Wage Theft: Salary, Tips, Commissions, Bonuses, and Stock Grants

The FLSA offers detailed guidance on how to count tips, commissions, bonuses, and other forms of compensation in relation to calculating a worker’s “regular rate” of pay. This is significant, because employers may unlawfully choose to exclude these forms of compensation when calculating overtime, which is mandated to be provided at one-and-a-half times an employee’s regular rate of pay. If your employer is not paying you overtime based upon all your compensation, then it may be violating the law.

Falsifying Time Records

It is unlawful for employers to alter time records in an effort to pay employees for fewer hours than they actually worked. Such falsification, or time shaving, violates state laws requiring employees to be paid for all hours worked, as well as overtime laws when the employees are working over 40 hours a week.

Paying Less Than Minimum Wage

Employers are generally required to pay their employees no less than the federal minimum wage of $7.25 per hour, or $2.13 per hour for tipped employees. However, if you work in a state with a higher minimum wage than the federal rate, you are entitled to receive your state’s minimum wage. Employers who pay less than these mandated amounts are violating wage and hour laws.

Illegal Deductions from Employees’ Pay

Taking unauthorized deductions from employees’ wages is another common violation of wage and hour laws. These illegal deductions can include charges for uniforms, tools, or other business-related expenses that should be covered by the employer.

Requiring Employees to Foot Business Expenses

As noted above, some employers improperly require their employees to cover business expenses out of pocket. These expenses might include costs for uniforms, tools, travel, supplies, or equipment necessary for performing job duties.

Failing to Provide Meal and Rest Breaks

Many states require employers to provide employees with meal and rest breaks. One of the states with the strongest requirements, California, mandates that employers offer workers a 30-minute meal break for every five hours worked, and a 10-minute rest break for every four hours worked.

Not Issuing Accurate Pay Statements

Accurate pay statements are essential for transparency between employers and employees regarding wages earned, hours worked, and deductions made. Employers who fail to issue accurate pay statements run afoul of the laws in numerous states.

Reporting Pay

“Reporting pay” refers to the compensation that must be provided when an employee reports for a scheduled shift but is sent home early because of lack of work or other reasons beyond their control. These laws, written at the state level, are designed to protect workers’ income stability, and this field of law is still evolving. However, an employer’s failure to provide reporting pay when required constitutes a violation of labor regulations.

Retaliation for Reporting Wage/Overtime Violations

When employers punish employees for asserting their rights under wage and hour laws — such as complaining about unpaid wages or overtime violations — by demoting them, reducing their hours, terminating employment, or other adverse actions, it is considered retaliation. This is prohibited under both federal law (FLSA) and various state statutes aimed at protecting workers’ rights.

Failure to Maintain Accurate Time Records

Employers are legally obligated under the FLSA and many state laws to maintain accurate records of all hours worked by their employees. Failure to do so makes it difficult for employees to verify that they have been paid correctly for all hours worked – including overtime – and constitutes a serious breach of labor regulations.

Forcing Employees to Work Off the Clock

Having employees perform work duties off the clock – without recording their hours worked – is an illegal practice. This includes tasks performed before clocking in or after clocking out, such as setting up equipment or shutting down operations at the end of a shift.

Denying Overtime Pay

Under the FLSA and state laws, nonexempt employees must be paid one-and-a-half times their regular hourly rate for any hours worked over 40 in a single workweek. Some employers attempt to pay employees at their regular rate, or straight time, for their overtime hours. Other employers refuse to pay for work performed because the overtime hours were not “approved.” Still other employers misclassify employees as exempt under the law and refuse any excess pay for working over 40 hours in a week. Denying employees full overtime pay is a clear violation of federal law as well as many state-specific labor statutes designed to ensure fair compensation for extended working hours.

Inaccurate Calculation for Overtime Pay Owed

Inaccurate calculations of overtime pay owed can occur when employers misinterpret how overtime should be calculated – often resulting in underpayment. Proper calculation involves including commissions, non-discretionary bonuses, and other forms of compensation in determining an employee’s regular rate before applying the time-and-a-half multiplier required by law.

Averaging Work Hours Over More Than a Week

Some employers illegally average an employee’s work hours over multiple weeks instead of calculating overtime on a weekly basis as required by FLSA regulations. This practice dilutes actual overtime owed by spreading extra hours across several weeks rather than compensating appropriately within each individual week where more than 40 hours were worked.