Wage theft is a shockingly common problem in the American workplace. Every year, millions of workers across all industries have their hard-earned pay unlawfully kept from them. In fact, employers are estimated to steal around $15 billion from workers each year just through minimum-wage violations-comparable in scale to nationwide losses from property crime. Wage theft can take many forms, from unpaid overtime to illegal paycheck deductions, and it disproportionately impacts low-wage workers (though more highly paid salaried employees can be victims too). If you’re an hourly worker or any employee not being paid what the law requires, you may be a victim of wage theft. This article will explain five of the most common ways employers steal wages – and how you can fight back to recover your stolen wages.
If you’re experiencing wage theft or suspect your employer is unlawfully withholding your earned wages, it’s time to take action. The Lore Law Firm is here to support your rights and ensure you get what you deserve. Don’t hesitate to contact us for guidance or call us at (866) 559-0400 to confidentially discuss your situation. Let’s work together to secure your financial future.
What Is Wage Theft?
Wage theft is the failure to pay workers the full wages and benefits they are legally entitled to. In other words, anytime an employer shortchanges you on pay – whether by violating minimum wage or overtime laws, making you work off the clock, or similar tactics – they are committing wage theft. This is a serious violation of wage and hour laws that protect employees’ rights. Wage theft can drain thousands of dollars from a worker’s income over time, making it harder to make ends meet. Even “small” instances, like not paying for 15 minutes of prep work each day, add up quickly. Recognizing wage theft is the first step toward stopping it.
According to the Economic Policy Institute, wage theft is pervasive across all industries and income levels – from restaurants and retail stores to construction sites and offices. However, it is especially common in low-paying jobs where employers may assume workers are less likely to complain. The problem is so widespread that one study found 2.4 million workers in just 10 states lost $8 billion in a year due to wage violations, suggesting over $15 billion is stolen annually countrywide. Unscrupulous companies know enforcement is often lax, so they illegally withhold wages expecting not to get caught. Below we break down five common ways employers steal wages and what to watch out for.
1. Unpaid Overtime Wages
One of the most common forms of wage theft is unpaid overtime. Under the federal Fair Labor Standards Act (FLSA), most workers are considered “non-exempt,” which means they must be paid time and a half (1.5 times their regular pay rate) for every hour over 40 in a workweek. Many states have similar laws, and some even add daily overtime requirements. Despite these laws, some employers refuse to pay overtime premiums to save money – effectively stealing those extra wages from employees.
How it happens: Your employer might simply pay you your normal hourly rate for overtime hours, or ask you to “clock out” and keep working after 40 hours. They might wrongly claim you’re “salaried” or exempt from overtime when legally you are not (more on misclassification below). Some employers even average hours over two weeks (for example, 50 hours one week and 30 the next, recorded as 40 each week) to dodge overtime pay – which is illegal. All of these are wage theft tactics.
Unpaid overtime examples include:
● Straight time for overtime: You work 45 hours in a week but only get paid your standard rate for all hours, instead of 5 hours at time-and-a-half.
● Off-the-clock overtime: You’re told to finish tasks after clocking out or before your shift starts, pushing your work beyond 40 hours without overtime pay.
● Hours shaving or averaging: Management alters time records or averages your hours across pay periods to avoid showing more than 40 hours in a single week. For example, recording 42 hours as 40 on a timesheet cheats you out of 2 hours of overtime.
If you’re putting in extra hours, you deserve the legally mandated overtime pay. Unpaid overtime not only violates the FLSA and state laws, it also cheats you out of significant income. (For instance, if your regular rate of pay is $20/hour, 10 hours of unpaid overtime means $100 stolen from you.) Keep careful track of your hours. If your paycheck doesn’t reflect overtime rates for hours over 40, that’s a red flag of wage theft.
2. Off-the-Clock Work
Off-the-clock work is another very common wage theft issue. This happens when an employer expects or allows you to perform work tasks when you’re not “on the clock,” meaning those hours or minutes aren’t being recorded or paid. Any work you do for your employer’s benefit must be compensated – it’s illegal to ask employees to work for free.
