What is wage theft? Learn how to protect your time and wages

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Whether you’re a blue-collar or white-collar worker, you should know the basics of one of the most common employment law crimes: wage theft. Wage theft can happen to anyone, in any industry, and in any geographic location.

In most instances, wage theft is a federal crime, and unfortunately, it’s not an uncommon one. The Economic Policy Institute reports that in the United States, wage theft costs workers as much as $50 billion annually. That number surpasses the damage done by all U.S. robberies, burglaries, and motor vehicle thefts combined.

If you suspect your employer is withholding money that you earned or is not paying you properly, you might not be wrong. You can and should speak up.

Victims of wage theft are often gaslit, have rules hidden from them, and are made to believe that what they suspect is occurring is either not happening or is perfectly legal. That’s why it’s so critical to understand what wage theft is, the signs to look out for, and what steps to take if you suspect foul play is afoot.

In this article, we’ll cover the most common types of wage theft, the protections that exist in the United States to help you guard your valuable time and your pay, and most importantly, where you should start when you need to make things right.

What is wage theft?

“Wage theft” is a crime that occurs when an employer doesn’t pay or underpays their employees. The phrase denotes a key legally recognized concept: when your boss doesn’t give you what is owed to you, they’ve stolen from you.

The industries most commonly affected by wage theft are the hospitality, food service, retail, healthcare, construction, and agriculture businesses—but it can happen anytime, anywhere, and to anyone.

The most common types of wage theft:

  • What is wage theft? Forcing employees to work without logging their hours
  • Paying less than minimum wage. This is usually done in a roundabout way, and it can be easy to miss when it’s happening. If you tally up your total pay, divide them by your actual hours worked, and come up with a figure that is less than the minimum wage mandated in your state or city, you may be a victim of wage theft.
  • Forcing employees to work without logging their hours. This may come in the form of withholding overtime pay, forcing employees to complete work-related tasks during unpaid breaks or when they’re supposed to be done working or making employees come in early or stay late without “counting” the time.
  • Withholding bonuses that are actually mandatory. This can take place in many forms, but generally, if you’ve been promised a bonus for hitting a performance goal, and you do hit the goal, your employer must pay the promised bonus. Instances, wherein an employer fails to pay a promised bonus that wasn’t deemed completely “discretionary” at the outset, might very well constitute wage theft. 
  • Not paying interns. Many interns are due at least minimum wage pay under federal law. The nuances are plentiful and may vary from state to state, but generally, if you’re completing valuable work for your employer, you should be paid for your time and effort.
  • Withholding money from tipped workers. While it may be okay to require a modest tip-out to certain employees, i.e., to bussers or hostesses, your employer is never allowed to require you to give your tips to the company, a supervisor, or a manager, even if you make minimum wage or higher, and no matter your industry. This is true even if your tips are taken through a “tip pool.”  
  • Failing to reimburse workers for qualified expenses. This can happen to workers in any role: For example, if your employer states in its handbook or in other policies that they’ll reimburse you for certain expenses (including travel, educational expenses, or entertaining clients), they must do it as long as you follow reasonable rules they set out in advance. In the blue-collar context, the same rule also applies; one of the most common examples of this type of wage theft is when employers make employees pay for uniforms up-front. Your boss should never make you pay up-front for a uniform. In some situations, your employer may take the cost of your uniform out of your paycheck, as long as it doesn’t cause you to make less than minimum wage. Note: Making employees pay for uniforms will almost always be illegal if the employee makes minimum wage.
  • Making pay deductions that aren’t authorized. Many payroll deductions are flat-out illegal, including deductions for business expenses, pre-employment examinations (like physicals or medical exams), employer-only payroll taxes, workers’ compensation premiums, and many types of protective equipment that you use. In any event, employers may never deduct anything from your paycheck that would cause your hourly rate to fall below minimum wage.

You should know: Protections exist against wage theft in the United States.

office workers in an office building - wage theft - hypertime

The Fair Labor Standards Act of 1938 made wage theft illegal.

The Act is not without teeth: Through its Wage and Hour Division, the United States Department of Labor enforces the Fair Labor Standards Act and punishes companies who break the law.

The DOL is responsible for investigating wage theft claims filed by workers, and it works diligently to recover stolen wages in order to make employees whole.

You should know that you’re protected from wage theft no matter your age, citizen status, or location within the U.S. Even if you are not an authorized U.S. citizen, the theft of your wages is illegal, and your company will have to reimburse you if they’re found guilty. 

Have you been a victim of wage theft? Here’s what you can do:

When you suspect you may have been a victim of wage theft, it can feel like the world is closing in on you.

You’ll likely feel violated, confused, and concerned—about your own situation and possibly that of your coworkers.

All of these feelings are totally normal. If you first raise the concern to a manager, HR administrator, or business owner, and your concerns aren’t sufficiently addressed, you have options. You should never be made to feel embarrassed or shamed when you bring up a concern about your pay.

Here are the first steps to take in standing up for yourself:

1. Talk to your coworkers. If you suspect wage theft is occurring in any form, talk to your coworkers. They might be experiencing the same (or similar) things. When it comes to standing up to your employer, there is strength in numbers. If any provision of your employee handbook, or any other policy seems like it may prohibit discussing wages or suspected wrongdoing with your coworkers, that portion of your employer’s rules is illegal and in contravention of the National Labor Relations Act. Wage theft doesn’t always happen in droves. Even if your coworkers don’t seem to be experiencing the same problem, it does not mean that wage theft that happens to you and only you isn’t worth filing a complaint over.

2. Know your rights.  We’ve touched on your rights under federal law in this article. Remember that, even if the government has to step in to make it happen, you are entitled to your unpaid wages plus interest from the date that your wages should have been paid to you. In some cases, you may also be entitled to further compensation from having your wages withheld. This could include what’s called “liquidated damages,” essentially entitling you to double what you were originally owed. Double-check whether your contract has an employee arbitration clause.

3. File a wage claim against your employer. You may file a wage theft complaint or claim at the federal level, the state level, or both. You can find more information about filing a state-level wage claim by visiting your state’s relevant websites. To file a federal claim, you can fill out this form provided online by the U.S. Department of Labor. After you complete the claim, your complaint will be forwarded to the nearest US Department of Labor field office, and you’ll be contacted within two business days. Following the initial contact, the next steps may include an official federal investigation.

4. If your employer retaliates against you, file a retaliation complaint immediately. Your employer is never allowed to retaliate against you for filing a good-faith complaint that they’ve broken a state or federal law. Examples of retaliation include but are not limited to: firing you; changing your work hours, shifts, or work location in a way that doesn’t benefit you; demoting you; passing you over for promotions; or denying you benefits.

5. Know when to seek help. You’re always well within your rights to speak to an attorney who can help you navigate your wage theft claim. If you cannot afford to secure an attorney to guide you through the process, reach out to your local Legal Aid office. “Legal Aid” is a nonprofit organization that provides free legal help to individuals in all fifty states, D.C., and U.S. territories. To find a Legal Aid office near you, you can use this link

Author

  • Cara Gray Bridgers

    Cara Gray Bridgers, JD MBA is a full-time in-house attorney for a global public corporation. In her spare time, she enjoys writing thought-provoking articles for HR professionals, managers, and employees. Cara's interests lie at the intersection of business and law (with a sprinkling of yoga and non-fiction reading thrown in, too)!


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