Wage theft is a controversial topic.  Sometimes companies claim that there is a good reason to deduct amounts from pay, such as the costs of breakage or cahier shortages from paychecks, or to call workers “assistant managers” or “professionals” to deny them overtime even though they are working the cashier and stocking shelves, or to use “rules” to “split tips” or create “tip pools.”

Both federal and state authorities, however, have pledged to fight wage theft.  Many courts, including the Supreme Court and New York Court of Appeals, have struck blows against tactics that large employers have used to justify deductions from or denials of pay.  The New York Commissioner of Labor has released a Minimum Wage Order for Miscellaneous Industries and Occupations stating, among other things, that deductions from pay in order to cover cashier shortages, breakage, rule violations, misconduct, and the like are illegal.

But how does New York labor law empower workers to combat wage theft, in practical ways?

Late payment (payment other than weekly or biweekly)

One of the trickier forms of wage theft is delayed payment of wages.  This denies the worker the full benefit of their pay, as they must suffer from loss of the time value of their money, and experience such evils as high-interest loans, late fees, and lost opportunities to enjoy life.  The federal government passed an Eight Hour Law in the wake of the U.S. Civil War in 1868.  It limited the working day for federal contractors or certain government employees to eight hours while mandating weekly payment for mechanics and workingmen.  Courts distinguished between managers and engineers on the one hand, and mechanics or laborers on the other.  In 1964, the Copeland Act required federal contractors and subcontractors involved in infrastructure and so on to pay their mechanics and workingmen once a week, rather than every two weeks or once a month.  New York has a law going back a century or longer requiring weekly pay of mechanics and workingmen.  A mechanic is literally someone who works with a machine, like a driver. 

Wage theft by paperwork

The Wage Theft Prevention Act (WTPA) passed in 2010.  Governor Andrew Cuomo signed the legislation after a public relations campaign insisting that workers would finally get paid what they were promised or guaranteed by law, without so many loopholes and technicalities.  The law amended the New York Labor Law to require clearer written notice of hourly rates, and written updates regarding substantial changes to the hourly rate, terms, conditions, or deductions.

The WTPA amended Labor Law section 195.3 to require a very complete wage statement that either should inform an employee why his or her wages have not been stolen, even in part, or that will provide vital evidence – in the form of false reports – regarding why a worker was underpaid.  The statement must cover “the dates of work covered by that payment of wages; name of employee; name of employer; address and phone number of employer; rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or other; gross wages; deductions; allowances, if any, claimed as part of the minimum wage; … prevailing wage supplements, if any, claimed as part of any prevailing wage or similar requirement pursuant to article 8 (Public Work); and net wages.”  In instances where overtime wages are relevant, among other instances, the employer must keep records that “include the regular hourly rate or rates of pay, the overtime rate or rates of pay, the number of regular hours worked, and the number of overtime hours worked.”  For all employees, payroll records including rates of pay, deductions, sick leave provided to each employee, and hours worked must be retained by the employer for six years and be “true, and accurate.”

Workers may complain to the Department of Labor or pursue private lawsuits where available.  They are entitled not to be retaliated against for asserting the protections of the Labor Law or the WTPA.  If they are fired or disciplined after asserting wage theft rights, they may get the pay and benefits they lost plus a penalty where applicable.  Some workers will have up to six years to sue for wage theft, a period of time that matches the employer’s obligation to keep accurate records.

Wage theft is also made subject to fines against employers, loss of employer licenses to do business, or enforcement by the Attorney General’s office.  The Department of Labor may also order employers to give stolen pay back to employees, as well as additional (liquidated damages) or civil penalties.  

Wage theft by unfair scheduling

Unfair scheduling is the irregular, last-minute scheduling of shifts.  It denies workers a fair opportunity to plan how to achieve overtime pay, or credit towards promotion related to good attendance etc.  The Fair Workweek Law’s regulations state that in New York City, employees of retailers, and fast food and utility safety workers, deserve notice of their schedule 14 days in advance, regular schedules, a right to decline extra or irregular work, a chance to see new shifts or opportunities before they are given to new workers, and protection for unfair cuts in hours.

Misclassification of assistant managers, professionals, and administrative staff

Section 160 of the Labor Law is about overtime pay.  Overtime is pay at a rate of one and one-half times the usual rate, for hours in excess of 40 per week or eight per day, depending on the circumstances.  New York law and a federal law called the Fair Labor Standards Act are intended to ensure higher standards of living and protection of persons working very long hours from exploitation.  An ordinary work day is eight hours, historically speaking.  A shift of more than 10 hours, or a split shift, is often called a spread of hours issue, which is different but also involves a higher than normal rate of pay given the number of hours worked.

Both New York law and federal law recognize exemptions from overtime.  One of the most obvious is someone who is not even an employee but a founder and shareholder.  Less obvious are the high executives, like CEO and CFO.  In a similar category are professionals like lawyers and educated engineers.  More controversial but also potentially exempt are outside salespersons, administrators, assistant managers, religious ministers, taxicab drivers, and students of various kinds.

Misclassification involves calling a worker who is not truly an executive or an outside salesperson, for example, by such a name, in order to avoid paying overtime, or having that effect on the worker anyway.  A worker who has been misclassified to be paid a salary and denied overtime, if his or her duties in reality involve more front-line work and not so much professional training or managerial control, may be entitled to back pay, liquidated damages, attorney’s fees, and other remedies.  

Banquet and party workers

Sometimes, banquet halls, wedding or party venues, and caterers bill customers for a service charge that simply goes in the pocket of management or the company.  This may trigger laws relating to worker wage theft and accurate advertising and billing of customers.

Misleading internship positions

Some young people in particular respond to advertisements or solicitations to be trained by experts in the field, in a practicum or apprenticeship of sorts.  Sometimes, these workers experience a bait and switch, find themselves doing menial tasks, and find little educational or professional training to be had, contrary to what was advertised.  It may be that a clear or implied promise is made to hire an intern in the financial industry full-time, later on – as a broker, an analyst, or a trader.  In certain cases, unpaid or poorly-paid internships may involve misclassification, denial of minimum wage or overtime, or wage statement and WTPA issues.

Nest steps

If you believe that wage theft may have occurred in your workplace, you may benefit from consulting an attorney. It is important to know your rights when it comes to wage theft, pay statements, and payroll.  A free consultation can help you understand your rights and take action to protect them, including by contacting human resources or the government.