The term “wage theft” refers to a broad range of unlawful employment practices that deprive employees of wages they have earned. This might include under-reporting of hours worked, underpayment for reported hours, illegitimate paycheck withholdings, requiring employees to work extra hours without pay, or even outright theft of tips. Employment statutes at the federal and state levels, such as the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and the New Jersey Wage and Hour Law (NJWHL), N.J. Rev. Stat. § 34:11-56a et seq., require employers to pay a minimum wage, pay extra for overtime, and keep detailed payroll records. None of these protections, however, applies to independent contractors, who are defined as independent of any one employer but are also just as susceptible to wage theft. A bill pending in the New York City Council would remedy this situation for independent contractors, including thousands of people who identify as freelancers, within the city.
The FLSA requires employers to maintain payroll records for all exempt and non-exempt employees. These records must include personal information like name and address, and non-exempt employee records must identify hourly rates, days worked, and hours worked each day, amounts owed for regular and overtime hours, itemized amounts deducted from paychecks, and dates and amounts of all paychecks. 29 C.F.R. §§ 516.2, 516.3. The U.S. Department of Labor’s Wage and Hour Division (WHD) enforces these regulations.
Payroll records assist regulators investigating alleged wage theft, as well as employees asserting claims for themselves. Employees can bring claims for underpayment or non-payment of wages under the minimum wage and overtime provisions of the FLSA and the NJWHL, and the WHD and New Jersey officials may also enforce these laws on workers’ behalf. In addition to civil liability for back wages and other damages, penalties under the FLSA include a fine of up to $10,000 and, for repeat offenders, imprisonment for up to six months. 29 U.S.C. §§ 215(a)(2), 216(a).