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Wage theft is a hot topic in headlines and legislation. To help AIM members stay compliant and avoid costly claims, here’s a quick refresher on what to watch for—and how to prevent it.
What Is Wage Theft?
Wage theft occurs when employees aren’t paid the wages or benefits they are legally entitled to. This includes wages, meal breaks, overtime pay, and any other ‘benefit’ that the employee has earned but has not received. Massachusetts law does not require an intentional act; sloppy recordkeeping or poor judgment about hours worked can still trigger a complaint. While ‘wage theft’ is a compelling term, Massachusetts usually treats unpaid wages as a civil matter, though criminal penalties are possible. Wage theft costs employees billions in unpaid wages annually, spanning industries from home healthcare to construction and hospitality. In Massachusetts, nonexempt (hourly) employees must be paid for every minute they work.
Examples of Wage Theft
Some of the more common examples include minimum wage and overtime violations. But the list is much longer than that and includes the examples below:
Avoiding Problems – What Employers Should DO Now
Steps an employer may take to avoid being the subject of a wage theft enforcement action include:
To avoid minimum wage violations, know the rate in every jurisdiction where you operate. The rate is currently $15/hour in Massachusetts, but it varies by state. For national information, visit this website.
Pay all eligible employees their proper overtime rate (1.5 times their hourly rate) for all hours worked over 40 hours in a workweek. Remember that wage and hour laws treat each workweek separately, so even if you pay an employee biweekly, you may not average the hours over two work weeks to avoid paying overtime for one of the weeks. Learn more here.
Massachusetts has two final pay rules: If an employee is terminated, they must receive all earned wages, including unused vacation, on their last day. If they resign, payment can be made on the next regular payday. The law is available here.
Massachusetts law requires employees to receive their paycheck within six days of the close of the pay period. Employers may not withhold the final paycheck to compel employees to return company equipment. An employer may make deductions in minimal cases, for example, if the employee owes a definite amount, such as advanced vacation time or a loan. In those cases, the employer may recoup some or all the money provided the employee receives at least minimum wage for every hour worked during the final week of employment. That means the employer may have to work out a separate agreement regarding the repayment of an outstanding debt or bring the employee to Small Claims Court—the Attorney. Gen.’s office has guidance on recoupment that you may find helpful. It is available here.
Be sure that employees stay on the clock for all the time they are scheduled to work. Massachusetts recognizes timeclock rounding to allow employees to punch in or out slightly before or after their scheduled working time, “provided that this manner of computing working time averages out over a reasonable period so that an employee is fully compensated for all the time he or she actually worked.” The regulations are available here.
All employees in Massachusetts must be paid within six days of the end of the pay period. While this is usually not an issue, it may occasionally become a problem when an employer ends its workweek on Saturday, adopts the following Friday as payday, and a holiday falls on Friday, causing the company to delay payroll until the day after the holiday (i.e., seven days). The law is available here.
Under Massachusetts law, an employer may not charge an employee for uniforms. The Massachusetts regulation states that “[a]n employee or prospective employee who is required to purchase or rent a uniform shall be reimbursed for the actual purchase or rental cost of the uniform.” This regulation also means that an employer may not attempt to recoup the value of uniforms from the employee’s paycheck. The regulation is available here.
Massachusetts has one of the strictest independent contractor laws in the United States. The three-prong test makes it extremely difficult for an employer to classify someone as an independent contractor if they are working on your property and performing labor similar to what other employees are doing at your company. The law is available here.
Remedies
Employers in Massachusetts may face wage theft charges from three different sources: the U.S. Department of Labor, the Massachusetts Fair Labor Division (FLD), and private right-of-action claims. In cases where an employee brings a private right-of-action claim in court, they must first file a claim with the FLD. If the FLD elects not to pursue the case, it will provide the individual with a private right-of-action letter.
If an employee prevails with a private claim, the individual will be entitled to three times the employer’s unpaid wages (i.e., treble damages). Because there are no exceptions to the treble damages rule, employers must be cautious to ensure that they pay the correct wage rate to an individual within the timeframe provided by law. One way an employer can minimize this risk is if an employee questions the amount on their paystub, investigates it as quickly as possible, and makes any necessary corrections as soon as it is determined that an error was made.
Need Support?
AIM HR Solutions continues to support members with education, guidance, and compliance tools. Our team is here to help you stay ahead of changing regulations and avoid costly mistakes.
If you have questions about wage and hour compliance:
Contact the HR Helpline: 800-470-6277 or helpline@aimnet.org
Visit aimhrsolutions.com for additional resources
