Wage Theft

What Is Wage Theft?

Wage theft happens when you aren;t paid what the law says you are owed. The Fair Labor Standards Act (FLSA), originally enacted in 1938, establishes standards for the minimum wage and overtime pay. The Act applies to full-time and part-time employees in both private and public sector work, with some exceptions. In all, over 130 million workers in the U.S. are guaranteed fair compensation by their employers under the FLSA.

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) handles wage theft by administering and enforcing the FLSA. Employees who have rights under the FLSA or other federal labor laws can file a complaint with WHD, in order to recover the wages that they are owed.

State laws regarding wages and hours also apply to employees covered under the FLSA. When both the FLSA and state employment law applies, the law setting the higher standards takes precedence.

Basic Provisions of the Fair Labor Standards Act

Minimum Wage

The FLSA obligates employers to pay their workers at least the federal minimum wage, which has been set at $7.25 per hour since 2009. Many states also have minimum wage laws, which entitle workers in those states to higher wages.

Employers of tipped employees must pay at least $2.13 per hour in direct wages. Tipped employees are defined as those who “customarily and regularly” receive more than $30 in tips per month. Employers may consider such tips as part of their employees’ wages, but they must make up the difference if an employee’s combined direct wages and tips do not add up to minimum wage. Also, employees must be allowed to retain all of their tips, unless they are part of a valid tip sharing arrangement with other workers.

Payment on a piece-rate basis is allowed under the FLSA, but employees must receive at least the equivalent of the required minimum hourly wage.

Youth Minimum Wage

A different wage standard applies to young people who are working. Employers are obligated to pay youth (persons under 20 years old) a minimum of $4.25 an hour. However, employers can only pay this lower rate for the first 90 calendar days of the young employee’s tenure, after which they are entitled to the regular federal minimum wage.

Employers are not allowed to attempt to displace non-youth employees in order to hire young employees who can be paid lower wages. Any adverse action that could result in displacing non-youth employees, including reducing hours, wages, or employment benefits, is prohibited by the FLSA.

Overtime Pay

The second pillar of the FLSA, besides minimum wage standards, is overtime pay. Employers are required to provide their employees with overtime pay for any hours worked beyond 40 per workweek. Overtime pay is at least 1.5 times the employee’s regular pay rate.

There are a few specialized overtime provisions that apply only to certain state and local government employees. Most importantly, these employees receive compensatory time off from work instead of cash overtime pay. Employees are given at least 1.5 hours off for each overtime hour worked. Compensatory time off can also be converted to cash overtime payments.

The law does not mandate overtime pay for work on weekends or holidays. Of course, if you have worked more than 40 hours during a particular week, you are entitled to overtime pay if you work overtime on weekends or holidays during that week.

The number of hours that employees may work in a workweek is not limited by the FLSA. However, this is only true of workers age 16 and over; the child labor provisions do set weekly limits for hours that minors can work. For more information, see the Department of Labor’s youth rules.

Types of Employment Practices Not Regulated by the FLSA

The FLSA lays out the basic minimum wage and overtime pay standards, but there are a many other aspects of employment that the FLSA does not regulate. Some examples of areas that are not covered by the FLSA include:

  • Maximum daily hours worked;
  • Maximum weekly hours worked;
  • Meal or rest breaks;
  • Scheduled days off, including holidays or vacations, and payment on those days;
  • Severance pay;
  • Sick pay;
  • Premium wages for working on weekends or holidays;
  • Pay raises;
  • Fringe benefits;
  • Discharge notices, reason for discharge; and
  • Immediate payment of final wages to terminated employees.

These matters are usually left for agreement between employer and employee. However, many states have passed laws to create requirements for these practices in order to protect workers.

Who Is Covered under the Fair Labor Standards Act

Generally, employees working for businesses that engage in interstate commerce are covered under the FLSA. In our interconnected national economy, it is rare that an enterprise would not have an interstate impact, so most businesses are subject to the law. However, employees of smaller businesses are not covered by the FLSA. Small businesses are usually defined as those with less than $500,000 in annual dollar volume of business.

Regardless of the entity’s annual dollar volume of business, employees of the following types of entities are always covered:

  • Hospitals;
  • Institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises;
  • Schools for children who are mentally or physically disabled or gifted;
  • Preschools, elementary and secondary schools, and institutions of higher education; and Federal, state, and local government agencies.

In addition, the FLSA covers domestic service workers, whose employers would usually not meet the business volume level needed to be subject to the law. As long as an employee receives at least $1,700 per year from one employer, or works more than eight hours per week for one or more employer, he or she will be protected by the FLSA.

