Wage theft sounds like something that sleazy men in back rooms perpetrate to further oppress their employees. While that does happen, a lot of wage theft is unintentional.
A new study from the Economics Policy Institute (EPI) says that employers short their employees by $15 billion a year, which means that millions of people are paid less than minimum wage for their work. This is, of course, illegal, and everyone reading this article knows this, so why on earth would your company be in violation? Well, wage theft isn't always the case of a corrupt boss attempting to take advantage of employees. And paying below minimum wage isn't the only form of wage theft.
Most businesses in the United States are covered by the Fair Labor Standards Act (FLSA) which determines not only minimum wage but when an employee is due overtime pay. You could be violating this law
EPI identifies 7 different types of wage theft. Here's how you could accidentally be committing one of these crimes.
1. Minimum wage violations: Is every employee being paid at least minimum wage? Of course, you say, but are they working on breaks or are your local managers paying illegal immigrants under the table? Often minimum wage violations hit those undocumented workers who can't complain without great risk to themselves. While it's illegal to hire someone who isn't authorized to work in the US, if you do hire that person, it's also illegal to pay them below minimum wage.If this is happening, someone is doing it purposely.
2. Overtime violations: This is where most companies get caught. If your employees don't meet the definition of exempt under Private businesses can't give comp time, nor can they say, "well, it was only 80 hours in a pay period, so that's the same as 40 hours per week." It's not. The law requires overtime pay when you go over 40 hours in one week, regardless of how many hours they work in the pay period.FLSA, then they are owed overtime if they go over 40 hours in one week (or 8 ours in one day in California and some other jurisdictions).
3. Off-the-clock-violations: You know you can't have someone clock out and continue to work. But did you know that you can't have them do that even if they volunteer? And even if you've absolutely, positively forbid employees to work off the clock, if someone does some work off the clock, you have to pay up. Additionally, a friend of mine told me about a fabulous program in her town where high school students "volunteer" at for-profit businesses. She was shocked when I explained that unless it met the strict criteria for internships, those high school students were owed minimum wage for all their work.
4. Meal break violations: Federal law doesn't require meal breaks, but many state and local laws do. And you must follow those laws even if your employees would prefer to work straight through without a break. If an employee works while you count it as a break, that's wage theft.
5. Pay stub and illegal deductions: There are some things you can deduct from an employee's paycheck and some things you can't. A good rule of thumb is don't deduct anything and if you want to deduct something, double check with your employment attorney. They should receive their full paychecks every week with very few exceptions.
6. Tipped minimum wage violations: If you own the restaurant, you can't share in the tips. If you have your wait staff come in to set up tables two hours before opening, they need to be paid for their time setting up. If their tips don't bring them to an amount equal to or greater than minimum wage, you must make up the difference.
7. Employee misclassification violations: Employers can make honest mistakes when they label someone as exempt, but the government doesn't care about good faith--it's illegal to not pay overtime to someone who deserves it, regardless of whether you both thought it was a fair exemption or not. You should check and double check your job descriptions to make sure that they accurately reflect what the employee does and complies with the law.
Is it possible that your business is unknowingly violating one of these 7 principles? Absolutely and you may not even know about it. Do an audit today and make sure you're 100 percent in compliance. It's the right thing to do for your hardworking employees and saves you from legal consequences.