Wage Theft: Know Your Rights and How to Recover

Your employer owes you money. Maybe they shorted your paycheck, skipped overtime, took illegal deductions, or "forgot" about your final wages. This is wage theft - and it's far more common than most people realize. The U.S. Department of Labor's Wage and Hour Division enforces federal wage laws and investigates complaints.

What Counts as Wage Theft?

Wage theft takes many forms. If any of these have happened to you, your employer may owe you money:

• Unpaid overtime: Working over 40 hours without time-and-a-half pay
• Minimum wage violations: Paying below federal or state minimum wage
• Off-the-clock work: Required to work before clocking in or after clocking out
• Tip theft: Employer keeping tips or forcing illegal tip pools
• Illegal deductions: Taking money for uniforms, tools, or register shortages
• Misclassification: Calling you an "independent contractor" to avoid wage laws
• Unpaid final wages: Not receiving your last paycheck after leaving
• Meal and rest break violations: Not paying for required break time

The "Independent Contractor" Trap

Many employers misclassify workers as independent contractors to avoid paying minimum wage, overtime, and benefits. This is often illegal.

You're likely an employee (not a contractor) if:

• The company controls when, where, and how you work
• You use the company's tools and equipment
• You can't work for competitors
• You're paid hourly rather than by project
• The work is a core part of the company's business

Calculate What You're Owed

Overtime Violations

Federal law requires 1.5x your regular rate for hours over 40/week. Some states have stricter rules (daily overtime, double-time, etc.).

Example: You earn $20/hour and worked 50 hours last week but were paid straight time. You're owed: 10 hours × $10 (half-time premium) = $100 for that week alone.

Minimum Wage Violations

Check your state's minimum wage - it's often higher than federal ($7.25). If you're paid below minimum wage, you're owed the difference for every hour worked.

Unpaid Hours

Track all time you work, including:

• Setup and cleanup time
• Mandatory meetings and training
• On-call time when you can't leave
• Travel time between work sites

Your Legal Protections

State Laws Often Provide More

Many states offer stronger protections than federal law:

• Higher minimum wages: Some states exceed $15/hour
• Daily overtime: California requires overtime after 8 hours/day
• Meal and rest breaks: Many states require paid breaks
• Penalty wages: Extra pay for late or missing final paychecks

Retaliation Is Illegal

Your employer cannot fire, demote, reduce hours, or otherwise punish you for:

• Asking about your wages
• Filing a wage complaint
• Discussing pay with coworkers
• Participating in a wage investigation

How to Recover Your Wages

Step 1: Gather Evidence

Collect everything you can:

• Pay stubs (or screenshots if electronic)
• Time records, schedules, and shift logs
• Your employment contract or offer letter
• Text messages, emails about hours or pay
• Personal records of hours worked
• Names of coworkers who witnessed violations

Step 2: Calculate Your Claim

Add up all unpaid wages, including:

• Base wages owed
• Overtime premiums
• Illegal deductions to be refunded
• Penalty wages (if your state has them)

Step 3: Send a Demand Letter

A formal demand letter puts your employer on notice and creates a paper trail. Include:

• Specific amounts owed with calculations
• Time period covered
• Relevant laws violated
• Deadline to respond (usually 10-14 days)
• Statement that you'll pursue legal remedies if unpaid

Step 4: File a Wage Claim

If the demand letter doesn't work, you have options:

• State labor agency: Most states have a wage claim process that's free and doesn't require a lawyer
• Department of Labor: File a complaint with the federal Wage and Hour Division
• Small claims court: Sue directly for amounts within your state's limit
• Private lawsuit: For larger claims, especially if others are affected

Liquidated Damages

Under federal law and many state laws, you may be entitled to double your unpaid wages as "liquidated damages." This means a $5,000 wage theft claim could become $10,000.

You may also recover:

• Attorney fees: The employer pays your lawyer if you win
• Interest: On unpaid wages from when they were due
• Penalty wages: Daily penalties for late final paychecks in some states

Time Limits

Common Employer Excuses (And Why They're Wrong)

"You're salaried, so no overtime"

Reality: Being salaried doesn't automatically exempt you from overtime. You must also meet specific duties tests (executive, administrative, professional) AND earn above the salary threshold.

"You agreed to this pay rate"

Reality: You can't agree to work for less than minimum wage or waive overtime. These rights cannot be contracted away.

"We're a small business, laws don't apply"

Reality: Minimum wage and overtime laws apply to most businesses. Very few employers are truly exempt.

"You were off the clock"

Reality: If they required you to work, you must be paid - regardless of whether you clocked in.

Tips for Specific Industries

Restaurant Workers

• Tip credits have specific rules - employers must make up any shortfall below minimum wage
• Mandatory tip pools cannot include managers or supervisors
• Side work limits may apply to tipped employees

Construction Workers

• Prevailing wage laws may apply on government projects
• Misclassification is rampant - verify your status
• Tool and equipment deductions may be illegal

Healthcare Workers

• Automatic meal break deductions may be illegal if you work through breaks
• On-call time often must be paid
• Donning and doffing time (changing into scrubs) may be compensable