Exemptions

There are some narrow exemptions from the FLSA’s minimum wage and overtime pay requirements for specific types of businesses, and other exemptions for specific kinds of work. The commonly exempted occupations are listed on the Department of Labor’s website. For assistance with determining whether the work that you do is covered under the FLSA or is exempted, it is best to consult with a knowledgeable employment attorney.

Subminimum Wage Provisions

In addition to the narrow exemptions for particular occupations, the FLSA also permits employers to pay certain individuals less than minimum wage. This includes vocational education students and full‑time students working in retail or service establishments, agriculture, or institutions of higher education. Also, individuals who have physical or mental disabilities (including those related to age or injury), and whose earning or productive capacities are impaired, can be paid less than minimum wage.

This lower wage standard is designed to ensure access to opportunities for employment for everyone. Employers are required to obtain a certificate from the Department of Labor in order to pay these types of workers less than the minimum wage.

Common Wage and Hour Violations

There are countless ways that employers can commit wage theft and violate the wage and hour requirements of the FLSA. Some of the most common include:

  • Improper classification of an employee as FLSA exempt: Employers fail to pay employees overtime, claiming the employees are not covered because they fall into an exemption category.
  • Improper calculation of regular rate: Employers fail to include all forms of premium pay received when they tabulate the employee’s regular pay rate for use in overtime pay calculation.
  • Off-the-clock work: Employees are not paid for pre- and post-shift duties that they regularly perform. Employers are required to keep records of all work performed, including off-the-clock activities.
  • Denial of compensatory time: Public sector employers deny requests by employees to make use of compensatory time off, or use the wrong conversion when translating compensatory time into cash payments.
  • Failure to pay overtime in a timely fashion: Employers often neglect to include overtime pay in the next regular pay period after it was worked.

Remedies for Wage and Hour Violations

If your employer has committed wage theft under the Fair Labor Standards Act in any of the ways discussed above, or you suspect they have failed to meet their obligations to you in other ways, there are several ways to seek a remedy. Employers can be brought to justice through administrative procedures, litigation, or criminal prosecution.

Administrative Remedies

To seek wages that you are owed, you can start by filing a complaint with your local Wage and Hour Division (WHD) office. WHD will investigate your claim, and if they discover that your employer has violated the wage and hour laws, they will request the payment of any back wages due to you and other employees. In most cases, you are entitled to recover not only back wages, but also liquidated damages, which is additional compensation amounting to double your unpaid back wages. Employers will often try to get out of paying liquidated damages, but it is the rule, not the exception, that employees are owed liquidated damages.

There is a 2-year statute of limitations for recovering back wages and liquidated damages, so you will only be able to recover for the past two years before you filed your complaint. This is extended to 3 years if the employer violated FLSA standards willfully.

Employers, in addition to paying back wages and liquidated damages, may be fined for child labor violations, repeat violations, or willful violations of FLSA requirements.

Litigation

Under the FLSA, employees may also file private lawsuits to recover their back wages and liquidated damages, in addition to attorney’s fees and court fees. Suing your employer for wage theft, and successfully getting a settlement or going to court can be a long and difficult process, so the counsel of an experienced lawyer is invaluable.

The Department of Labor is also authorized to file suits on behalf of employees for back wages, liquidated damages, and civil money penalties, or to seek an injunction to restrain the employer from violating the law.

Criminal Prosecution

Employers who have willfully violated the law may be subject to criminal penalties, including fines and imprisonment. Wage theft is a serious crime.

Employer Retaliation is Prohibited

If your employer has taken any adverse action against you following your attempts to ensure that your employment rights are upheld, you may have a case for retaliation. It is a violation of the FLSA for an employer to retaliate by firing or otherwise discriminating against an employee for filing a complaint or a lawsuit. If you have been retaliated against, you are entitled to reinstatement to your job, payment of your lost wages, and liquidated damages.

Seeking Assistance with your Wage and Hours Claim

If your employer has violated your rights under the Fair Labor Standards Act, you deserve to have the situation remedied. For advice on how best to proceed with your case, consult with an experienced wage theft attorney today.

It is helpful to have the information below on hand when discussing your wage theft case:

  • Name of the company where you work or used to work;
  • Company’s location;
  • Name of the manager or owner;
  • Company’s phone number;
  • Type of work you did;
  • How and when you were paid;
  • Pay stubs or your own records of the hours you worked; and
  • Any information on the employer’s pay practices.

Sending us information about your potential case does not mean we will automatically represent you – you are telling us about your situation in order for us to evaluate whether we believe you have a case which we may choose to handle on your behalf. We will review your circumstances and let you know as soon as possible whether we can discuss your potential case with you further. The information you give us is confidential and can’t be shared with anyone outside of our office.