How it happens: You might be required to do tasks before clocking in or after clocking out, such as setting up equipment, logging in or out of computer programs, cleaning up, or closing out a register. Some employers automatically deduct meal breaks from hours worked even when you didn’t get to take those breaks (forcing you to effectively work through lunch for free). Mandatory staff meetings or training outside of your paid shift that go unpaid are another example. All of these scenarios mean you’re working time that doesn’t show up on your paycheck.
Working off the clock directly violates wage laws. For instance, if you spend 15 minutes each day preparing before your shift begins, that adds up to over an hour of unpaid work a week (and over 60 hours a year of free labor). Over time, that’s a substantial amount of stolen wages. Off-the-clock work often goes hand-in-hand with overtime theft – for example, being told to finish up after clocking out is both off-clock work and a way to avoid paying overtime. Remember: your workday starts when you begin working and ends when you finish working, not strictly when your scheduled shift says so. If your employer expects tasks outside your recorded hours, they must pay you for that time. You have a right to refuse to work off the clock, or to demand payment if it happens.
3. Employee Misclassification
Some wage theft is subtler, occurring through misclassification of employees. This is when an employer improperly classifies a worker in a way that denies them proper wages – usually to avoid paying overtime or benefits. There are two main misclassification schemes:
● Exempt vs. Non-Exempt Misclassification: Your employer labels you as an “exempt” employee (not eligible for overtime) when your duties do not truly qualify for an overtime exemption. For example, they might give you a managerial title or pay you a flat salary to dodge overtime, even though your job duties don’t meet the legal criteria for exemption. If you don’t actually manage anyone or lack true executive/administrative responsibilities, you likely should still get overtime pay despite being salaried. Simply being paid a salary doesn’t automatically make you exempt from overtime laws.
● Independent Contractor Misclassification: Your employer calls you an independent contractor or 1099 instead of an employee. True contractors are not subject to overtime or minimum wage laws, and employers avoid payroll taxes and benefits. However, if the company controls when, where, and how you work (and you function like an employee), you legally should be classified as an employee, not a contractor. Misclassifying employees as contractors is a very common wage theft tactic – it’s estimated that over 3 million workers are misclassified as contractors when they’re actually employees.
Why it matters: If you’re misclassified as exempt, you might be denied overtime pay or even minimum wage (if on a fixed salary working long hours). If misclassified as a contractor, you could be missing overtime, paid time off, health benefits, and your employer’s share of Social Security taxes. In both cases, the employer saves money at your expense. Misclassification is illegal when used to avoid paying what’s required by law. The FLSA and state laws have strict definitions for exemptions and contractor status – job title alone doesn’t decide it, actual job duties and level of independence do. If you suspect you’ve been given a bogus title or contractor label purely to cut your pay, you can challenge that classification. Companies can be held liable for back wages and overtime for misclassified workers once the truth comes out.
4. Minimum Wage Violations and Tip Theft
Minimum wage violations are a blatant form of wage theft. There is a required minimum hourly wage set by federal law (currently $7.25 per hour under the FLSA) and often much higher minimums under many state or local laws. Employers must pay workers at least the highest applicable minimum wage for every hour worked. Unfortunately, some employers pay less than the law mandates – especially in industries like food service, retail, cleaning, and hospitality. This could be as straightforward as paying, say, $5 an hour under the table when the legal minimum is $7.25, or paying the federal $7.25 when a state law requires $10, for example. Any amount below the legal minimum wage for your jurisdiction is wage theft.
Illegal underpayment can also happen more subtly. For instance, an employer might make you pay for work expenses (uniforms, equipment, gas, etc.) out of pocket without reimbursement. If those deductions effectively push your net pay below minimum wage, that’s unlawful. Similarly, time shaving and off-clock work (discussed above) can cause your average pay to dip below the minimum. All these scenarios violate wage and hour laws.
