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Five Common Types of Wage Theft

The term “wage theft” is used to describe when an employer fails to pay their workers wages they are legally owed. This shockingly common phenomenon costs workers billions of dollars every year, with employers often using leverage over employees to get away with this illegal conduct. Here are five common ways employers commit wage theft against their employees:

  • Forced or unpaid overtime
    • One of the most common ways employers will steal from employees is by refusing to pay them for overtime. They may force employees to “clock out” so their overtime is not recorded, or they may simply refuse to pay any hours worked over what was scheduled. Other employers may pay for overtime, but only their normal wages, not the time-and-a-half required for overtime by law. Whatever the case, though, this is a violation of the law and a form of wage theft.
  • Paying less than effective minimum wage
    • The federal minimum wage is currently $7.25 per hour, and $12.50 per hour in New York State. In theory, no one should ever be paid less than that amount. However, there are a few loopholes that employers will exploit to get around these minimums. For example, an employer can pay less than that if their employees make tips, so long as the amount they make from tips makes up the difference. They may also pay less than minimum wage for full-time students and for people with disabilities. Some employers are eager to exploit these loopholes to get away with paying less than they are legally required, which is a form of wage theft.
  • Misclassifying employees as independent contractors
    • Another way some shifty employers will try to get away with not paying their workers is by misclassifying their employees as independent contractors. This can save an employer a lot of money, because they do not owe independent contractors things like sick or vacation leave, workers’ compensation, or other benefits. Independent contractors are also responsible for their own Social Security taxes, whereas employers must pay half the Social Security tax themselves, with the rest being withheld from an employee’s paycheck. Pushing the responsibility for illness, injury, and Social Security taxes on employees is a way some employers will engage in wage theft.
  • Tip-pooling or tip-sharing violations
    • When some businesses do have their employees working for tips, employees will often engage in “tip-pooling” or “tip-sharing” that help them all do a bit better on their daily earnings. Some employers will have policies in place to regulate these practices, which is fine on the surface. However, some employers will use tip-pooling or tip-sharing as a way to take tips from their employees, refusing to redistribute money collected in a tip pool. They may also try to substitute “service charges” for tips, taking the money that most people would spend on tips and using it to line their pockets. When employers do this, they are committing wage theft.
  • Uncompensated travel expenses
    • Many jobs require employees to travel long distances for their work, apart from a daily commute. Travel done for work is supposed to be compensated by your employer, either in the form of paying for mileage or some other measure. Employers who force their employees to travel for work but do not compensate them for it are committing wage fraud by pushing travel expenses onto their employees.

If you have gotten into a legal dispute with your employer, it is important that you seek the guidance of an experienced New York employment lawyer who can protect your legal rights and advocate on your behalf. Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 39 years’ experience handling the many aspects of employment law. To schedule an appointment with New York City employment lawyer Steven Mitchell Sack, call (917) 371-8000 or visit his contact page.

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