Wage Theft Laws: What You Need to Know to Protect Your Business

With increasing frequency, states are adopting "wage theft” bills. Because of this, TriNet has made the move to protect our clients by having worksite employees (WSEs) authorize their payroll deductions with us directly.

What is wage theft

Wage theft is the illegal withholding of wages or the denial of benefits rightfully owed to an employee. Wage theft can occur through various means, including:

• Failure to pay for overtime worked
• Minimum wage violations
• Employee misclassification
• Illegal deductions in pay
• Having hourly employees perform work “off the clock”
• Not paying employees at all

Penalties and sanctions

When the Department of Labor, Wage and Hour Division or state agency responsible for enforcing labor laws receives reports of violations, it works to ensure that employers change their work practices and pay back missed wages to the employees. Willful violators can face both civil and criminal penalties for failure to comply with these laws.

Accidental wage theft

As a business owner, it is very easy to accidently commit wage theft. In order to comply with the Fair Labor Standards Act (FLSA) minimum wage and record-keeping provisions, employers must ensure that voluntary deductions do not erode the employee’s pay to the point they fall below the required minimum wage rate. Some employers, unaware of these FLSA mandates, may allow their employees to elect to withhold too much.

Also, there are state requirements regarding permitted and prohibited deductions from wages which many employers, especially employers who have workers in various states, may be unaware of.

Voluntary v. mandatory deductions

Voluntary deductions are not governed by federal law the way mandatory deductions are. Most states have their own laws specifying the kinds of voluntary deductions that employers may and may not make, and the conditions under which the deductions may or may not be made. Some categories of employers are subject to or excluded from the reach of the state’s law (e.g., private employers, farming employers, etc.) and there are provisions applicable to specific industries or groups of employees.

It is important that business owners understand and comply with wage and hour laws when managing their businesses. Making sure you provide employees the required notices and comply with all wage and hour laws is key to a successful business.

How can TriNet help?

TriNet makes sure our clients have the information they need to comply with current and pending wage and hour laws. We provide audits to ensure all employees are paid in accordance with the FLSA classification displayed within our payroll systems. We have the expertise to take the burden off employers – so that they can maintain compliance with their payroll and other administrative HR burdens.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.