The Sneaky, Secret Methods Employers Use to Steal From Your Paycheck
Your employer is supposed to pay you, not use your earnings as a piggy bank. Imagine the surprise and boiling anger you might feel if you found out your boss was shortchanging you — not just shortchanging you, but actively and deceptively stealing from you, paycheck after paycheck. This is called wage theft, and it’s much more common than you might realize. In fact, studies have shown as much as $3 billion per year is pilfered from workers’ checks.
Perhaps unsurprisingly, it’s typically the checks of those who can least afford it: workers in low-wage, low-skill industries. But it also occurs in the highest echelons of American industry. Although companies, such as Walmart and McDonald’s, might be easy targets for protests, even companies, such as Apple, Google, and Adobe, have been caught systematically finding ways to scrape money away from their employees.
How do they do it? There are numerous means and methods — some more obvious than others. And you, no matter your industry or role, might have had your wages stolen or suppressed at some point in your career. It might have happened right under your nose or even with your consent. You might have just been too naive to recognize what was happening. Here are 13 methods employers use to engage in wage theft or suppression.
1. Hiring you as an unpaid intern
Internships have become extremely common in the United States. The issue, however, is internships are supposed to abide by certain rules, but often interns end up becoming unpaid laborers. For example, internships are, by law, supposed to be beneficial to the intern, and the employer is not supposed to gain immediate advantage from the intern’s production.
There’s a lot more to it than that, but interns commonly end up doing grunt work. For that, you’re supposed to be paid at least minimum wage. This has led to a rash of lawsuits in recent years, many of which were in the entertainment industry, involving Fox, NBC, Viacom, and Hearst.
Next: Interns aren’t the only type of misclassification used to an employers’ advantage.
2. Employee misclassification
Along with internships, contract (or “gig”) work has also become more popular among American companies. Instead of hiring full-time staff, companies hire contractors to complete certain projects. It’s like hiring freelancers. But again, employers often abuse the contractor (1099) classification, treating contractors like full-timers.
The logic behind it is contractors aren’t technically employees, so employers don’t have to pay them overtime or reimburse them for expenses. This has landed some big companies, including Uber and FedEx, in hot water.
Next: But what if an employer is misclassifying the money that was destined for your retirement account?
3. ‘Depositing’ your retirement savings
Some employers steal from employees’ retirement accounts. This is done through 401(k)s, in which employers match employee contributions. But instead of matching, employers keep the money for themselves. It’s evidently a common tactic, too. Luckily, the Labor Department has sniffed out this type of fraud and has been coming down on businesses that engage in it.
Next: What are these pay deductions?
4. Docking your checks for expenses
Some employers tell workers they will dock their pay if the money in the register doesn’t add up or if they break company property. They assume if the numbers are off, employees are pocketing cash (and they might be). Or they figure a dishwasher owes them if a coffee mug is dropped and shatters.
There are circumstances under which an employer can dock your pay, but these examples aren’t included. Under the Fair Labor Standards Act, you can really only have your pay withheld if you consent to it. But it varies from state to state.
Next: What about the minimum wage?
5. Paying less than minimum wage
In cities and states across the country, the minimum wage has become a hot topic. There are several parts of the country where it’s been raised to $15 per hour, while workers in other areas are entitled to less than half of that — the federal minimum wage of $7.25. In many industries, employers try to get away with paying less than what is legally allowed. This, naturally, can lead to lawsuits and big fines for employers who are skirting the law to pad their margins.
Next: Are you entitled to overtime pay?
6. Making you a ‘manager’
Want to be a manager? Who doesn’t? If you earn it, then great. But if you feel like you’re working in a place full of “managers” or perhaps you don’t quite fit the management mold, there might be something else going on. Typically, it’s a way to take an hourly employee and make them salaried. When you consent and agree to a fixed salary, you might end up working way more hours (negating overtime pay) than you would have at the hourly level.
It’s important to note, however, the government has recently laid down some new laws to curb this type of abuse. If you earn less than $47,476 (salary) and are in a management position, you’re now entitled to overtime pay.
Next: If you’re working, you should be paid.
7. Working off the clock
On the topic of overtime, this is another popular way in which employers skimp out on paying their employees. Some workers are required to report to work before their scheduled start time. And sometimes, they clock out and stay later. This is wage theft at its finest. If you’re at work and working, you should be paid for it. Again, check your state laws, but know working off the clock or overtime does entitle you to compensation.
Next: Another way employers avoid the law
8. Paying you ‘under the table’
A job is a job. And for a lot of people, working “under the table” is a way of making a living and avoiding Uncle Sam. The term “under the table” basically means you’re working off the books and are probably being paid in cash. For employers, this allows them to avoid taxes and other expenses an on-the-books employee brings. And for workers, it’s a way of avoiding income taxes. It might be beneficial to both parties, but if you’re working under the table, you might be getting paid less than minimum wage and missing out on other benefits.
Next: Still waiting for that reimbursement?
9. Not reimbursing you for applicable expenses
Certain jobs require some investment or expenses on the part of the employee. Traveling salespeople or delivery drivers, for example, might use their personal vehicles and fuel to get where they need to go. These expenses, in many cases, are supposed to be covered by employers in the form of a reimbursement (unless you’re a 1099 contractor). Some employers neglect those reimbursements, effectively taking money out of workers’ pockets.
Next: Lunch break? What’s that?
10. Forcing you to skip breaks
If you’ve ever worked through a scheduled break, hopefully it was a one-time thing. If you’re hardly ever getting a break or being asked to skip lunch, then you’ve got a systematic issue on your hands. And it is, indeed, a form of wage theft. Depending on where you live, an employer forcing you to skip a break can result in some serious trouble. Taco Bell, for example, had to pay employees hundreds of thousands of dollars for unpaid breaks a few years back. And Starbucks also had to shell out millions to employees who were asked to skip their breaks.
Next: When employers agree not to compete, employees lose.
11. Collusion with competing employers
Collusion among businesses is nothing new. This is, after all, why non-compete agreements exist. When workers can’t pit employers against each other in an effort to negotiate higher pay, employers win. This is exactly what happened in Silicon Valley several years ago, where a handful of big tech companies made an agreement not to poach each other’s employees and thus suppress wages across the board. The companies involved included Apple, Google, Lucasfilm, and Intuit.
Next: Do you go to work sick?
12. Denial of vacation days or sick leave
Depending on where you live and work, you’re entitled to sick and vacation days. But what if your boss says you’re not allowed to use them or retaliates when you do? Again, this is a form of theft. Although not all employers in every city or state are legally mandated to offer sick pay or vacation days, many are. And when they foment a culture in which calling in sick is more or less forbidden, there’s a problem. Walmart was recently busted for this, to give one example.
Next: Worker’s comp is your right as an employee.
13. Pressure to avoid worker’s comp claims
If you’ve been hurt on the job, you’ve probably looked at your options for supplementing your income if you’re out of work. Workers comp, as it’s commonly called, is used in these types of situations. But many employers might ask you to lie about your injury to save them money. Again, this depends on local law, but this type of behavior is basically red meat for attorneys.