5 Things You Didn’t Know About Wage Theft

By Kelsey Basten

Published on August 14, 2018

Wage theft seems easy enough to avoid. However, with new minimum wage laws popping up at the federal, state, county and city levels, many companies are one small step away from committing it themselves. Here are a few things you didn’t know about wage theft, and how to avoid it:

1. Wage theft appears in more than one form.

Most companies think 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

2. 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.

3. Wage theft can occur in all industries.

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.

4. There are multiple ways for employees to get help if they are 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.

5. State and local levels of government are acting to combat wage theft.

State and local legislation 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.

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