The High Cost of Wage Theft

Every day, companies steal thousands of dollars from employees without employees even knowing about it. This is called wage theft, and it comes in many different forms. Wage theft is a violation of the Wage Theft Prevention Act and numerous other Labor Code provisions.

Wage theft can happen anywhere, and while it may not amount to much on an individual basis, for a corporation with a large workforce, even small amounts can add up quickly. Employers, motivated perhaps by fierce competition or higher profits, can save a great deal of money by cutting labor costs, at the expense and demoralization of employees.

Unfortunately, wage theft, particularly from low-wage legal or illegal immigrant workers and women, is not uncommon in the United States. It happens frequently in labor-intensive industries such as agriculture, fast food, garment workers, construction, janitorial, retail and hospitality.

Survey evidence gathered by the Economic Policy Institute in 2014 suggests that wage theft costs US workers billions of dollars each year, even though the rights violated by wage theft have been guaranteed to US workers by the 1938 Fair Labor Standards Act (FLSA) and other laws. In addition, labor experts say, these employers are robbing the state of much-needed payroll taxes to fund unemployment insurance and disability programs.

What is Wage Theft?

Wage theft is the illegal withholding of wages or the denial of benefits that are rightfully owed to an employee.

Wage Theft Takes Many Forms

  • Violating minimum wage laws
  • Failure to pay overtime or violating overtime guidelines
  • Misclassification (classifying employees as "independent contractors" to avoid wage and hour rules)
  • Timecard "Rounding" (The practice of rounding employees payroll hours up or down, often to the 15 minute interval. This practice can be done legally, but must be neutral and consistent, favoring the employee as much and as often as the employer)
  • Erasing work hours/manipulating time cards
  • Illegal pay deductions (Any deduction that brings an employee's compensation to a level lower than minimum wage, regardless of the reason)
  • Injured workers being pressured not to apply for Workers Comp
  • Tip stealing
  • Understaffing (While workers may be compensated within legal boundaries, they are forced into completing a task designed for a larger work force)
  • Denying payment of sick days or promised paid vacations
  • Break/meal break denial
  • Forcing employees to work off-the-clock (Putting employees to work before they clock in or after they clock out, such as insisting that they count drawers, set-up or clean-up a work station before or after a shift)
  • Full wage theft (Not paying employees at all for hours owed)

If you have questions or concerns about any of these practices, or if you feel that your employer has paid you unfairly, or has illegally withheld pay from you, it is important to seek the advice and guidance of a knowledgeable California Employment Law Attorney, such as those at Baker Curtis & Schwartz, P.C.