Tipped workers face a unique wage theft risk. Under federal law, employers can pay a lower base wage (as low as $2.13/hour federally) to employees who earn tips, but only if tips make up the difference to at least the full minimum wage. The employer must ensure the sum of your base wage + tips equals at least $7.25 (or the higher state/local minimum) for every hour. If not, they must make up the shortfall. Wage theft occurs if an employer pays tipped workers below minimum wage and doesn’t cover the difference. Even worse, some employers outright steal tips – confiscating a portion of the tips you earned or running illegal tip pools that share your tips with managers or non-tipped staff. Tip theft is illegal. Tips are the property of the employee who earned them; bosses or owners may never keep employees’ tips under federal law.
Signs of minimum wage or tip violations: If you notice your effective hourly rate (including tips) averages out to less than the legal minimum, you’re being underpaid. For example, if you worked 30 hours and earned $150 in tips plus $2.13/hour base pay (which is $63.90), your total of about $213 is only $7.10/hour – below a $7.25 minimum. Your employer should contribute the difference, but a bad one might not. Also, if managers dip into the tip jar or you’re forced to share tips with non-service staff, that’s unlawful in most cases. Always record your hours, base pay, and tips. Minimum wage and tip laws exist to guarantee a baseline income; when employers flout these laws, they are literally stealing earnings from their lowest-paid workers.
5. Illegal Pay Deductions and Withholding Wages
The fifth common way employers steal wages is through illegitimate deductions or outright withholding of pay. While employers can make certain legal deductions (for taxes, healthcare premiums, etc. with your consent), some take money out of paychecks improperly or fail to pay all that is owed. Here are a few examples:
● Unauthorized paycheck deductions: Your employer docks your pay for things like the cost of a uniform, register shortages, broken equipment, or customer walk-outs. In many cases, such deductions are illegal – especially if they are not agreed upon or if they reduce your pay below minimum wage. For instance, charging a waiter for dine-and-dash customers or making retail staff pay for shoplifting losses is generally not allowed. These tactics shift business costs onto employees, effectively stealing wages.
● “Fees” or deposits for the job: Requiring employees to pay a hiring fee, safety deposit, or training cost can be unlawful. If those come out of your paycheck, it’s likely wage theft unless very clearly permitted by law (which is rare and typically capped).
● Withholding final paychecks: When you quit or get fired, some employers fail to provide your last paycheck or delay it far beyond the legal deadline. Final-paycheck deadlines vary by state-often by the next regular payday, and in some states sooner (especially after discharge). Refusing to pay you for your last days of work is wage theft, plain and simple. This includes not paying out earned vacation or commission if required by state law or contract.
● Bonus or commission tricks: If you earned a commission or performance bonus and met all criteria, that money is part of your wages. Employers who cancel or withhold earned bonuses/commissions without a valid reason (especially after you’ve left the company) may be engaging in wage theft. Always read your commission agreements; if you fulfilled your end and the employer won’t pay, you may have a claim.
● Timesheet manipulation: As mentioned earlier, altering time records to erase hours (sometimes called “time shaving”) is another form of withholding wages. For example, a supervisor might edit your timesheet to cut out a half-hour here and there. That’s effectively a deduction of your earned time, and thus your pay.
If you suspect your paycheck is lighter than it should be, dig into the details. Look at pay stubs for unexplained deductions. Employers generally cannot dock your pay as punishment or to cover routine business costs. When in doubt, ask for an explanation in writing. Illegitimate deductions and withheld wages are not just unfair – they’re illegal, and you have the right to reclaim that money.
How to Fight Back and Recover Your Stolen Wages
Experiencing wage theft can be frustrating and financially devastating, but you are not powerless. Both federal and state laws give employees the right to take action to recover unpaid wages. Here are steps you can take to fight back:
● Document everything: Start keeping detailed records of your hours worked and wages paid. Save pay stubs, timesheets, schedules, tip records, emails – any evidence of the hours you worked and what you were (or weren’t) paid. If you suspect wage theft, write down the specific instances (e.g. “Worked 8am-6pm, but employer only recorded 8am-5pm”). These records will be extremely valuable in proving your case. Remember, under the law it’s actually the employer’s duty to keep accurate pay records, and if they fail to, it can strengthen your claim.
