Wage theft: What it is and how it works

In the six years between 2009 and 2014, 193 Cincinnati employers were found to have violated the Fair Labor Standards Act (FLSA). The six-year total of minimum wages, overtime wages, and civil monetary damages recovered across those cases was $3,679,911. More than 6,000 workers were affected.*

“Wage theft occurs when employers refuse to pay promised wages, pay less than the minimum wage, fail to pay for all hours worked, or don’t pay overtime compensation as required by law,” according to Policy Matters Ohio.

[RELATED: What is a fair wage?]

Employee misclassification

Wage theft happens across multiple sectors, ranging from construction to restaurants to retail (and more). One common way in which employers manipulate the system and pay workers less than they’re due is through employee misclassification. 

Many employers game the system by misclassifying part- or full-time workers as independent contractors. An independent contractor is “in business for themself, can increase profit through business decisions…decides how and when they will perform the work” in addition to other considerations. Some employers classify workers as independent contractors but still have expectations that they work on the employers’ terms.

Those who are misclassified as independent contractors “may be denied benefits and protections to which employees are legally entitled.” That could include not having the right to minimum wage or overtime pay, workers’ compensation, and more.

Subcontracting can hide wage theft

In 2022, the Department of Labor’s Wage and Hour Division recovered more than $32.9 million in back wages for construction employees, making it the industry in which wage theft is most likely to happen. Low wage, high violation industries in 2023 included (in order according to amount of back wages recovered) construction, health care, and food services. 

Subcontracting, a process that’s common in the construction industry, “…can obscure legal and ethical responsibility for the consequences of wage theft,” according to an article on ConstructionDive. Some companies underpay, don’t pay overtime, or require unpaid work hours for their subcontractors “as part of their business model.” 

Other types of wage theft

There are countless ways for employers to attempt to work around the FLSA. Those tactics include (among others):

• Meal break violations: These can take many forms, but include not allowing breaks at all or requiring employees to do work tasks during unpaid breaks
• Time theft: This could include not paying for training or considering certain tasks to be necessary but unpaid (e.g. requiring workers to arrive at 15 minutes before their shift begins but not paying the worker for that time)
• Unpaid overtime: An employer may misclassify a worker as exempt to avoid paying them overtime—or they may not pay at the required 1.5 times the worker’s regular hourly rate for overtime

Wage theft violations can be difficult for any worker to address. Workers may fear retribution. But, wage theft affects immigrants disproportionately.

*Source: The History of Wage Theft in Cincinnati 2005-2016, prepared by Cincinnati Interfaith Workers Center