Wage Theft in the USA Wage Theft; WORKERS BEWARE?

What is wage theft?

Written by: Azka Yamin & Dee Champ

Approximately 50 Billion dollars are stolen by employers in wage theft in the United States (Wage Theft An Interactive Report, 2017). The first step in solving an underlying problem is the identification of the problem. That is where you start. So what is wage theft? Is it your employer not giving you your hard earned money? Yes. But most of the time you don’t even know you’re being denied off so today let’s work towards identification of this problem.

When someone is desperately in need of something, you throw the most invaluable scrap at them and they’d be grateful to you for the rest of their lives not knowing that what you did was not charity but simply an exchange of service. Until you come in light regarding what has been done to you, they’d owe you a large sum of money so at that point they’re just so fiscally strong to fight you off legally. That’s when you understand that you had literally been strong arming the very party that was stealing from you. That is why you should know your rights and duties alike.

Is it accidental?


The first question that comes to any logical human being’s mind is that is wage theft intentional or is it an honest mistake on behalf of the employer? Well that can simply be seen when you take a look into the books of your employer which of course is not possible unless the court has legally subpoenaed the records. But in the eyes of a common employee the scale to judge can be; Is it a small Business you work for or is it a big corporate firm. Wage theft is a pandemic that has been around for ages and has maintained its cover intact. Small business owners try their best to give their employees the fiscal credit due for their hard work but many big corporate structures might take a cut from your cheque and you would never know because you are never shown the big picture of those deductions.   

The year 2020 has been a whirlwind for everyone on the face of Earth. Billions around the globe have been forced to work from home to stay safe from the disease that has encaptivated us. Where working from home has perks of being comfortable, it has its own ways of challenging you to make you uncomfortable in the comfort of your home. That is something most of you must have experienced. There may not be a fixed 9 to 5 routine but that certainly does not mean it has become any easier for us. Many have been forced to work around the clock outside of the regular hours with that overtime not even being considered only because that counts as work from home.

Let us take an example of Karen. Karen works at a law firm as a paralegal. Usually when Karen is working on a case with her associate and needs to put in extra hours she stays in her office and those extra hours are billed as ‘Overtime’. If she’s smart and keeps track of those hours, she is paid for every one of those extra hours. But now ever since March 2020, she has moved into her home office, whenever she works extra hours she does not necessarily get paid for that overtime. Especially when the world is in this pandemic and no one really keeps track of her hours she’s working just as hard but is not sure she will get her monetary dues. What do you think, is she eligible to be paid for the over time she’s putting in or not?

Ever since the lockdown softened in September, employment has increased relatively. According to the monthly surveys conducted by the US Bureau of Labor Statistics, the number of persons on temporary layoff fell by 1.4 million to 3.2 million. Which is considerably low from the alarmingly high 18.1 million in April 2020 (THE EMPLOYMENT SITUATION -- OCTOBER 2020, 2020). 

Types of wage theft


Wage theft is a very broad term in its own. There are so many different ways to deny someone their right, it’s actually mind boggling. Minimum wage violations and Overtime pay violations are two common answers to the question ‘what do you think is wage theft’. Many household workers in the US are denied the legal minimum wage and most of them do not even know that their rights are being denied. It is simply defined as ”When an employer pays an hourly rate less than the minimum wage or makes improper deductions that reduce a worker’s take-home pay below the minimum wage, that’s wage theft.” (Common Forms of Wage Theft, 2017). The other types of wage theft include not being paid for overtime. This can be counted as ‘unpaid off the clock work’. This is what Karen went through this year working from home. Improper record keeping is the reason for this type of malpractice.

Jobs that require a direct contact with the consumer/ customer can face wage theft by tip-sharing or tip-pooling malpractice. Uncompensated meal breaks between workhours are also times when you are being denied your rights. If your job requires you to travel or make expenses solely for work purposes, it is your right to get the charges reimbursed if not paid by the employers in advance. Use of prepaid Debit cards can be less of an administrative hassle but that reduces the employees take home pay. There are law clinics and firms established that deal with cases of owed unpaid wages (Wage Authority Group, n.d.)

Your rights and duties


Now first to understand your rights you must know what your duties are. To be considered a full time employee of any organization you have to be working 40 hours a week on record. The Fair Labor Standards Act (FLSA) protects the employees by establishing a minimum wage, eligibility to overtime pay, child labor standards and record keeping in all departments.  Any person who is putting in registered 40 hours in a workweek is protected by the Fair Labor Standards Act (FLSA). All employees are required to fill in the Time and Attendance Record for overtime to comply with the FLSA standards. The Human Resource Department of every organization is required to keep a check on every single hour that is put in. This is where you come in. You have to make sure that you keep track of your work hours and make them registered with the Human Resource attaché to your respective department (Fair Labor Standards Act (FLSA), n.d.).