● Raise the issue (in writing if possible): Sometimes wage discrepancies can be mistakes that an employer will fix if brought to their attention. Consider notifying your manager or HR department that you believe you weren’t fully paid. Do this in writing or email so there is a record. Be factual and professional – for example, “According to my records I worked 45 hours last week, but I was only paid for 40. Can we resolve the missing overtime pay?” This puts the company on notice. If they refuse to correct the issue or you sense intentional cheating, it’s time to escalate the matter. (If you fear retaliation, you may choose to skip directly to the next steps; see the FAQ on retaliation below.)
● File a wage complaint with authorities: You can file a complaint with the U.S. Department of Labor’s Wage and Hour Division (WHD) for federal wage violations (overtime, minimum wage, etc.), or with your state labor department if state wage laws were violated. The Department of Labor (and state agencies) can investigate and recover back wages on your behalf in many cases. The downside is that government investigations can be slow and they might prioritize larger group violations. Still, it’s free to file a complaint, and doing so might prompt your employer to pay up once they’re contacted by authorities. Importantly, it is illegal for your employer to fire or retaliate against you for filing a complaint about wage issues – you are protected by law.
● Consult an experienced wage and hour attorney: For many workers, the surest and fastest way to recover stolen wages is to speak with an employment law attorney who has experience in wage and hour violations. An attorney can evaluate your case, help gather proof, and advise on the best course – whether that’s negotiating directly with your employer, filing a lawsuit, or even a class action if multiple employees were affected. The benefit of using a lawyer is that under laws like the FLSA, your employer typically must pay your legal costs if you win. Many wage theft attorneys work on a contingency basis, meaning you pay nothing upfront – they only get paid if you recover your wages. In a successful lawsuit, you can recover all unpaid wages, plus “liquidated damages” equal to those wages (essentially double payment as a penalty), and attorney’s fees. In other words, if you’re owed $5,000 in overtime, you could potentially recover $10,000 plus have your lawyer paid by the employer. This strong remedy is designed to make you whole and deter employers from cheating workers. Don’t be afraid to get legal advice; a reputable lawyer will tell you frankly if you have a case, usually in a free consultation.
● Don’t delay: Wage and hour laws have time limits (statutes of limitations). Under federal law (FLSA), you can typically claim unpaid wages going back 2 years, or 3 years if the violation was willful. Some states allow claims for 3 or up to 6 years of back wages. But if you wait too long, you could lose the ability to recover your money. To be safe, take action as soon as you realize there’s a problem. The sooner you speak up, the sooner you can recover your stolen wages – and possibly prevent ongoing violations.
Fighting back against wage theft might feel intimidating, but the law is on your side. Employers cannot legally retaliate by firing or demoting you for asserting your right to proper pay. Standing up for your rights not only helps you, but also helps ensure your coworkers aren’t exploited in the same way. If you’re unsure about how to proceed, reach out for professional guidance.
Frequently Asked Questions (FAQs)
What are wage and hour violations?
“Wage and hour violations” refer to any failure by an employer to follow laws regulating employee pay and work hours. This includes not paying the minimum wage for all hours worked, not paying required overtime, denying legally mandated breaks or meal periods, requiring off-the-clock work, misclassifying workers to avoid paying proper wages, or illegal deductions from pay. Wage theft is a broad term encompassing many wage and hour violations – essentially, anytime you aren’t paid what you’re owed under the law, it’s a wage and hour violation. Both federal and state laws set wage and hour standards (for example, the FLSA sets a federal baseline, and states can add stronger protections). If your employer is breaking these rules – such as paying below minimum wage or ignoring overtime laws – you are experiencing a wage and hour violation and can take action to recover the pay owed.
What are some examples of unpaid overtime?
Unpaid overtime occurs whenever you work more than 40 hours in a week but do not receive the legally required time-and-a-half pay for those extra hours. Examples include: working 50 hours in a week and only getting paid for 50 hours at your normal rate (instead of 40 hours normal + 10 hours at overtime rate), or getting a fixed salary that doesn’t increase when you put in extra hours, even though your role is non-exempt. Another example is if your boss tells you to finish work at home or on the side (after you’ve clocked out) so that those extra hours aren’t recorded – that is unpaid overtime because you did work that went unpaid. Some employers also try to average your hours over two weeks (say 45 one week and 35 the next, calling it 40 each week) – this cheat means 5 hours of overtime pay disappears. All of these are unpaid overtime examples of wage theft. If you regularly work over 40 hours but never see overtime pay (1.5x rate) on your paycheck, that’s a strong sign you’re a victim of unpaid overtime.
