How to Avoid Wage Theft Complaints — Advice for MWBEs

All employers have an obligation to pay workers fairly and in accordance with federal, state and local laws. However, inexperienced business owners often get caught in the cross-hairs of government regulators because they are unaware of what the rules governing workers’ pay are. In New York State, for example, regulators returned over $35 million in illegally unpaid wages to more than 35,000 workers in 2018. Some of this money was undoubtedly withheld by unscrupulous employers who intentionally skirted the law. But much of it likely was the result of unintentional wage theft by inexperienced business owners who failed to understand the rules.

Department of Labor Oversight

The New York State Department of Labor is responsible for overseeing state labor laws, which govern many aspects of employee pay, working conditions and mandatory benefits, such as rest periods and meal breaks. It enforces minimum wage statutes, overtime rules, allowable payroll deductions, and a number of industry-specific rules. And while these are necessary to protect hardworking employees from wage theft, they can be confusing for new employers. This is especially true for some women and minority business owners, who often don’t have mentors or a peer group to help them navigate labor laws.

So, what are some of the most common ways employers — either intentionally or inadvertently — commit wage theft? According to the NY Department of Labor, some of the top issues are:

  • Failing to pay overtime rate for hours worked in excess of 40 hours per payroll week. The federal Fair Labor Standards Act defines the overtime rate as 1.5 times the employees normal hourly wage. State laws may mandate a higher rate. (New York State does not.) In that case the higher of the two rates applies.

Note: According to federal law, businesses are not required to pay Executive or Administrative employees overtime as long as they receive a guaranteed weekly wage of $675.00 per week, effective December 31, 2015. However, this amount is considerably higher in New York State. As of Dec. 31, 2018, the amounts are as follows:

New York City – $1,125
New York City, businesses with 10 or fewer employees – $1,012.50
Long Island and Westchester – $900
Remainder of New York – $832

  • Failing to pay minimum wage. The minimum wage in New York State rose to $11.10 per hour on December 31, 2018. In New York City, the minimum wage is now $13.50 per hour for businesses with 10 or fewer employees and $15 and hour for businesses with 11 employees or more. In Nassau, Suffolk and Westchester Counties the minimum wage is $12 per hour as of January 1st. Paying less than these amounts can be reported by the employee as wage theft.

Remember, too, that employers must pay minimum wage in accordance with the number of hours worked. So, if an employee works more than their scheduled number of hours, their pay must be adjusted accordingly.

  • Paying tips only
  • Withholding money for uniforms, equipment or other items that the employer requires as a condition of employment. Employers are also prohibited from deducting the cost of any of the following from an employee’s paycheck:

Broken goods or equipment
Cash shortages
Losses to the business

  • Not paying for travel time. Employers are not required to pay for employees’ travel time to work each day. But they are required to compensate them for travel time between work assignments in the same day.
  • Not paying for “training” required for the performance of an employee’s job.
  • Withholding or delaying a final paycheck. According to New York State law, employees must be paid their final pay on or before the next regularly scheduled payday. The employer must mail the check at the employee’s request.

Employers can protect themselves from allegations of wage theft by strictly adhering to these Department of Labor laws.

Prevailing Wage vs Minimum Wage

Any employer who contracts with the federal government (as many certified MWBEs do) is also responsible for paying contractors and subcontractors what’s called the “prevailing wage” and attendant “fringe benefits” (such as overtime, breaks, etc.) In the construction industry, this requirement is defined by the Davis Bacon and Related Acts (DBRA).

In New York State, prevailing wages are determined by the State Department of Labor’s Bureau of Public Work, which ensures that employers pay contractors and subcontractors on any public work project the published prevailing wage. The wages are determined on a county-by county basis and published online. Failing to abide by these wage schedules may also result in allegations of wage theft.

About the Carmoon Group

The Carmoon Group Ltd. is an insurance brokerage headquartered in Hicksville, New York. Through our large network of nationwide affiliates, we offer risk management solutions and comprehensive insurance programs for businesses in a wide range of industries. We have the expertise and experience to provide you optimal coverage at the best possible price. So why not give us a call today to set up an appointment for your insurance review? Or if you prefer, just reach out online and we’ll get back to you at a convenient time.

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