What is Wage Theft? How Employers Use Overtime Exemptions and Misclassification to Steal Your Pay
Say you’re sitting at your desk. It’s after business hours, but you don’t get overtime. Maybe you’re behind the wheel, stuck in traffic, with four more deliveries to make; maybe you’re closing up a restaurant for the night and your boss has pocketed your tips. That’s just the way it is, you think.
But is it?
Wage theft can mean a lot of things, and it affects workers at all levels of employment, whether you’re a white collar worker or a dishwasher.
Whether you’re a blue collar or white collar worker, you may be missing out on wages.
So how do employers get away with it? Here are a few methods they may use that make your paycheck come up a bit short.
Misclassification
So you’re an independent contractor. You could be a driver, writer, salesperson, or anything in between. There’s nothing wrong with being an independent contractor, necessarily. But what’s important is how or why you ended up as one.
Some companies will misclassify people who should be employees eligible for legal protections as independent contractors, because then they don’t have to treat you like you should be treated.
There’s nothing about being an independent contractor that’s necessarily wrong. However, companies often hire people as independent contractors but give them all the responsibilities of a full-time employee and work them just as long. This is called misclassification.
By hiring workers as independent contractors, companies might try to avoid paying overtime, avoid paying minimum wage (see “day rates” below) or avoid paying for your benefits, which means you’re paying for them out of your own pocket.
Check out this video for more independent contractor info:
Unpaid Overtime
You’ve probably heard a lot about being an “exempt” employee. Basically, what that means is that due to some Fair Labor Standards Act exemption, your boss doesn’t need to pay you overtime. (Here is a list of the exemptions.)
Usually, hourly employees are wage-theft victims, whether their employer is rounding down their hours or making them work “off the clock.” However, anyone who works “off the clock,” isn’t paid for these hours, and isn’t actually an exempt employee, is probably coming up short on their paycheck.
Drivers specifically should be aware of “day rates.” For example, say you get paid $150 daily to deliver packages between 9 a.m. and 5 p.m. However, there’s traffic — your day extends from 9 a.m. to 6:30 p.m. You still get paid $150. Doesn’t sound fair? That’s because it might be illegal.
Tip Sharing, Tip Pooling, And Tipping Out
If you work in the service industry, (e.g., as a waiter, server, or bartender), you may participate in tip pooling. That’s not always wage theft — the front of house can legally pool tips with one another.
But what if the chef takes some tips, or the manager? That’s cause for concern.
Minimum wage matters, too. Federal minimum wage for tipped employees is $2.13 hourly, but that’s before tips. With tips, you should be making normal minimum wage for your area (federal minimum wage is $7.25 hourly) by the time you get your paycheck.
What Now?
If you think wage theft affects you, take action. Otherwise, your employer will continue to take advantage of both you and future employees. To get the money you deserve and to avoid retaliation, ask a lawyer if your rights are being violated, and pursue justice.
