Wage Theft

Wage theft is simple: an employer takes money that belongs to an employee. The schemes to do so, however, can be complex. The attorneys at Migliaccio & Rathod LLP are experienced at seeing through smoke and mirrors to hold employers accountable when they break the law. The firm has recovered millions of dollars in wage theft suits on behalf of their clients.

Please contact us for a free consultation if you believe you have been a victim of wage theft. Some common wage theft schemes are below:

Misclassification. Federal law (and often state law) state that employees should be paid time and a half for hours worked over 40. There are some exceptions, but employers often stretch the bounds of these exceptions and break the law in doing so. For example, one exemption to paying overtime is if an employee is an “executive.”  Some employers will claim this exemption by labeling an employee a “manager” and making him or her work long hours, even though the primary duties of the job are actually more similar to that of hourly employees. In such instances, the employee may be misclassified as exempt and therefore entitled to overtime pay at a rate of time and a half.

Unpaid Off the Clock Work.  Some employers may make employees work off the clock such as by doing work before a shift begins, after it ends, or during unpaid breaks.  Employers may also not pay not for certain work such as safety meetings, traveling to work sites, and other preparatory work. This is usually unlawful.

Tip Credit Violations.  The minimum wage for tipped employees is $2.13 and is even higher in some states. In order for a business to pay a tipped employee a cash wage lower than the standard federal minimum wage of $7.15, several qualifications must be met. If an employer fails to meet just one of these requirements, the employee is entitled to the federal minimum wage, in addition to tips they might receive.

Common violations include:

  • tip credit claimed by the employer exceeds the actual amount of tips received
  • tips are retained by the employer instead of the employee
  • the inclusion of non-tipped workers in a tip pool
  • paying an employee a tip wage when over 20 percent of his or her job involves tasks that do not normally receive tips.

Improper Use of Independent Contractor Status

The FLSA’s minimum wage and overtime provisions only apply to employees. Independent contractors are not employees and therefore not subject to the benefits of the FLSA. Just because your employer calls you an “independent contractor,” though, does not make you one.  In general, these are the guidelines to determining whether or not a worker is an employee:

  • the worker is integral to the employer’s business, it is more likely that the worker is economically dependent on the employer and less likely that the worker is in business for him or herself
  • the worker exercises managerial skills that affect his or her opportunity for profit and loss
  • the worker makes some investment to indicate that they are an independent contractor
  • the worker’s skills demonstrate that he or she exercises independent business judgment.
  • permanency or indefiniteness in the worker’s relationship with the employer suggests the worker is an employee
  • degree of control by the employer. An independent contractor generally works free from control by the employer.

Many times someone called an “independent contractor” is actually not one and therefore entitled to minimum wage and overtime guaranteed by the law.

Half-Time or Fluctuating Work Week Violation

The general rule of thumb is that for every hour worked over 40 in a week, a worker should be paid time and a half (or 1.5) times his or her regular rate of pay, even if the worker earns a salary. Some employers, however, will pay employees a set weekly salary but just one-half (0.5) of their regular rate so that the workers actually make less for hours worked over 40. This can be a lawful exception to the general rule but only if some very strict criteria are met:

  • the employee must work hours that fluctuate from week to week
  • the employee must be paid a fixed salary that serves as compensations for all hours worked
  • the fixed salary must be large enough to compensate the employee for all hours worked at a rate not less than the minimum wage
  • the employee must be paid an additional one half of the regular rate for all overtime hours worked
  • there must be a “clear mutual understanding” that the fixed salary is compensation for however many hours the employee may work in a particular week, rather than for a fixed number of hours per week.

It is often the case that there is a lack of “clear mutual understanding”, violating the FLSA and giving employees a basis to seek compensation for underpaid overtime.

Straight Time for Overtime

Unless specifically exempted, the FLSA requires employers to pay employees one and one-half times their hourly rate for each hour beyond 40 in a workweek. Paying workers a straight-time rate for overtime violates the law.

Current Cases

Overtime Pay for Operators at Sabre Energy. Field Operators at Sabre Energy have filed a class and collective action suit against Sabre Energy in the Northern District of New York. They allege that many weeks Sabre made them work long hours but did not pay them overtime.

Missed Meal Breaks at MedStar Hospitals. Nurses and other hourly employees have filed a collective action suit against MedStar and several of its hospitals in the Washington D.C. metropolitan area, alleging that they were made to work through their meal breaks without compensation.

Tipped Minimum Wage Violations at IHOPs Operated by CFRA. Servers at IHOPs operated by franchisee CFRA have filed a collective action suit in the Middle District of North Carolina, alleging that they were paid a tipped minimum wage of $2.13, or sometimes $1.59, an hour but made to perform excessive side work (cleaning the restaurant, refilling condiments, stocking materials and similar tasks) that do not earn tips.    

Overtime Pay for Equipment Operators at Stingray Pressure Pumping. Equipment operators have filed a class and collective action lawsuit in the Federal District Court of the Southern District of Ohio against Stingray Pressure Pumping. They allege that they had to work long hours but did not receive overtime pay.

Overtime Pay for Assistant Managers at Kmart. Softline and Hardline assistant managers at Kmart have filed a nationwide collective action, and state-based class actions, alleging that they were not paid overtime for hours worked over 40 in a week. They allege that although Kmart classified them as exempt under the “executive” exemption to the FLSA, their primary duty was far from managerial and, instead, involved mostly manual labor.

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