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Aug 22, 2023 | Nancy Chen and April Xu

Wage Theft Prevention: Know Your Rights at Work

Employers have stolen $52 million from people working in restaurants from 2017 through 2021, more than in any other industry in New York, according to an investigation recently published by Documented and ProPublica. What are some common wage theft schemes in restaurants and other industries? This article gives you a reference and aims to help you identify and avoid them. This list below is summarized from information provided by Herrmann Law, Pelton Graham LLC, Lipsky Lowe LLP and McInnes Law LLC.

Also Read: Restaurant Workers Struggle to Recover Wages Stolen During the Pandemic

As a newsroom that serves immigrant communities, Documented has written a comprehensive guide for New York immigrants. This article is part of Documented’s series on workers’ rights and wage theft.

1.     Paying less than minimum wage

The federal minimum wage for covered nonexempt workers is $7.25 per hour effective July 24, 2009, which is established by The Fair Labor Standards Act (FLSA).

For employees regularly receiving over $30 per month in tips, employers must pay them $2.13 per hour. However, employers must make up the difference if the amount of tips plus the $2.13 is less than $7.25 per hour.

The New York state-level minimum wage is $15 per hour for New York City, Long Island and Westchester residents, and $14.20 for the residents in the remainder of the state. The minimum wage for home care aides is $2 per hour above the basic minimum hourly rate.

Any employers who don’t pay according to the minimum wage are engaged in wage theft.

2.     Stealing tips

FLSA prohibits employers from keeping employees’ tips under any circumstances. Managers and supervisors also cannot keep employees’ tips, including through tip pools.

Drew N. Herrmann, a lawyer advocating for workers’ rights at Herrmann Law, explains that it is illegal for employers to take a portion of employees’ tips or charge an “administrative fee”. The tip pool scheme where employers retain a portion of tips and thus fail to distribute all the tips from the pool to other workers is also unlawful.

3.     Failure to pay or miscalculating overtime

The federal and state law requires that the employer pay the employee 1.5 times the worker’s regular rate for each hour beyond 40 hours in a week. Failure to pay this premium pay constitutes wage theft.

Herrmann points out that all compensation, including “bonuses, commission payments, reimbursements, inventive payments, pier diems and any other type of compensation”, should be included while determining an employee’s rate of pay to calculate overtime pay. This is applicable “even if the bonus is paid at the end of the year or at the end of some shorter amount of time designated by the employer for bonus pay.”

It is also possible that the overtime rate of pay varying from week to week if the employee has multiple components (for example, regular rate of pay, tips and gratuities) to their wages.

4.     Employee misclassification

Employee misclassification happens when a worker is hired as an independent contractor when he or she should be an employee. Employers may use this strategy to avoid complying with minimum wage, overtime pay, social security, tax withholding and more. It often occurs in gig economy.

“Economic reality test” is often applied to determine the employer-employee relationship. DOL has listed seven important factors that are taken into consideration when evaluating the case. Again, no single factor is determinative.

5.     Unpaid internship

Some employers try to take advantage of interns by exploiting interns’ production without paying them. The U.S. Department of Labor has developed seven criteria as part of the “primary beneficiary test” to determine whether an intern should be treated as an employee entitled to minimum wage and overtime pay.

Note: The “primary beneficiary test” is flexible, meaning that no single factor in determinative. Courts may assess the case based on its unique circumstances.

6.     Failure to reimburse employees’ expenses

Lipsky Lowe LLP explains in an article that employees sometimes may use their personal money to pay for business-related expenses, including but are not limited to gas, insurance, meals during business trips, telephone costs, office supplies and uniform costs. New York State explicitly requires employers to compensate employees for these costs.

7.     Meal breaks

Under FLSA, employers are not required to provide meal or rest breaks. If they do, however, breaks that are less than 20 minutes should be compensated. Meal breaks over 30 minutes are not compensable.

New York State laws require employers to provide workers a meal break, but not rest breaks. The length of the break allowed and compensated depends on whether the workers is in factory or non-factory industries and how long his or her shift is. You can check out the details on NYS DOL’s Guidelines for Meal Periods.

You can also check out Lipsky Lowe LLP’s article about New York State regulations on breaks for homecare aides, breastfeeding and people in factory, retail and hospitality services.

You can visit NYS DOL’s website for frequently asked questions on wages and hours.

If you suspect you have encountered wage theft, please call fill out this form (which may remain anonymous) or call 888-469-7365.

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