Waging War Against Wage Theft

Though the Fair Labor Standards Act, which established a federal minimum wage, regulations on child labor, and overtime pay, was enacted in 1938, Aaron Johnson is struck by how often employers continue to violate basic labor laws nearly 100 years later.

“You’d think over the years that employers would learn, ‘OK, here are the rules’ and just do it,” says Johnson, an employment attorney at Fair Labor Law in Austin. “But it’s a problem that persists. There are always employers who outright flout these wage laws or look for ways to stretch the boundaries.”

Blue-collar hourly workers are especially susceptible, says Michael Josephson, an attorney at Josephson Dunlap in Houston who does class and collective actions for workers cheated out of overtime pay. “They’re the ones usually most in need of their jobs and less likely to complain about pay practices.”

Johnson says a frequent issue is employers failing to pay for certain parts of the workday—for instance, when an employee has to work through a lunch break or detours en route to a job site to retrieve a company truck and tools.

“This happens a lot with the most vulnerable workers,” Johnson says. “That’s where we see the most blatant violations—like a company saying ‘We don’t pay overtime around here.’”

Josephson says some salaried employees, such as assistant store managers, are often misclassified and wind up exempt from overtime pay. “The company has treated them as exempt, but in reality, they’re overtime-eligible,” he says. “They don’t really have discretion or exercise judgment in their job, but because they’re called a manager and paid a salary, they don’t question whether they should be paid overtime.”

Independent contractors are another form of misclassification. “That’s a big issue right now,” Josephson says. “They might work for a company for years as a contractor and do the same things employees do, but because the company has designated them as independent contractors, they’re cheated out of benefits and overtime compensation.”

Johnson says wage fraud usually isn’t hard to miss, and cites as examples hours shaved off a paycheck to avoid overtime, or overtime hours that aren’t time and a half. 

Josephson suggests employees be extra diligent when checking pay stubs and other paperwork. “Ask questions,” he says. “Call a lawyer or the Department of Labor. But don’t sit back and let your rights be violated. Be proactive.” 

As for internal processes like HR? “There’s nothing wrong with trying to use whatever processes exist internally,” Josephson says. “But know the person you’re trying to get help from is not your buddy. They’re looking out for the company’s best interests.”

In addition to ascertaining whether a situation involves illegal practices, Josephson says, a lawyer can take steps to ensure a company doesn’t destroy evidence. It’s also important to initiate any lawsuit within the statute of limitations, since federal law gives employees only three years to claim back wages.

“The longer an employee waits to recover unpaid wages, the less recovery they’ll make,” Josephson says. “A lot of times employers know the clock is ticking and will take steps to delay answering questions or resolving the issue.”

Generally, Johnson says, lawyers take such cases on a contingency basis, recovering fees and perhaps a percentage only if the employee wins the case. Most state and federal wage laws, he says, include provisions requiring employers found at fault to pay not only back wages and damages but attorney’s fees.

He recommends keeping records such as pay stubs, time cards, or screenshots of timekeeping apps. Keeping your own notes is also worthwhile, he says.

“People shouldn’t be afraid to talk to a lawyer if they don’t have those records,” Johnson says. “The company is required to keep accurate records of time and pay. Workers often succeed in wage cases just using their best estimate.”

Aside from making sure companies act responsibly going forward, Josephson says fair wage cases uphold an American ideal. “In a world where employees don’t have a lot of rights, being paid overtime when you work more than 40 hours a week is the exception,” he says. “Everybody recognizes that you should be paid fairly for the work you perform.”

A Thousand Cuts

Attorneys say the most common wage theft cases fall into these areas: 

• Employers not paying for time worked
• Employers calculating overtime at the incorrect rate of pay
• Employers misclassifying workers as exempt employees