On New Year’s Day, minimum wage rose in 21 states and 35 cities across the country. According to the National Employment Law Project (NELP), which tracks American wages, economic policy, and financial crimes like wage theft, 2022 marks the biggest simultaneous pay bump in sub-national minimum wage in U.S. history.
While the rising minimum wage is certainly good news for the 1.1 million American workers who work at or below the federal minimum wage, rising wages can also stoke fears of wage theft — a frighteningly common type of financial crime committed by American companies against their own workers. Each year, the Economic Policy Institute (EPI) estimates U.S. employers cheat minimum-wage workers out of an estimated $15 Billion in pay.
Wage theft is one of corporate America’s biggest crimes against its own workers, but, sadly, it is seldom discussed in popular conversation. The tragedy of wage theft results in harm to working families, taxpayers, and the U.S. economy. EPI estimates that the total economic toll of wage theft could be as high as $50 Billion a year.
The Growing Problem of Wage Theft
Wage theft can take many different forms, but it’s commonly defined as any employment scenario in which an employer fails in their legal responsibility to pay wages and/or benefits owed to an employee. Unfortunately, problems like unpaid overtime and other wage violations are exceedingly common.
In addition to failing to pay overtime hours, other common examples of wage theft include:
- Failing to pay workers minimum wage or higher
- Failing to offer meal breaks to employees
- Taking illegal paycheck deductions
- Asking or requiring employees to work “off the clock”
- Misclassifying full-time employees as contractors
No industry or line of work is completely safe from wage theft, though it occurs in higher frequency among America’s most vulnerable workers: low-wage earners who are often men and women of color. The food-service industry, for example, is one of the sectors most impacted by wage theft.
Other occupations commonly impacted by wage theft include:
- Call center employees
- Childcare workers
- Construction workers
- Factory workers
- Gas Station attendants
- Homecare workers
- Janitors and maids
- Parking attendants
While the Fair Labor Standards Act (FLSA) was signed into law in 1938 during President Franklin D. Roosevelt’s second term, its effectiveness is waning in the 21st century as deregulation of the labor market steadily continues.
The FLSA was an attempt to correct a once-widespread employment dynamic that greatly favored employers and exploited low-wage employees. The FLSA offers victims of unpaid overtime, employee misclassification, and other forms of wage theft a legal course of action through which they may be able to seek justice.
What Is a FLSA Violation?
The FLSA governs federal minimum wage for workers, as well as overtime, recordkeeping, and employment standards. A FLSA violation occurs when an employer fails to meet the requirements established in the law.
Such violations occur more frequently than you may think: In a recent Florida case, the U.S. Department of Labor (DOL) found that a Pensacola-based company that owns two 24-hour care facilities owed workers $93,932 in backpay. The DOL found that “employees working 16-hour days were paid for only 12 or 13 hours.”
This is a clear violation of the Fair Labor Standards Act.
Commenting on the case, Wage and Hour Division District Director Wildali De Jesus said:
“When employers fail to meet their obligations to pay essential workers all the wages they have earned it hits our lowest wage-earners the hardest, significantly impacting their ability to earn a living. Other employers in this industry should use the outcome of this investigation as an opportunity to review their own pay practices, ensure they comply with the law, and avoid violations like those found in this case.”
Unfortunately, this Pensacola case is but one of thousands each year.
How Corporations Abuse the FLSA
Wage theft is one of the most common crimes committed by corporations every year, and there are far too many victims. Corporations will often find and exploit loopholes in the law to avoid compensating employees.
Companies may outsource work to temp agencies or hire subcontractors to minimize their liabilities in cases of wage theft. Other companies may intentionally classify workers as independent contractors to avoid paying benefits and minimum wage.
Alongside corporations, trade organizations, such as the National Restaurant Association, spend tens of millions each year lobbying Congress to vote against raising the minimum wage.
Though minimum wage will be increasing for many workers in 2022, more than half of American states are still fighting for higher wages for hourly workers.
Seeking Help for Wage Theft
Are you owed money? If you were a victim of wage theft, it’s important to seek legal help as soon as possible.
For more than 40 years, Sokolove Law has been fighting on behalf of workers — hard-working men and women who have been short-changed by powerful corporations with seemingly endless bankrolls.
To find out if you may be eligible for wage theft compensation, contact us today for a free, no-obligation legal consultation.