What is Wage Theft?
Your questions about workers’ rights, answered
Wage theft costs workers an estimated $50 billion a year. But what is wage theft? How do you report wage theft? And can you receive back pay if your employer doesn’t pay you?
Wage theft includes paying less than minimum wage, withholding overtime pay, or requiring off-the-clock work.
It can also include harder-to-detect examples, like automatically deducting time for meal breaks or not paying for remote work. Tipped employees might also experience tip skimming, a common form of wage theft.
Keep reading to learn about the definition of wage theft, wage theft examples, and how to report wage theft.
What is wage theft?
Wage theft happens when an employer fails to fully pay an employee for their labor. It takes many forms, such as paying less than the minimum wage, failing to pay overtime, requiring off-the-clock work, or taking illegal deductions.
Wage theft is a major problem in the U.S. and costs employees an estimated $50 billion a year in lost wages. Workers in low-wage industries are most commonly the victims of wage theft.
Federal, state, and local laws protect employees from wage theft. These laws also give employees tools to recover stolen wages from their employers.
Learn more about the most common forms of wage theft.
How common is wage theft?
Wage theft is shockingly common. Workers lose $50 billion a year because of wage theft, according to the Economic Policy Institute. Let’s compare wage theft vs other theft: the amount of stolen wages is more than 100 times the cost of every robbery in the country.
How much wage theft per year do authorities catch? It’s a fraction of the billions stolen from workers. From 2017-2020, authorities recovered $3 billion stolen from workers. Yet billions more go unreported.
Where do I report wage theft?
Victims of wage theft can file a claim with the Wage and Hour Division of the federal Department of Labor.
In addition, you can file with your state Department of Labor. Some states, such as New York, offer stronger protections than federal law and give employees a longer time to file a claim.
You can contact a wage theft lawyer for a free consultation. A wage theft lawyer can help you collect evidence, file a lawsuit in court, and prove your wage theft case.
Can you sue a company for wage theft?
Yes, you can file a lawsuit against a company for wage theft. Depending on your state, a wage theft lawyer may recommend bringing a suit under state laws.
A lawyer can also help you file a complaint with the federal Wage and Hour Division of the Department of Labor and your state’s Department of Labor.
If you choose to hire a lawyer, both the federal Fair Labor Standards Act and many state labor laws require your employer to pay your attorney fees if you win your claim.
What is the punishment for wage theft?
Employers found guilty of committing wage theft must repay the stolen wages to their employees. Victims of wage theft also qualify for liquidated damages, which equal the amount of unpaid wages.
For example, if a restaurant failed to pay a server $10,000 in minimum wage and overtime, the server could receive $10,000 in unpaid wages and $10,000 in liquidated damages, for a total of $20,000. This provision is known as double damages.
In New York, the Wage Theft Prevention Act also orders fines of up to $10,000 per employee for companies that fail to provide a wage notice or pay stubs. The Act punishes repeat offenses by ordering penalties of between $1,000 to $20,000 for employers who violated the law in the previous six years.
What is a wage theft notice?
In New York, employers must give their employees written notice of wage rates under the Wage Theft Prevention Act. The notice must include the rate of pay, whether the employee receives wages hourly, any deductions, the scheduled payday, and the employer’s contact information.
Employers must provide a wage notice to new employees in English and the employee’s primary language. They must also keep a copy of the wage notice and the employee’s signed acknowledgment for six years after ending the employment relationship.
If employers fail to provide wage notices, they can be fined up to $5,000 per employee.
Want to know more? Check out our FAQ on the Wage Theft Prevention Act.
How do you report wage theft?
Employees can file a claim for wage theft independently with the federal Wage and Hour Division or their state Department of Labor. A wage theft lawyer can help you navigate the process.
Victims of wage theft can also file a lawsuit. This may be the best available remedy for certain employees. However, depending on your state, the statute of limitations for reporting wage theft varies. Some states also cap back wages for certain professions.
Not sure what to do about wage theft? In the New York City area, employment lawyer Charles Joseph brings over 20 years of experience in wage theft. He founded Joseph & Kirschenbaum, a wage theft firm that has recovered over $140 million for clients. Contact Charles Joseph for a free consultation.
Learn more about common forms of wage theft or read our related FAQs.