Stop, Thief! Wage-related FLSA Violations and the Consequences | DCR Workforce Blog

Stop, Thief! Wage-related FLSA Violations and the Consequences

Both New York and California are among the US states that have enacted laws against wage theft, threatening stringent punishments and dire consequences. However, a recent study of 2011 workforce data for the two states, done by the Department of Labor (DOL), has turned up the fact that between 3.5 and 6.5 percent of all the wage and salary workers in California and New York are being paid less than the minimum wage!

That works out to more than 600,000 workers suffering minimum wage violations in these two states, amounting to a weekly loss of wages totaling to nearly $20 million in New York and $29 million in California. The DOL estimates that a similar violation rate in the other states (though none of them have such stringent state-level laws against FLSA violations involving wage theft) would mean that at least 2 million workers across the nation are being paid wages lower than the minimum federal or state wages. Which leads workers to cry: Stop, thief!

Some facts about FLSA Violations

The following facts stand testimony to the significant erosion of labor standards and FLSA compliance.

  • FLSA Violations are most common in industries which already offer low wages, particularly in hospitality (both hotels and restaurants), education, retail and wholesale as well as health services.
  • Younger workers are significantly more likely to fall victim to such practices. Not surprisingly, more women than men fall prey to FLSA violations.
  • Such practices cost the country as it loses the tax that would have been paid on the income.
  • There is an additional burden on taxpayers, as more people find themselves so poor as to be unable to make ends meet and need to depend on food stamps and school breakfast/lunch and other dole outs. Data from the Survey of Income and Program Participation estimates that 41,000 families in California and 26,000 in New York fell below the poverty line because of those violations.
  • Such bad employers put pressure on their competitors to break the law too, to survive the unfair competition.
  • Employees are disengaged and become less productive.
  • The overtime work could makes them careless and prone to accidents due to the fatigue.

Long-established legal standards

What are the established legal standards require of an employer? Check them out.

  • Payment of minimum wages with time-and-a-half for overtime hours and provide regular work hours and breaks.
  • Documentation of all payroll information with an audit trail.
  • Protection for workers’ health and safety.
  • Carry workers’ compensation insurance in case of on-the-job injury.
  • No tip-stealing and getting work off-the-clock.
  • Workers are guaranteed the right to organize and bring complaints about working conditions.
  • No retaliation when workers complain.
  • No discrimination on the basis of age, race, religion, national origin, gender, sexual orientation or disability.

 DOL takes action

The DOL has initiated action against such violators.

  • California-based Sanchez Recycling was ordered by the DOL to pay $113,000 in FLSA penalties, consisting of back wages and damages for paying cash to seven workers, who were denied overtime pay, and for not keeping proper records. Some Sanchez employees were working approximately 65 hours in six days and driving between its different locations without pay.
  • Garcia Recycling, owned by the brother of Sanchez Recycling’s owner, was also made to pay $200,378 for wage violations toward 15 workers.

Other companies fall under scrutiny

Even McDonald’s came under the microscope when an employee, Ms. Salazar, pointed out how her paychecks repeatedly missed a few hours of work time and cheated her of overtime pay, sometimes bringing her overall pay below the minimum wage. Tyson, Target and Walmart are a few other big names (among others) that have been sullied by accusations and lawsuits that accuse them of wage violations, laying them open to FLSA penalties.

Deliberately violating wage laws (whether federal or state) to save on employee costs is a very short-sighted business strategy that will only prove more expensive in the long run and threaten the very survival of the business.

For the right kind of business, that’s not an option that can be considered even remotely. The increasing use of social media for providing anonymous feedback on an erring employer could seriously hurt their brand image as an employer, leaving their open positions forever open…or filled by monkeys which are happy to be paid in food!

Have you seen instances of FLSA Violations at your company?

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.

One response to “Stop, Thief! Wage-related FLSA Violations and the Consequences”

  1. Shelley Luzaich says:

    An old comedian, George Carlin (deceased), had a skit on convoluted words. This reminds me of that skit. If a company steals from an individual by not paying their wages it’s “wage theft;” whereas if a person steals from a company it’s “embezzlement.”

    Not only that – the company caught stealing must give the person back pay and may receive a hefty fine, while the person caught stealing must repay the company and has a good chance of going to prison.

    Interesting how that works out.

Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.