Wage theft is the illegal withholding of wages or the denial of benefits that are rightfully owed to an employee. Examples include the failure to pay overtime, failure to pay minimum wage, employers taking illegal deductions from employees’ pay, employees working off the clock, and, at its most extreme, employers not paying their employees at all. Wage theft is common among low-wage workers because these workers generally lack the resources to protect themselves from abusive employers and to assert their rights. Immigrant workers are uniquely vulnerable because their employers often illegally threaten to report them to immigration authorities after affected employees complain.
In the United States, the Fair Labor Standards Act (FLSA) prohibits wage theft; however, the U.S. Department of Labor estimates that about 70% of employers are noncompliant. Workers are robbed between $40 and 60 billion each year, which exceeds the total amount stolen through robbery, burglary, larceny, and auto theft combined, making employers the number one perpetrators of theft in the United States.
The FLSA protects employees from wage theft in all forms and requires employers to keep time records of their employees. Regardless of how small and voiceless a worker may feel going against large, powerful corporations, the FLSA exists to empower workers to bring claims against noncompliant employers and preserves their right to earn a fair living.
In Peralta v Paramount Citrus Cooperative, agricultural workers commenced an action against Paramount Citrus Cooperative (PCC), the United State’s largest fresh citrus grower, accusing PCC of a variety of FLSA violations. PCC paid its agricultural workers piece-rate compensation based on the number of citrus bundles they harvested. This payment scheme resulted in workers being paid less than minimum wage for hours worked at the piece-rate, and not being paid at all for hours they had to wait for work, carry equipment, and travel to and from work sites, and breaks. In addition, PCC released many workers at the end of the season without paying them at all.
Although piece-rate compensation is a legal way to pay employees, employees paid on a piece-rate basis are not exempt from the various requirements of the FLSA, including minimum wage, overtime, and record keeping obligations. Piece-rate compensation schemes are often used in circumstances where the time it takes an employee to complete a task is not relevant; however, this methods should only be used if the employee does not work more than forty hours in a workweek and the employee’s total compensation for the week averages at least the applicable minimum wage.
Employers frequently violate the law by failing to understand the requirements the FLSA imposes. If you believe your employer has discriminated against you with regard to wage theft, please contact The Harman Firm, LLP.