Introduction

According to the Economic Policy Institute, every single year there are millions of workers in the United States who are not paid the full wages to which they are legally entitled to. Low-wage workers are at an increased risk; national data showing an estimated 17% of low-wage workers experience minimum wage violations in a given year. Many of these workers may not even realize it. 

Wage theft is illegal. Since the early 2010s, various states across the country have taken steps to begin treating the act as a criminal offense. Today, about 30 states have criminal penalties for unpaid wages, with a few states treating severe or repeated violations as misdemeanors or felonies.

Stealing wages is not uncommon. Numerous high-profile companies have committed wage theft in recent years, such as:

• Uber (2023 case)

• Walmart (2000-present; ongoing series of class-action lawsuits, federal investigations, and massive labor settlements)

• Disney (2025 settlement involving more than 50,000 employees)

• FedEx (2015-2026; multiple lawsuits resulting in half a billion dollars worth of settlements)

• Bank of America (2015-present; multiple multi-state and regional class action lawsuits)

Wage theft can be intentional and unintentional. Regardless, it is illegal. 

If you understand your rights as a worker and are aware of the policies in your workplace, you are better prepared to protect yourself against wage theft. 

How to Avoid Wage Theft: Know Your Rights 

Your rights are recognized and protected by law. Regardless of your circumstance or background, you are entitled to these rights. Knowledge is power.

• Find out your state minimum wage. You should be paid at least the federal or state minimum wage—whichever is higher. Federal law requires $7.25 an hour, but state laws can vary. Look up your state minimum wage here: State Minimum Wage Laws | U.S. Department of Labor

• Find out if you are an exempt or non-exempt worker. Exempt workers do not get overtime pay. Non-exempt workers earning overtime are paid 1.5x their regular hourly rate for any hours worked beyond 40 in a week. Non-exempt employees are disproportionately targeted by wage theft, so this article will focus on them. Find out your status | LegalClarity.

• You must be paid on time, every time. Employers are required to pay you on time (weekly, biweekly, or monthly, depending on your initial work agreement and state laws).

• Federal law protects short rest breaks. Breaks anywhere from 5 to 20 minutes are protected by federal law as paid work time. Break duration may vary depending on local

If you use a timecard, take photos, and collect them into a digital or physical folder just for work records. Even if your employer has a timeclock, make sure to keep a record for yourself.

• I save all my paystubs. 

Every time you receive a paystub, check and confirm that your hours, wages, and deductions are correct. Look for any discrepancies in hours, unauthorized deductions, or missing overtime. Save everything.

• I get promises in writing. 

If your boss agrees to a bonus or raise, always get the confirmation in written form. For example, an email or text message will work. 

Knowing your rights and keeping records of anything pay related is the first step to protecting yourself against wage theft. 

Common Wage Theft Situations

Using real world examples, we will focus on the most common wage theft situations. Our goal is to introduce you to how wage theft can look in the workplace. Keep in mind—this list is not exhaustive. The following examples will focus on non-exempt workers, since they are disproportionately affected by wage theft. 

1. Your manager takes a portion of your tips because you made a mistake.

Under federal law, managers or supervisors may not keep any portion of employees’ tips. Unlawful tip pooling is also prohibited; employers might pool your tips to include employees who are not entitled to tips, or deny you tips that you are entitled to.

2. Your boss pays your regular rate even though you worked more than a 40 hour week. 

Non-exempt workers are entitled to 1.5x their base pay for any overtime worked—which is more than 40 hours. Checking every paystub, keeping track of your hours, and any overtime is key to recognizing this form of wage theft.

3. You get paid less than the federal minimum wage.

The federal minimum wage is $7.25 per hour. If you are paid anything below that number, that is illegal. If your state minimum wage is higher than the federal minimum wage, you should be paid that higher amount. Servers and other tipped employees can be paid as little as $2.13 per hour, granted their tips add up to make at least the federal minimum wage of $7.25 per hour.

4. Your boss says no breaks are allowed in order to meet production goals.

Failing to provide legally mandated breaks is illegal. According to OSHA, the same applies to bathroom breaks—employers cannot limit or deny restroom breaks to boost production goals. Generally, 30 minute or longer meal breaks are unpaid, depending on the guidelines in your state. Breaks count as long as you are completely relieved of all work duties. If you work through a break, that is not a break.

5. You receive a 1099 instead of a W-2.

Employers will sometimes misclassify employees as independent contractors to avoid providing them with benefits. Independent contractors receive 1099s, while employees receive W-2s. Another way you can be misclassified is if an employer classifies you as an exempt worker when you are actually an unexempt worker. If you are unsure about your classification, refer to this article to determine your standing: Exempt Vs. Non-Exempt Employees: A Legal Guide | SG 

6. Your boss asks you to stay and close up, but to clock out first.

Any work “off the clock” is considered wage theft. If your boss tries to make you work before clocking in, after clocking out, and during breaks, that is considered unpaid work and is wage theft, especially for non-exempt employees. Exempt employees, like salary-based workers, have different rights. Click here for more _________

7. The paycheck seems smaller even though you worked the same hours.

Your boss might say because the table you were attending walked out, or your cash register was short that your paycheck needs to make up for it. Other situations might look like them asking you to pay for mandatory uniforms, gear, or tools. All of these situations requiring you to forgo part of your paycheck is illegal.

Comparatively, if you are unsure and would like more information to figure out your individual situation, you are allowed to call the labor department to ask questions and seek guidance.

You can also file a complaint with the U.S. Department of Labor (DOL) Wage and Hour Division. State labor departments often have stronger protections and stricter penalties against employers than federal law. However, if your state lacks strict wage laws—the better alternative is filing a federal complaint with the DOL. 

“What if I can’t afford a lawyer?”

You do not need a lawyer to report wage theft or to recover unpaid wages. When you file a claim with your state’s labor department, you represent yourself. Lawyers are beneficial, but not strictly necessary. On USA.gov, lawyers offer free or low-cost legal help depending on your situation.

 Conclusion

A worker who knows their rights is better equipped to recognize and avoid wage theft. Understand your state’s minimum wage and find out if you are an exempt worker. You are entitled to be paid on time, every time, and you are entitled to breaks. Make sure to record your hours, save your paystubs, and keep promises in writing. 

To recap, wage theft can look like any of the following: 

• Withholding tips

• Not paying for overtime 

• Paying less than minimum wage

• Not providing legally mandated breaks 

• Misclassifying employees

• “Off the clock” work

• Unauthorized deductions

Resources are available nationwide; you can file with your state’s labor department or the DOL. 

Written by Nina Zavala