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).
These laws only protect employees of covered employers. Independent contractors are generally not covered by the FLSA and other statutes. Determining whether an individual is an employee or an independent contractor might require an analysis of job duties, work site, and level of autonomy over their hours and work product. A common indicator that someone is an independent contractor is the receipt of payments without income tax or FICA withholding, followed by a 1099 tax form instead of a W-2. Misclassification, which occurs when an employer wrongfully treats an employee like an independent contractor, is a common problem in wage theft claims.
A bill introduced in the New York City Council, Int. 1017-2015, would protect freelance workers and other independent contractors against employers who withhold payment. The bill would require a written contract, with a definite due date for payment, for any job worth more than $200. The city’s newly created Office of Labor Standards would enforce the law, which would impose both civil and criminal penalties on employers who do not pay workers by the contractual due date or within 30 days of completion of the work, whichever is sooner. The bill was introduced on December 7, 2015, and is awaiting further action.
If you need to speak to a New York or New Jersey employment law attorney, contact the Resnick Law Group online, at 973-781-1204, or at 646-867-7997.
More Blog Posts:
Unpaid Intern Sues Celebrity Twins Under State Wage and Hour Laws, The New Jersey Employment Law Firm Blog, September 25, 2015
Lawsuits, Pending Legislation, Address Question of Whether NFL Cheerleaders Are Employees or Independent Contractors, The New Jersey Employment Law Firm Blog, June 4, 2015
The Distinction Between an “Employee” and an “Independent Contractor” is Critical in New Jersey Employment Law Claims, The New Jersey Employment Law Firm Blog, May 22, 2015