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Protect Yourself From These Common Forms of Wage Theft

Legal content fact checked by Charles E. Joseph

Wage theft is a serious crime that affects millions of workers. When employers don’t pay you the full amount you’ve earned, you can lose out on thousands in compensation. 

The most common forms of wage theft include paying employees less than the minimum wage and not paying for overtime. However, other forms of wage theft cost employees millions of dollars every year.

These eleven common forms of wage theft are all illegal. If your employer violated your rights, a wage theft lawyer can help.

1. Paying Less Than Minimum Wage

Federal and state laws say employers must receive at least the minimum wage for all hours worked. Paying less than minimum wage qualifies as wage theft.

In New York state, the minimum wage is several dollars higher than the federal minimum wage, with an even higher minimum wage in New York City. Employers must pay the higher amount in areas with a higher minimum wage. Minimum wage increases in the past few years mean employers must pay their employees a higher hourly rate in 2019 versus 2018.

If your employer does not pay minimum wage, you can file a wage claim. You can receive unpaid wages plus damages equal to the amount of your unpaid wages, known as double damages.

Learn more about minimum wage protections.

2. Not Paying Overtime

Employers must pay overtime when employees work over 40 hours in one week. While some employees are exempt from overtime protections, millions experience lost wages because of unpaid overtime. This is a common form of wage theft.

Employees should receive time and a half pay for every hour worked over 40 hours in a week. Employers cannot average the number of hours worked during a two-week pay period to deny overtime. It is also against the law to misclassify an employee as overtime exempt when they should receive overtime.

The penalties for unpaid overtime include double the unpaid wages plus fines.

Learn more about overtime protections.

3. Illegally Withholding Tips

Tips should go to employees for service provided to the customer. However, when employers withhold tips or distribute tips to people ineligible to receive tips, this qualifies as wage theft.

For example, including managers at a restaurant in the tip pool violates labor laws. Similarly, employers cannot charge a mandatory service charge and withhold that money from servers without clearly informing customers that the money is not a tip.

Refusing to fully compensate a tipped employee by withholding tips is against the law.

Learn more about tipped employee protections.

4. Automatically Deducting Time for Meal Breaks

Deducting pay for meal breaks may violate the law.

Under New York state law, employees must receive meal breaks.

State law grants employees an unpaid half-hour lunch break when they work a shift of more than six hours. The six hours must include the period between 11:00 a.m. and 2:00 p.m. If the shift starts before 11:00 a.m. and ends after 7:00 p.m., employees must receive another 20-minute break between 5:00 p.m. and 7:00 p.m.

Employees who work a shift of more than six hours that starts between 1:00 p.m. and 6:00 a.m must receive a 45-minute break in the middle of their shift.

Some employees must receive paid meal breaks.

Employers must pay for breaks if you have to perform any work during break time. This can include checking work emails or answering phone calls. However, if you do not have to do any work, meal breaks are unpaid.

In addition to meal breaks, employers may provide shorter five to twenty-minute breaks throughout the workday. If your employer offers short breaks, these are considered part of the workday. You must receive your regular wages for this time.

Employers cannot automatically deduct unpaid meal breaks, which may violate wage theft laws. If work regularly interrupts your meal break, your employer owes you money for that time, plus fines and penalties.

5. Improper Deduction for Damages

Your employer cannot make certain deductions from your paycheck. Employers can deduct wages when required by law, such as income taxes or Social Security taxes. They can also take deductions for your benefit, like health insurance, pension contributions, or other perks. 

In all other cases, your employer must ask for your agreement in writing before taking deductions from your wages.

Illegal deductions include:

  • Spoilage or breakage
  • Cash shortages or losses
  • A customer’s failure to pay their bill
  • Fines or penalties for lateness, misconduct, or quitting without notice

These illegal deductions may also violate minimum wage protections.

It is also against the law for your employer to ask for kickbacks. In other words, employers cannot demand part of your wages by threatening your job.

6. Not Paying For “Off The Clock” Work

Employers must pay their employees for all hours worked. If you arrive at work at 8:55 a.m. every day, but your computer takes twenty minutes to install updates before you can officially clock in, you are still entitled to wages for those twenty minutes.

These rules apply to all employees, including office workers. The legislation itself uses the examples of a lathe operator who starts the workday oiling, greasing, or cleaning his machine, and a garment worker who shows up 30 minutes before others to get machines ready for operation.

However, call center workers, for example, must receive wages for the time spent downloading work instructions, computer applications, and work-related emails.

7. Misclassifying as Overtime Exempt

Overtime laws guarantee additional pay for certain employees, but employers may misuse the classification system.

Misclassification is a serious problem that can cause significant lost wages. If an employee has been improperly classified as overtime-exempt, they must receive back wages. For more, see our article on overtime laws.

8. Abusing Unpaid Interns

The Fair Labor Standards Act (FLSA) de­fines the term “employ” very broadly. This includes everyone that employers “suffer or permit to work.” Employees must receive compensation for the services they perform for an employer. However, some employers unfairly abuse unpaid interns.

Recently, several cases challenged the issue of whether interns should be classified as employees under the FLSA. In the for-profit private sector, employers can only offer unpaid internships or training programs under very specific circumstances.

The DOL sets specific criteria that must be met in order to classify someone as an unpaid intern. If these criteria are not met, the individual is an employee and they are owed wages.

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training that would be given in an education environment.
  2. The internship experience is for the bene­fit of the intern (for example, the intern earns college credit).
  3. The intern does not displace regular employees but works under the close supervision of existing staff.
  4. The employer that provides the training derives no immediate advantage from the activities of the intern and, on occasion, its operations may actually be impeded.
  5. The intern is not necessarily entitled to a job at the conclusion of the internship.
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

New York state uses a similar standard. Unpaid internships that violate these standards are illegal, and interns should be paid and classified as employees.

9. Not Paying for Remote Work

Employees often use mobile devices to send and receive work-related emails. Employers must pay their workers for the time reading and responding to emails and text messages while not on site.

In the past, employers were not responsible for this work because of the impracticality of calculating the hours worked. Recently, the Department of Labor developed a mobile timesheet app for iPhones and iPads that provides an easy way to track hours of work. Currently, there is no available version for Android devices, but there are numerous time-keeping apps offered by other vendors.

If employers do not pay employees for remote work, they are violating the law.

10. Misclassification as an Independent Contractor

Wage theft laws provide fewer protections for independent contractors. However, in some cases, employers misclassify independent contractors who should be employees.

Misclassification is a serious problem that causes significant lost wages. If an employer inappropriately classified an employee as an independent contractor, the employee must receive back wages.

Learn more about independent contractor rights.

11. Not Paying Spread-of-Hours Pay

In New York, employers must pay you an additional hour of pay if you work more than ten hours in a single workday. This is called spread-of-hours pay.

If, for example, you work a ten-hour shift, your employer must pay you an additional one hour of pay at the standard minimum wage.

The law also covers employers who work a split shift. If you work the lunch rush at a restaurant and then return in the evening for dinner and closing, you must receive spread-of-hours pay if your arrival and departure time exceed ten hours.

What To Do About Wage Theft

If you are the victim of wage theft, you have rights. Every day, employers illegally deny employees money and benefits. A New York wage theft lawyer can help.

Charles Joseph has over two decades of experience in wage theft cases. His firm has recovered more than $140 million for victims of wage theft and other employment violations. Contact Charles Joseph for a free consultation today.

Learn more about what to do about wage theft:

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Legal content fact checked by Charles E. Joseph

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