Is Your Employer Stealing Your Wages or Denying Your Overtime Pay?
Table of Contents
It’s a striking fact: more than 75% of workers in the United States are not paid what is owed to them under the law.
According to our federal laws, the majority of employees must receive overtime pay—or time and a half pay—for all time that they work more than the standard 40-hour work week.
Have you worked your 40 hours (or more) this week but not received the time-and-a-half pay that you were due? If you are paid by the hour and were denied overtime pay, or if you were not properly paid for your work, then you may be owed compensation for your unpaid wages from your employer.
Read on to make sure you are protecting your rights as a worker and earner.
What Are My Rights?
If you are an employee paid by the hour, then you are likely entitled to extra pay—or “time and a half” pay—for all the time you work in excess of 40 hours per week.
According to the Wage Theft Prevention and Wage Recovery Act, passed by Congress, workers across the United States lose more than $8.6 billion each year because of wage theft—or underpayment by employers. This type of illegal activity often comes hand-in-hand with other types of employment discrimination, including race, sex, creed, national origin and religious discrimination. As part of this same study, Congress found that women are more likely to experience wage theft than are men. Similarly, African Americans and workers who are foreign-born are particularly susceptible to wage theft.
There are many ways, outlined below, in which employers will try to cheat, undercut and undermine the wages that you earn with your time and with your efforts. Whether it is by failing to account for time worked outside the office, misclassifying workers, averaging time over pay periods, or unlawfully pooling tipped employees’ wages, you should know what you are entitled to as an employee to protect your rights—and bring home the pay that you have already earned.
How Does this Type of Violation Occur?
There are several ways in which employers and companies can undercut your bottom line as an employee, shortchanging your paycheck in violation of state and/or federal laws.
Oftentimes, employers will claim that you are not entitled to overtime pay unless you have received anticipatory permission to work those extra hours—or they might refuse to pay you for the time you have already spent on work-related activities, like preparing for your shift, donning safety equipment, or working from your home office.
Does My Employer Owe Me Overtime?
Employers are aware of the federal and state laws protecting employees, and they work to overcome and skirt them to shortchange your paycheck. Some of these tactics include:
- Misclassification as an “Independent Contractor.” Workers who are classified as “independent contractors” usually work on the basis of a contract for another business or businesses. In this way, they are not fully employees of the company. Instead, they are considered to be “self-employed” individuals and are not entitled to overtime pay. Employers are aware of this classification and may, whether intentionally or unintentionally, improperly classify their employees as independent contractors when, in fact, they fall squarely within the definition of an “employee” and are entitled to overtime pay. Have you been misclassified as an independent contractor?
- Misclassification as an “Exempt Employee.” Sometimes, workers are exempt from receiving overtime pay and other federal and state pay benefits. Certain levels of employee or classifications of workers within a business unit may be correctly classified as exempt, such as managers and supervisors. This type of “exempt” employee is not entitled to overtime pay if that person works more than 40 hours per week; instead, the salary they are paid is based on their performance instead of their time. However, misclassifications of this type are frequent. Many employees are incorrectly misclassified as “exempt” when the company wants to avoid paying their overtime worked. For example, a supermarket may give a person performing cashier duties the title of “front manager” to avoid paying overtime. While the employee may feel like this is an improvement in their work status and position, it could actually be harmful to the pay that they bring home, if their job duties do not reflect the change to the manager.
- Failure to Pay Minimum Wage. Although the federal minimum wage remains at $7.25 per hour, some states have already surpassed that rate by passing their own state-specific minimum wage that is higher. But even though the minimum wage is on the rise, some employers and companies shortchange their employees of the wage owed to them. Particularly susceptible to this type of scam are those employees who also rely on tips for their income, including waitresses, waiters, hosts, and hostesses. These “day-rate” employees and tipped employees are paid in a combination of their hours worked and also on their performance (paid in tips). This type of pay structure makes it easier for the employer to shortchange their hourly rate, and potentially undercut their pay to less than the federal or state minimum wage owed to them.
- Pooling Tips. Similarly, tipped employees like servers, hosts, hostesses, waiters and waitresses and susceptible to being cheated from pay owed to them by employers who “pool” tips with non-tipped employees. This type of cheating can occur when tipped employees—including busboys, waiters, and bartenders—place all the tips they earn into a general pool that is later divided equally among tipped workers. But in some workplaces, non-tipped employees, like cooks and managers, incorrectly and wrongly collect a portion of these tips, to which they are not entitled. Therefore, the tipped workers who contributed to the pool are cheated, and their hourly rate suffers. Particularly, if this causes their hourly rate to fall below the federal and/or state required minimum wage, this could be grounds for disputing your pay with a wage and hour claim.
