employment contracts, witness statements, work logs, and receipts.

The Department of Labor’s Wage & Hour Division maintains offices nationwide for filing formal complaints and submitting evidence. State-level departments enforce state wage laws, and employees should know whether the violation is at the federal or state level.

Do I Need an Attorney for My Wage Theft Claim?

Given the reporting restrictions and the complexity of legal matters, it is advisable to consult with a local employment lawyer before filing a wage theft claim. An experienced attorney can help you understand your state’s specific laws, determine the best course of legal action, guide you through the process, protect your rights, and represent you in court if necessary.

LegalMatch is an online legal matching service that can help connect you with local employment lawyers who handle wage theft claims.

By providing information about your legal issue and location, LegalMatch can match you with attorneys who have experience in the area of law that your case falls under. You can review each attorney’s profile, ratings, and reviews from past clients to help you make an informed decision about whom to hire.

Use LegalMatch to set up a free initial consultation with your matched attorney to discuss your case and determine if they are the right fit for you.