Wage Theft is the ‘illegal withholding of wages or denial of benefits that are rightfully owed to employees’ and is very common in the United States. Wage Theft can be conducted through various means such as: failure to pay overtime, minimum wage violations, employee misclassification, illegal deduction to pay, working off the clock, not permitting employees to place actual times worked on time sheets or not being paid at all. These violated rights have been guaranteed to workers in the United States since 1938 by the Fair Labor Standards Act.
When the Wage and Hour Division receives reports of violations, it works to ensure that employers change their work practices and pay back missed wages to employees. Willful violators can face fines up to $10,000 upon their first conviction with imprisonment resulting from future convictions. In regards to child labor laws, an employer can face a fine of up to $11,000 per minor. In 2012 the Wage and Hour Division collected $280 million in back wages for 308,000 workers. As of 2014, there are 1,200 federal investigators for 135 million workers in more than 7 million businesses. The ratio of labor enforcement agents to U.S. workers has decreased ten-fold since the inception of the FLSA from one for every 11,000 workers in 1941 to one for every 123,000 workers in 2014.
I’ve heard stories from HR professionals where administrative/clerical personnel were finding the need to work more than the 40 hours per week they were hired to work. They consistently worked 45 to 50 hours per week….one working as many as 52 to 55 hours per week, arriving at 7:00am, working through lunch, running home to put dinner in the oven and returning to work into the early hours of the evening. From an HR perspective, their timesheets would be reviewed and questioned why they did not place the actual number of hours on the timesheet. The HR professionals were told by the workers that they were forbidden to put anything more than 40 hours on the timesheet even though it was known they were working more than the relegated 40 hours per week. The position required approximately 50 to 60 hours work per week.
The question could be raised regarding these individuals that held the same position at different times that they were slow or inept at what they were doing…but, if the hours were worked, the money is owed. Apparently, this was not the case in question; it turns out that the company did not want to pay extra, the training for the position was insufficient and the supervision extremely poor in both instances. And, most importantly from an employee’s perspective, jobs were scarce and one worked what they needed to work to keep a job. One of these individuals was in her mid-40’s, a single parent and the other was in her early 50’s; both were taken advantage of in this situation. Regardless, the individuals should have been paid for what they worked and not subjected to harassment when the excessive amount of work they were attempting to complete was advocated on their very detailed job description. Please note, there is no time limit for reporting wage theft and there is no time limit for rectifying wage theft.
Another way Wage Theft manifests itself is through the fact that as many as 20 million U.S. workers do not receive paystubs that outline how their pay is calculated or what deductions were taken from their wages. There is no federal requirement that employers give workers a paystub. However, various States have recently (within the past year) passed legislation guaranteeing official notice of pay to ALL workers. Often, workers who don’t receive paystubs are victims of Wage Theft, cheated of the pay they legally earned. There is a group that has formed an organization called Paystubs for All that would like to see a federal requirement that employers provide workers with the information that they are already required to keep. This would help deter Wage Theft. Too often, workers’ pay is illegally whittled down by undercounting the hours they worked, paying illegal wage rates or taking unauthorized deductions. Many workers are paid in cash, by check without any explanation or calculation, or with a payroll debit card that either doesn’t have a paystub feature or that charges workers to see their paystubs.
Some employers who are illegally stealing workers’ earned wages are reluctant to show documentation for workers’ hours. Workers should always keep copies of hours submitted, whether signed or approved. It is the only documentation that they have. It is good to even keep a notebook of hours worked so in the event there is involvement by the Wage and Hour division, a work history trail is recorded. The Department of Labor is not innocent in this regard; at present, employers need to keep records of how pay is calculated for three years. Requiring paystubs is an easy step for the USDOL to help hold employers accountable for paying wages to their workers.
There is a web site titled ‘wagetheft.com’ that highlights the type of Wage Theft that exists around the country. There is also another website entitled 'Canmybossdothat.com'. These are outlets for anyone who has been involved in a Wage Theft situation as well as sites that help identify situations, lawsuits, and arrests around the country where Wage Theft is being addressed and stopped.
Wage Theft is not only an issue for hourly workers; it has become a trending situation for white collar workers in a number of industries. Many American companies hire a cadre of attorneys that help them shirk the letter of the law, while perverting its spirit. White collar wage theft is achieved indirectly by influencing the labor market. Google, Apple, Intel and Adobe are at present settling a class-action lawsuit filed by 64, 613 engineers for $3 billion in lost wages from 2005 through 2009. The case was focused on engineers being prevented from leaving one company to go to work for another company. By stopping the transfer of the workers, wages were artificially depressed. Companies do this by threatening the employee with their non-compete clauses, theft of ‘secrets’, etc. These threats inhibit an employee from leaving to go to another company for the employee feels that they will become involved in a lawsuit if they leave their present employer and end up without an income.
Jail is now a threat that skilled employees may face when looking for better jobs. A new scheme that is being perpetrated against white collar laborers is the threat of ‘criminal conviction’ upon leaving the company…for whatever reason….another job/position or an employee going out to start their own business. This practice, in effect, is producing a passive, yet effective threat to all employees that leaving their employer could result in criminal prosecution. An example of this occurring is a company convincing a local district attorney to bring an action against a former employee for ‘stealing company secrets’ and vaguely attempting to prove that the ‘secrets’ were stolen. This happens more often than one would think and employees have a need to protect themselves. One example that I’m aware of cost the former employee over $100,000 in lost wages and legal fees. He was eventually exonerated but unemployed and deep in debt.
Why does this happen? Why is this happening? ….one would think that in 2015 with all the laws and protections for the average employee in place, this would not exist…Again, if one sees themselves in this BLOG, as an employer, you can rectify how you treat your employees immediately and you can pay any former employees that which is owed to them (including the penalties, of course)….if you are an employee, please contact the Department of Labor in the State/Commonwealth in which you reside, for instance, in the State of Pennsylvania, Wage Theft is definitely considered a criminal offense….and please keep records of your work hours/times, etc. They will be necessary for the Department of Labor to review.
If you have any questions or would like further clarification, please contact Rosanne Bennett at email@example.com or at 484-798-1236. I look forward to hearing from you! A great article on Wage Theft was recently in my SHRM magazine: How HR Can Prevent Wage Theft, written by Eric Krell from June 23, 2014. If anyone would like a copy, please let me know and I can send you the link or send you a copy. This is not just a good article for HR Professionals but it is a great read for anyone issuing or receiving a paycheck!