Protecting Your Paycheck

Wage theft—the unfair practice of withholding pay from employees, often by not paying minimum wage or overtime—affects millions of workers to the tune of billions of dollars in the U.S. each year, according to the Economic Policy Institute. In New York, it’s so widespread that in 2022, Gov. Kathy Hochul announced a crackdown that includes a hotline for victims to report violations; in 2023, Manhattan District Attorney Alvin Bragg Jr. launched a new department to pursue criminal charges against employers accused of the practice.

“Wage theft is a very common occurrence in every industry, sometimes out of ignorance from the employer and sometimes through purposeful mistreatment of employees,” says Darren Rumack, a partner with The Klein Law Group who practices employment law.

Some wage theft can happen in subtle ways. Rumack recently handled a case against coffee shop owners who forced employees to share tips with the manager and kitchen workers, supposedly thinking it would create a more equitable workplace. “That’s illegal under both New York and federal law,” Rumack says. “The manager had control over the employees’ hiring, firing and scheduling. And secondly, he only worked in the kitchen and had no customer contact.”

Kenneth Katz, an employment litigator with Katz Melinger in New York, describes a different type of management faux pas: when a manager-in-name-only, or other misclassified worker, gets saddled with extra, uncompensated hours. “They just are sort of the person to go to if there’s an issue with something in the restaurant for the day. But really, the owner of the business is the one who supervises and controls everything. Because of the [manager] title, they’re claimed to be exempt from overtime.” 

Paying employees under the table can also open the door for wage theft. Rumack recently represented a construction worker who logged well over 40 hours a week but was paid a flat rate in cash. “We filed a lawsuit and resolved the case in mediation where the employee got nearly 100 percent of his backpay claims that day,” he says.

Not surprisingly, wage theft disproportionately affects undocumented workers, who are often afraid to fight back for fear they’ll be fired, demoted or reported to immigration officials. But, says Katz, the offending employer is actually at greater risk. “I’m not sure that the government would care so much that the person is undocumented as much as that you’re paying people off the books and not paying taxes.”

So what can you do to protect yourself against wage theft? And what if your employer refuses to pay you what you’re owed? 

First, keep track of the amounts you receive, and what they should be. You could then try talking to your employer. “In general, that doesn’t usually change things,” Katz admits. “These employers either know they’re not doing it right and aren’t going to change it all of a sudden, or don’t realize they’re not doing it right and aren’t looking to change based on one employee complaining.”

You can also file a request for the New York Department of Labor to investigate. But be prepared for a long wait—up to several years—due to backlog. Another option is to hire an attorney to write a demand letter. Generally, employers take your case more seriously if you have legal counsel. 

If none of this works, the attorney can sue on your behalf or as part of a collective action (similar to a class action) with other underpaid workers. Not long ago, Katz settled a case for $275,000 for a group of 10 restaurant employees. The lead plaintiff, who had one of the stronger claims, walked away with about $60,000 after legal fees. Another, who was living in a homeless shelter, “now has $15,000 that he should have made years ago, which obviously would be significantly helpful for him to get back on his feet,” says Katz.

Most wage theft lawsuits are filed in federal court, partly because the process there tends to move at a faster pace. “The federal judges see enough of these cases that they generally understand the claims very well,” Katz says. “Litigation, if you have a good case, weirdly, is often the fastest way to actually get a resolution. They know how these cases operate and they want them to move to settlement quickly.

“Very rarely do they go to trial,” he adds. “Very rarely, even if you went to trial, does someone lose a case, because [the employer] is usually in clear violation of the law.”