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Wage Theft Lawsuits On the Rise: 5 Tips for Business Owners

By Daniel Taylor, Esq. | Last updated on

As a business owner, you likely do everything you can to discourage employees from stealing from your business.

Increasingly, however, employees are applying the same scrutiny to employers by filing so-called wage theft lawsuits against employers who fail to properly compensate them for their work. These lawsuits, including recent suits against large employers such as McDonalds and Walmart supplier Schneider, typically involve violations of minimum wage and overtime laws, reports The New York Times.

How can you stay clear of a potential wage theft lawsuit? Here are five tips:

  1. Know the difference between employees and contractors. There are some key differences between employees and contractors when it comes to wage and hour laws. Simply calling employees "contractors" to try to save a few dollars by not having to pay overtime, for example, can come back to cost you big. Make sure you know what the difference between the two is, and act accordingly.
  2. Don't have employees lie on timecards. It may seem like common sense, but an employee's timecard should accurately reflect the hours that employee works. Instructing employees to lie, or to sign a blank timecard can get you sued for wage theft. Equally ill-advised: modifying employee's timecards after they've been turned in.
  3. Comply with overtime laws. One of the most common grounds for a wage theft lawsuit is failure to properly pay overtime. Under federal law, any non-exempt employee must be paid overtime pay for any hours beyond 40 worked in a given week.
  4. Make sure your workers get lunch and work breaks. No less important than adhering to minimum wage and overtime laws, employers must also give employees required work breaks -- including meal breaks. In 2011, a Pennsylvania appeals court upheld a $187 million verdict against Walmart for encouraging employees to skip the breaks they were entitled to under state law.
  5. Getting sued? Call a lawyer. If you do find yourself involved in a wage theft lawsuit, find a lawyer who specializes in wage and hour law to represent you. Wage theft lawsuits can be costly even in the best circumstances. In the worst, they may put you out of business entirely.

To learn more about your obligations to your employees under state and federal employment law, check out FindLaw's Learn About the Law section on Employment Law.

Follow FindLaw for Consumers on Google+.

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