The Issue of Wage Theft and How to Combat It

Wage theft is an issue more widespread than most realize. Employers are silently stealing from countless employees across the U.S. through their wages. It’s a problem that isn’t restricted to any one industry or demographic and affects workers from all walks of life.

So you can identify and combat wage theft, Barrett & Farahany will break down the various forms of wage theft and its impact on employees, and discuss actionable steps to combat this pervasive issue. By the end, you’ll have a clear understanding of wage theft and be empowered to protect your earnings.

What is Wage Theft?

Wage theft occurs when employers fail to provide the full compensation or benefits owed to employees as guaranteed by either contract or law. This can take many forms, from unpaid overtime to illegal deductions. For employees like you, recognizing wage theft is the first step towards reclaiming your rightful pay.

For many employees working in today’s economy, every dollar counts. Wage theft depletes your immediate earnings in the short-term and corrodes your ability to provide for yourself in the long-term. This issue is particularly significant for low-wage workers who rely heavily on their full earnings to meet basic living expenses.

Types of Wage Theft

1. Unpaid Overtime: Employers may require employees to work beyond their regular hours without proper compensation. This is a blatant violation of labor laws, particularly the Fair Labor Standards Act (FLSA), which mandates payment for overtime work.
2. Minimum Wage Violations: Some employers pay workers less than the federal or state-mandated minimum wage. This is especially common in industries with high rates of under-the-table payments.
3. Illegal Deductions: Unauthorized or excessive deductions from an employee’s paycheck for uniforms, damaged property, or other expenses can constitute wage theft, leaving workers with diminished earnings.
4. Misclassification of Employees: Employers sometimes classify employees as independent contractors to avoid paying benefits and allowing overtime. This misclassification deprives workers of their legal rights and full compensation.
5. Failure to Provide Final Paychecks: When employees leave a job, some employers withhold their final paychecks or do not pay for all the hours worked. This denial of final payments contravenes labor laws.
6. Off-the-Clock Work: Employees might be required to perform work-related tasks before clocking in or after clocking out, essentially working for free and losing overtime wages. This includes opening or closing activities that they do not receive compensation for.
7. Tip Theft: In industries where tipping is customary, employers sometimes unlawfully take a portion of tips earned by employees. This practice is illegal and deprives workers of money rightfully earned.

Each wage theft type significantly impacts the livelihood and well-being of workers. Identifying and addressing these issues is crucial for ensuring fair and legal compensation.

Understanding the Impact of Wage Loss

As reported by the Economic Policy Review, in the ten most populous states in the U.S., 2.4 million workers report being paid less than the state or federal minimum wage each year. This represents approximately 17 percent of the eligible low-wage workforce.

The total underpayment of wages to these workers amounts to over $8 billion annually. If these findings are representative nationwide, the total wages stolen from workers due to minimum wage violations could exceed $15 billion each year.

Legal Implications for Employers and Employees

Labor laws are designed to protect employees from exploitation and ensure fair compensation. The Fair Labor Standards Act (FLSA) specifically sets the standard for minimum wage, overtime pay, and child labor. At the state level, additional protections may apply, offering further safeguards against wage theft.

If you suspect wage theft, it’s crucial to take action as soon as possible. Start by documenting your hours and pay meticulously. Report discrepancies to your HR department or supervisor. If the issue persists and your complaints are ignored, consider filing a complaint with the Department of Labor or seeking legal counsel for help.

How Wage Theft Affects Different Demographics

Wage theft disproportionately affects certain groups, including young workers, women, people of color, and immigrants. These demographics are more likely to hold low-wage jobs, making them more vulnerable to exploitation.

For workers suffering minimum wage violations, the financial impact is severe. On average, these employees are underpaid $64 per week, nearly one-quarter of their weekly earnings. Over a year, this amounts to a loss of $3,300, which can significantly hinder someone’s ability to save for emergencies, invest in education, or plan for retirement.

Contact Barrett & Farahany For Help Get the Wages You Deserve

Combating wage theft is not just about reclaiming lost wages; it’s about upholding the dignity and rights of every worker. Employees must stay informed and proactive when employers are not utilizing ethical practices.

If you believe you’re a victim of wage theft, seek legal advice to understand your options. Barrett & Farahany is experienced with labor laws and can help you decide the right course of action. You should fight for the wages you are owed. Contact us today to learn more.