How can I recover stolen wages from my employer?
To recover stolen wages, you have a few options. First, you can file a complaint with the federal or state labor authorities (such as the U.S. Department of Labor’s Wage and Hour Division or your state’s labor department). They can investigate and often will attempt to recover your unpaid wages on your behalf, at no cost to you. Second, you can file a lawsuit against your employer for unpaid wages – either individually or as a class action with coworkers who were similarly underpaid. A lawsuit can be very effective, especially with the help of an experienced wage and hour attorney. As mentioned, the law allows you to recover not just the wages you’re owed but potentially an equal amount in liquidated damages, plus attorneys’ fees, if you win. This makes many employers quick to settle once confronted with a strong claim. In any case, you should gather evidence of the wage theft (timesheets, pay stubs, etc.) to support your claim. It’s often wise to consult an attorney about your specific situation – many offer free consultations. They can advise if your case is worth pursuing and the best strategy to get your money back. Remember, you have a right to recover your stolen wages, and there are legal protections in place to help you do so.
Can I get fired for reporting wage theft?
No – it is illegal for your employer to fire or retaliate against you for reporting wage theft or making a claim for unpaid wages. The FLSA and state laws strictly prohibit retaliation. That means your boss cannot lawfully punish you (firing, demoting, cutting hours, harassment, etc.) because you complained about not being paid properly or filed a labor board complaint or lawsuit. Employers who do retaliate face additional penalties, and you could be entitled to damages for retaliation on top of your unpaid wages. Practically speaking, we know some bad employers might threaten or scare workers to discourage them from speaking up. But if you exercise your rights, the law is on your side. If you suspect retaliation – for example, you complained about overtime pay and suddenly you’re being written up or terminated – document what’s happening and contact an attorney or the labor agency immediately. Retaliation claims can be pursued in court, and remedies can include reinstatement, back pay, and other appropriate damages (which may include compensatory and, in some jurisdictions, punitive damages), if they retaliate willfully. Don’t let fear stop you from seeking your rightful pay. The law protects you for standing up against wage theft.
Don’t Let Wage Theft Go Unchallenged at Work
Wage theft is unfortunately rampant, but you do not have to be a victim in silence. Every worker – whether hourly or salaried – deserves to be paid fully for their labor. Employers who steal wages count on employees being uninformed or too intimidated to take action. By knowing your rights and the common tricks employers use, you can recognize when something isn’t right. If any of the 5 common wage theft scenarios we described sound familiar, take it seriously. You work hard for your money, and every dollar makes a difference.
The good news is that there are clear legal pathways to recover your unpaid wages and even additional damages in many cases. Time is of the essence, so don’t wait. If you believe you’ve suffered wage theft – whether unpaid overtime, missing wages, illegal deductions, or any other violation – reach out for help.
The Lore Law Firm is a national employment law firm that has extensive experience helping workers fight wage theft and recover their stolen wages. Our team has assisted thousands of employees in recouping unpaid overtime, minimum wages, and other earnings from unscrupulous employers. We offer a free, confidential case review to evaluate your situation. You won’t pay anything upfront, and you owe nothing unless we win your case – we work on a contingency fee, aligning our success with yours.
Wage theft can be stopped. Contact The Lore Law Firm today for a free consultation with an experienced wage and hour attorney. We will listen to your story, explain your rights, and help you take the next steps to get the pay you’ve earned. Don’t let your employer pocket money that you are legally entitled to – fight back and get what you’re owed. Your work has value, and we’re here to ensure you receive every cent of it.
If you’re experiencing wage theft or suspect your employer is unlawfully withholding your earned wages, it’s time to take action. The Lore Law Firm is here to support your rights and ensure you get what you deserve. Don’t hesitate tocontact us for guidance or call us at (866) 559-0400 to confidentially discuss your situation. Let’s work together to secure your financial future.
