What Is Wage Theft — and Could You Be a Victim?

It’s an increasingly buzzy term doing the rounds in the working world, but are you familiar with the concept of wage theft? And would you be able to spot this phenomenon if it popped up in your office? We’ve broken down some of the most common forms of wage theft — plus how employers may be trying to get away with them — and got the scoop from an employment law attorney on how to proceed if you think you may be a victim.

What is wage theft?

Essentially, wage theft occurs when an employer doesn’t pay wages or other benefits that an employee has earned.

Some forms of wage theft are easier to spot than others, but there are some key signs to look out for. If you’re an hourly worker who regularly works overtime without being paid for those extra hours, you’re a victim of wage theft. Other common forms include misclassifying an employee as an independent contractor, not paying earned time off or holidays, being asked to complete work tasks when you’re off the clock, or constantly having to arrive early or stay late without compensation.

“Here’s an example pulled from one of our current claims,” says Joshua Konecky, an employment law partner at Schneider Wallace Cottrell Konecky LLP. “A worker must be at the warehouse at a specific time, such as 7 a.m. If they are not there, they will not get work for that shift. But they must commute to the warehouse and wait, sometimes as much as an hour or two, before they’re assigned work or released for the day. They should be paid for that waiting time.”

Being forced to work through meal breaks, being made to pay upfront for a uniform (if, after the cost is deducted from your paycheck, you’re being paid less than minimum wage), and employers skipping your final check after you’ve left a job all count as wage theft, too.

You’re “engaged to be waiting, not waiting to be engaged”

“One legal phrase you typically see is whether an employee is ‘engaged to be waiting,’ not ‘waiting to be engaged,’” explains Konecky. “If you’re engaged to be waiting, you’re providing a work benefit to your employer. Even though you may not be doing productive work, you still have surrendered control of your time and permissible activities to your employer.” When this happens, you should be paid for that time.

Often, practices that can constitute wage theft are so normalized that they go unnoticed — or employees are conditioned to feel like they’re not pulling their weight if they raise the issue. Being asked to work beyond your hours isn’t a huge leap from familiar office cultures of presenteeism, and checking your email on weekends is easily explained away as being a useful member of a “team.”

Courtney, a restaurant worker in New York, told Forbes that she has lost hundreds of dollars in unpaid tips, and particularly since the pandemic, has become used to being paid late, with the excuse that “all of us need to chip in right now.”

“You start believing that’s OK, that’s just how things work,” she told the magazine.

How prevalent is wage theft?

Extremely. According to a report by the Economic Policy Institute, American workers recovered $3 billion in wages lost between 2017 and 2020 due to wage theft, but this only represents a tiny proportion of the total pay lost. A study cited by the EPI estimates that workers nationally lose $15 billion every year from minimum wage violations alone — and minimum wage workers are far from the only victims of the practice. The total loss to workers likely amounts to many billions more.

How do businesses try to get away with wage theft?

“We usually see wage theft when payments don’t match up to hours,” explains Daniel Altman, chief economist at Instawork. “For example, a business might try to classify legitimate overtime hours as something else. It might also understate the hours worked by deducting time for breaks that a worker may not have taken, or expecting a worker to complete tasks when they weren’t on the clock.”

Employers are more easily able to disguise their encroachment into workers’ off-hours — especially that of hourly employees — with the rise of working from home and smartphones.

“A worker may check emails when ‘off,’ providing effectively free labor to their employer,” says Konecky. “An employer may be making these types of free productive periods easier by putting email or team chat software on employees’ phones, or giving hourly workers phones with these apps.”

Some employers wise to the threat of litigation may even attempt to cover their backs in advance.

“Many employers have trended toward making their employees sign arbitration agreements as a condition for getting or keeping their jobs,” explains Konecky.

“These forced arbitration agreements purport to require employees to bring any disputes before a private arbitrator, rather than a judge in court, and typically prohibit employees from participating in class actions,” he adds. “In a class action complaint, one worker can represent all those harmed through wage theft. The hope for many employers is that this will prevent employees from joining together to enforce their rights.” It’s important to note that not all “forced arbitration” clauses are enforceable, so you should speak to an employment attorney to review your case.

Are some workers more vulnerable to wage theft than others?

In general, workers are exploited more when they have little bargaining power and are unaware of their legal options for fighting back.

“Undocumented workers and people working informally are at the most risk, followed by workers who can easily be replaced in a very liquid labor market,” says Altman. “Workers with lower incomes and savings may also have a hard time accessing the legal system. The same goes for foreign workers who may not be familiar with their rights, or might not speak English well.”

Even apparently small instances of wage theft can have a massive cumulative effect over time. A full-time worker earning the federal minimum wage of $7.25 an hour who works an extra 15 minutes “off the clock” before and after their shift every day loses around $1,400 per year. That’s nearly 10 percent of their annual earnings that can’t be used for food or bills — and well over 100 hours of free labor for their employer.

Is anything being done about this?

Following some setbacks, yes. The number of investigators — the people who respond to complaints about wage theft — at the Wage and Hour Division (WHD) in The Department of Labor dropped by nearly 16 percent under the Trump administration. In late January however, the department announced plans to hire 100 new investigators, and it’s expected to take a tougher approach with employers moving forward.

Some states have also been increasing their own deterrents against less diligent employers and companies. Connecticut now requires employers to pay employees back double the amount of any wages stolen, and Minnesota has a law that specifies criminal charges with jail time and fines of up to $100,000 for those who commit wage theft. In Washington, D.C., employers who commit wage theft can be found guilty of a misdemeanor and sentenced to up to 90 days in prison, in addition to a $10,000 fine for each affected employee.

What should I do if I’ve been a victim of wage theft?

First, however you decide to proceed, be sure to keep a record of every instance when you suspect you’ve been a victim.

Then, speak with your manager. A responsible supervisor should sort it out right away, but if they don’t, take the issue to a different manager, or to human resources. Keep records of these interactions too.

If you have no luck within the company, you can file a confidential Department of Labor complaint by calling 1-866-4USWAGE (1-866-487-9243) Monday through Friday, from 8 a.m. to 8 p.m. EST. You should do this as soon as possible, but the department will accept complaints up to two years after you leave the employer in question. You can also file a complaint via the state, which may have stricter labor laws offering greater potential damages, by visiting your state’s official website, and searching for “wage complaint” or “workplace complaint.”

Make sure you have as much information as possible about your employment at the ready, including details about the instances of wage theft. Your employer can’t reprimand you for making a complaint, but a paper trail can help protect you if they try to fire you for some “unrelated” reason in its wake.

If you have the funds, you can also hire an attorney and file a private claim alongside your government claim — but be sure to check first whether your state will allow your legal fees to be reimbursed if you’re successful. Contingency fees can be a useful option for those who may not have the funds but have a solid case.

“With contingency fees, or fee shifting, you don’t need to pay attorneys’ fees or costs upfront,” says Konecky. “Your attorney can recover it as a percentage of the overall recovery, or separately from the employer at the end of a successful case. This applies whether the employee brings the case in court or in arbitration.”