5 Myths About Wage Theft

By Kelsey Basten

Published on April, 11, 2017

What do the Olsen twins, Uber and McDonald’s all have in common? They’ve all recently found themselves caught in wage theft litigation.

There isn’t one specific definition of wage theft because it occurs in various forms.

However, describes wage theft as something that occurs when employees do not receive their legally or contractually promised wages. Look at the 5 myths about wage theft below to get a better understanding of how wage theft works and how our governing bodies are working to combat it.

MYTH #1: The only form of wage theft is when employees are not paid for overtime hours worked.

Although this is the first type of wage theft that comes to mind, it’s one of many. Wage theft exists in the following forms:

  • Non-payment of overtime
  • Not giving employees their last paycheck after he/she leaves a job
  • Not paying for all the hours worked
  • Not paying minimum wage
  • Not paying an employee at all

MYTH #2: Only one law is broken in wage theft cases.

Multiple laws are broken when wage theft occurs, including:

  • Fair Labor Standards Act (FLSA)
    • Provides a federal minimum wage and allows states to set their own, higher minimum wage.
    • Requires employers to pay time and a half for all hours worked above 40 hours per week.
  • Davis-Bacon Act
    • Employees paid by a contractor or subcontractor of a federal government contract are entitled to receive the prevailing wages for that work in the city or region of the U.S. where the work was done.
    • Prevailing wages are calculated by the U.S. Department of Labor and are higher than minimum wage.
  • Tax laws
    • Tax laws are often broken when an employee is misclassified as an independent contractor. When an employee is called an independent contractor, the employer doesn’t pay its share of federal taxes.

MYTH #3: Wage theft only happens in certain industries and to employees earning minimum wage.

Wage theft occurs in all industries and regions. It happens not only to employees earning minimum wage, but also to those who earn higher wages. The industries with the most reported cases of wage theft are agriculture, janitorial services, restaurant work, home health care and retail.

MYTH #4: Very few resources are available for wage theft victims.

There are more than 200 employee centers throughout the U.S. that serve as advocates and resources for employees who have experienced wage theft. Employees can find visit their local Wage and Hour Division (WHD) offices here.

From there, there are two main paths to recover stolen wages. First, employees may gather and confront their employer about the stolen wages. They also may approach their employer’s customers to inform them of the situation.

Second, employees may file lawsuits against their employer. For larger employers, they could turn into class-action suits as well.

MYTH #5: Nothing is being done at the state and local levels to combat wage theft.

State and local legislations are working to create laws to tackle wage theft for good. Many states are proposing an increase in the amount of money an employer would owe their employee if they violate wage theft laws.

A few other consequences proposed include revoking the employer’s business license, increasing criminal punishment and extending the statute of limitations.

Visit this site to see the current and pending wage theft legislations for each state.

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