A new type of wage and hour legislation is gaining steam around the country. Although you may not be familiar with the term “wage theft,” chances are good that you’ll be hearing more about it soon. What is wage theft? Generally, the term refers to an employer’s failure to pay wages when they are due and in compliance with legal wage rates. In the past year, multiple cities, counties, and states around the country have enacted their own laws to enforce wage and hour provisions.
This is important because these new laws usually cover smaller employers that might not otherwise be subject to the requirements of the federal Fair Labor Standards Act (FLSA). In addition, these state and local laws often impose wage and hour requirements that are more stringent than federal law. For example, Miami-Dade County (Florida), enacted an ordinance in February 2010 that requires employers to pay wages due no later than 14 calendar days from the date the work is performed, unless modified by an express agreement with the employee.
As an employer, you should carefully review your pay practices and be sure that your classification of workers meets current legal requirements. Increased wage and hour enforcement from the federal government is already underway, and state and local governments are joining in by enacting their own wage theft laws.
Maryland, Iowa, New Mexico, and Delaware enacted wage theft laws in 2009, followed by Washington in 2010. Miami-Dade County, San Francisco, Los Angeles, and New Orleans have or are considering local ordinances dealing with wage and hour provisions.
This issue has gained some attention in Texas. In November 2009, advocates in Austin, Houston, and El Paso planned educational or protest events as part of a National Day of Action called by the Wage Theft Online Resource Center.
A 2009 study, “Broken Laws, Unprotected Workers,” concluded that approximately 68% of the workers surveyed were denied overtime pay and were often paid less than minimum wage on a routine basis. In addition, the researchers estimated that wage and hour violations cost the average low-wage worker more than 15% of yearly earnings. The study was conducted by researchers from the University of California-Los Angeles, University of Illinois-Chicago, Cornell University, Rutgers University, and the National Employment Law Project (NELP).
Recent announcements from the IRS and Department of Labor indicate that these agencies also see wage and hour compliance as a significant problem. Both agencies are stepping-up enforcement of federal laws designed to protect workers, specifically those who may be misclassified as exempt from overtime pay and workers who are treated as independent contractors rather than employees. The Department of Labor’s “Plan, Prevent, Protect” and the “We Can Help” campaigns, both announced in April, are clear indications that employers should be prepared for increased scrutiny of pay practices.