The United States of America has strict Human Resource guidelines for the coronavirus pandemic. Emergency paid leaves to employees based on COVID related issues to employees are provided by the government. This includes leave for caring for someone with the disease or a minor child with any issues directly or indirectly related to COVID. This is the Emergency Paid Sick Leave Act that has been valid from April 1, 2020 and will expire on December 31, 2020 (2020 federal COVID-19 leave laws and how they apply to state employees, 2020).

The line between legal and illegal deductions


While the Fair Labor Standards Act (FLSA) protects the employees it also lets the employer set the average hours of a workweek. So this can and has been twisted up by employers that have been sued for wage theft. This has happened in a recently settled suit by the US Supreme Court. In the said case the court ruled against Auto-Service Advisers in Overtime Lawsuit (Wage Theft, 2018). Vulnerable jobs like hotel service providers, employees at call centers, house helps etc. are the ones that are most hard hit by wage theft and should most definitely keep a strong track of time. Approximately 50 Billion dollars are stolen by employers in the United States (Wage Theft An Interactive Report , 2017).

How can you protect yourself?

While the best way to protect yourself is through keeping a track of your work hours and registering them with the Human Resource Department as per FLSA guidelines you can do so legally as well. It is worth noting that 83% of workers who win their wage theft suits never actually win a dime (Wage Theft An Interactive Report , 2017). Now if you still go ahead with this route of action, you must understand that in this niche of legal protection, you cannot actually file a ‘Class Action Lawsuit’. A class action lawsuit protects the rights of many people harmed by the problem. You can be a plaintiff from the very beginning but with wage theft you need a ‘Collective Action Lawsuit’. It is different from a Class Action suit because in a collective action your suit starts only when ‘you’ as an employee opt into the case, not when it was first filed by someone else. And you have to opt into the case within two years of the alleged FLSA violations (Lisa Guerin, 2015). If found not a collective mistake, the court can instruct all employees to bring their own individual lawsuits.

2035 FLSA cases were filed in the year 2000 but that number went on to increase to 7764 in 2013 (Wage Theft An Interactive Report, 2017). This shows that the problem is just increasing. The problem is of a far greater magnitude than we think. The social aspects to it go far and beyond just simple wage theft. Gender, race, nationality status are a big contributing factor. 30.2% women face wage theft as compared to the 19% men in the US. Similarly, the figure doubles from 15% to 31% for Foreign born employees as compared to US born employees (Wage Theft An Interactive Report, 2017). The problem is big but unlike some bank heists it is more of a slow poison process where cash is taken out slowly until it amounts to big numbers like the 50 billion dollars annually.  The best way to protect yourself is by being vigilant and forthcoming from the very beginning.  




2020 federal COVID-19 leave laws and how they apply to state employees. (2020). Retrieved from Office of Financial Management : https://ofm.wa.gov/state-human-resources/coronavirus-covid-19-hr-guidance-state-agencies/

Common Forms of Wage Theft. (2017). Retrieved from Wage Authority Group : https://www.owedunpaidwages.com/wage-theft/minimum-wage-violations/

Fair Labor Standards Act (FLSA). (n.d.). Retrieved from Office of Financial Management : https://ofm.wa.gov/state-human-resources

Lisa Guerin, ​. B. (2015, April 9). What Is a Collective Action Under the FLSA? Retrieved from Lawyers.com: https://www.lawyers.com/legal-info/labor-employment-law/wage-and-hour-law/collective-actions-under-the-flsa.

THE EMPLOYMENT SITUATION -- OCTOBER 2020. (2020, November 6). Retrieved from U.S. BUREAU OF LABOR STATISTICS: https://www.bls.gov/home.htm

Wage Authority Group. (n.d.). Retrieved from Wage Authority Group: https://www.owedunpaidwages.com/

Wage Theft. (2018, April 21). Retrieved from Wage Authority Group: https://www.owedunpaidwages.com/u-s-supreme-court-rules-auto-service-advisers-overtime-lawsuit/

Wage Theft An Interactive Report . (2017). Retrieved from http://owedunpaidwages.com/wp-content/uploads/report/wage-theft-2017-report/