There are members of Congress who believe that many employers commit something called “wage theft.”
Wage theft sounds ominous. I picture some fat-cat company owner intentionally purloining money from an employee’s paycheck and re-depositing it into some company slush fund.
But it’s more than that.
A prior version of a bill called the Wage Theft Prevention and Wage Recovery Act” claims that wage theft also includes “misclassifying employees as being exempt from overtime compensation or as independent contractors rather than as employees,” regardless of criminal intent, which the word “theft” would seem to imply.
Nomenclature aside, this bill has returned in 2023 with a focus on “deterring and punishing” businesses that violate federal wage and hour law, any which way.
It begins innocuously enough by requiring employers to provide employees an initial disclosure of the terms of their employment and regular paystubs to all employees.
The bill would create a civil penalty of $1,000 for an employer’s initial violation of the FLSA’s recordkeeping provision (and $5,000 for each repeated or willful violation).
Employers would also need to pay final paychecks within 14 days of separation or by the payday for the pay period, whichever is earlier, or the delinquent employer must continue paying the terminated employee’s wages for up to 30 days.
But the penalties ramp up from there.
If an employer violates the Fair Labor Standards Act now, it will owe back wages and potentially liquidated damages equal to the wages owed. This wage theft bill would raise the total bill to triple the wages owed plus interest.
Workers fired by their employer as retaliation for filing a complaint concerning wage theft or cooperating with a DOL investigation — I neither recommend nor condone this — would be entitled to increased damages: quadruple the owed wages, plus interest assessed on the original owed wages.
The bill would also enable employees to pursue collective action cases like in most class action cases, in which members of the “class” must affirmatively “opt-out” of the case in order not to be involved (rather than “opt-in”). It would also do away with arbitration and class action waivers. Plus, employees would have four years (rather than two) to assert their claims, with a five-year statute of limitations for willful violations (was three).
The Chamber of Commerce has previously blasted a prior version of this legislation as a way to “promote expensive class action litigation that does little to help businesses and employees” and “benefit the attorneys who file class action lawsuits.”
Call it what you will; wage and hour violations are costly.