- “Averaging” Two Workweeks in a Pay Period. One of the most common ways employers and companies undercut workers’ wages and skirt their obligations under wage and hour laws is by taking the “average” of their employees’ hours over the two-week pay period. For example, if you work 60 hours this week and 20 hours next week, you would work 80 hours total for two weeks’ time: thus, falling within the 40-hour workweek on average. By using this type of calculation, your employer may try to argue that you are not entitled to overtime because you did not work extra hours over the pay period as a whole. But this method of calculating time and overtime is incorrect, and—more importantly—is illegal. If you work more than 40 hours in the span of one week, you are entitled to overtime pay (time and a half) for that time. In this example, you would be eligible for 20 hours of overtime pay during the first week. This type of discrepancy could make a big difference in your take-home pay. If you think you’ve been cheated in this way, you could have the grounds for a wage and hour lawsuit.
- Failure to Pay for Total Hours Worked. As a worker and employee, you’re entitled to get paid for all of the time you work on behalf of your employer. This includes work done on the job site, in the office, and on projects—as well as work performed off the employer’s premises. All of the time you spend working for the company is “compensable time” for which you should be paid. Especially considering the advances in today’s technology, it is ever-easier to work remotely and in non-traditional places and contexts. But this technological advancement also makes it easier for your employer to undercut the wages owed to you for the work and time you actually performed. Types of tasks that make workers vulnerable to this type of undercutting include:
- Donning or taking off necessary equipment;
- Putting on required safety gear;
- Turning on, restarting or booting down your computer;
- Staying “on call,” whether for routine or emergency situations;
- Short breaks between five and twenty minutes;
- Attending certification courses;
- Performing or undergoing checks for security;
- Cleaning your work equipment;
- Attending or leading required safety courses; and
- Working from home, including checking your work email from home.If your employer is failing to account for your time spent on these and other tasks, you could be entitled to a wage and hour dispute. This is because your employer is failing to account properly for the actual time you work each week, and your time is not free: you should account for all of the time worked for your employer and ensure that you are receiving proper—and fair—pay.
- Compensation or “Comp” Time. Sometimes, an employer will offer their workers what is called “comp time”—or compensation time, as hours that can be used in the future as vacation time or sick time. Employers tout this as being an equitable way to keep time in the “bank” for your future use. But this treatment of time that is actually worked is wrong—and it’s illegal if you’re an employee for a private company. Only employees of state and federal governments are eligible for this type of “comp time” pay instead of overtime pay. So if you work for a private company and you have been given this type of comp time exchange, you may have been cheated out of actual wages that were owed to you.
Industries with Common Wage and Hour Compensation Violations
Although violations of wage and hour compensation issues cross all types of industries, job types and employees, some types of workers are more vulnerable to violations of their compensation and wage and hour rights. These include:
- Retail employees;
- Installation and repair employees;
- IT professionals;
- Sales representatives;
- Wait staff, servers, hostesses and tipped employees;
- Call center employees;
- Oil and gas field workers; and
- Sales professionals.
Although this list is not exhaustive, if you are a professional in one of these industries and receive payment by the hour, you should be aware of your rights to fair compensation and potential violations of your wage and hour rights. If you were denied overtime or underpaid for your time, you might be able to file a claim against your employer, or potentially even a collective action lawsuit against your employer on behalf of yourself as well as on behalf of your fellow employees who may suffer the same mistreatment.
Have I Been a Victim of Wage Theft?
The term “wage theft” is a wide term, encompassing many types of ways and means by which employers and companies may try to deny their workers the pay and wages owed to them.
But in recent years, wage theft has been garnering public attention. For example, recently thousands of employees filed a collective action lawsuit against the popular restaurant Chipotle, in which the workers alleged that they were owed lost wages because the company required that they work extra time after they had already “clocked out.” Similarly, the parent company of Chipotle, McDonald’s, has also been charged with lawsuits with similar allegations.
But asking employees to work after they clock out (or before they clock in) is not the only way that employers may undercut workers’ wages. Other types of wage theft include:
- Withholding tips owed to tipped employees;
- Failure to pay the minimum wage over the entire pay period;
- Failure to pay overtime for hours worked in excess of 40 hours;
- Misclassification of a worker as an independent contractor;
- Misclassifying a working as an exempt employee; or
- Failure to provide the employee a final payment.
All of these types of wage theft frequently occur in America’s employment market, but if you stay aware of the ways in which employers try to skirt the law—and if you know your rights—you can be in a better position to protect your pay and your family.
But if you feel your rights as a worker have been violated by failure to pay overtime, underpayment, misclassification or other wage and hour violations, you may have the grounds for a lawsuit against your employer. Know your rights—and protect them.