When Employers Commit Wage Theft

people sitting at desk

In 1990, the rock band “Jane’s Addiction” released their most commercially successful song, titled, “Been Caught Stealing.” While that song is about shoplifting, its title underscores a theme that many plaintiff-side employment lawyers repeatedly hear from employees who have been shorted on overtime pay. Some employers have “been caught stealing” their employees’ wages.

“Wage theft” is a practice whereby an employer illegally withholds money that has been rightfully earned by an employee. Wage theft violates the Fair Labor Standards Act, the New Jersey Wage Payment Law, and the Pennsylvania Minimum Wage Act.

The City of Philadelphia has a Wage Theft Ordinance which should serve as a further deterrent to wage theft, given the penalties that it imposes for violations. The Philadelphia Wage Theft Ordinance provides a private right of action to seek unpaid wages due, costs, counsel fees and penalties.

If an employer is found to have violated the Philadelphia Wage Theft Ordinance, the court is required to award “costs, reasonable attorney’s fees, and [statutory] penalties” of up to $2,300 for each violation of the Ordinance, in addition to the amount of the employee’s unpaid wages. Wage theft may occur as a result of an employer’s attempt to cheat the system by avoiding payroll taxes.

To thwart the obligation to pay payroll taxes, such as social security and Medicare taxes (known as the Federal Insurance Contributions Act [FICA] tax), some employers misclassify their workers as "salaried/exempt" as opposed to being "hourly/non-exempt". Employers have also misclassified their employees by labeling them as “independent contractors” instead of "employees."

Independent contractors are exempt from overtime compensation, but only if they are truly independent contractors. By classifying a worker as an independent contractor or as salaried/exempt, the employer pays the worker the straight-time regular hourly wage for hours worked above 40 per week, instead of paying the worker an overtime premium of 1.5 times the regular hourly wage; this is stealing.

If you suspect that your employer has been stealing from you in New Jersey or Philadelphia (PA), please call (856) 746-6332 or fill out our online contact form today to schedule a free consultation with our experienced employment law attorneys at Morgan Rooks P.C.

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