Minimum Wage, Overtime and Unpaid Wages

1Why this matters

Unpaid wages are more common than most people think: unpaid overtime, work before or after a shift, deductions that cut pay below the minimum, tips taken by managers, and workers wrongly treated as independent contractors. The amounts add up over months, and because the time limit runs back from the day you file, waiting costs money. This guide explains the basic federal rules, what you can recover and how to file a complaint at no cost.

2What is the minimum wage?

The federal minimum wage is $7.25 an hour and has been since July 24, 2009. About 30 states and D.C., and many cities, set higher minimums, often adjusted each year. When more than one law covers you, you are entitled to the highest rate. Federal law allows a youth wage of $4.25 an hour for workers under 20 during their first 90 days with an employer.

Tipped employees can be paid a lower cash wage, $2.13 an hour under federal law, with the employer counting up to $5.12 an hour of tips toward the minimum. If tips do not bring you up to the full minimum in a workweek, the employer must make up the difference. Several states do not allow a lower tipped wage at all.

3How does overtime work?

Covered employees who are not exempt must be paid at least one and a half times their regular rate for hours worked over 40 in a workweek. Each workweek stands alone, so hours cannot be averaged over two weeks, and comp time instead of overtime pay is generally not allowed for private employers.

Being paid a salary does not by itself make you exempt. To be exempt as an executive, administrative or professional employee, you generally must earn a salary of at least $684 a week, or $35,568 a year, and your job duties must meet the test for that exemption. Many salaried workers in roles like assistant manager or administrative staff are owed overtime.

4Other common pay violations

• Off-the-clock work: time spent before or after a shift, in required training, or answering messages from home generally counts as work.
• Short breaks: rest breaks of 5 to 20 minutes must be paid.
• Travel and on-call time: travel between job sites during the workday counts as work, and so can on-call time when you must stay at the workplace or cannot use the time freely.
• Deductions: charges for uniforms, tools or shortages cannot bring pay below the minimum wage or cut into overtime.
• Tips: employers, managers and supervisors cannot keep any part of employees' tips.
• Misclassification: calling a worker an independent contractor does not make them one; the law looks at how much the employer controls the work.
• Final pay: when and how a final paycheck must be paid is set by state law.

5What can you recover, and how long do you have?

You can recover back wages, the difference between what you were paid and what the law required. In a lawsuit you may also recover an equal additional amount as liquidated damages, and the employer may have to pay your attorney's fees.

The Fair Labor Standards Act allows two years for most violations and three years for willful ones. The time runs back from the date you file a lawsuit, so each week you wait, the oldest week of unpaid wages can drop out. State laws often allow longer periods and may give more protection, so check yours.

6How to file a complaint

Call the Wage and Hour Division at 1-866-487-9243, file through its website, or visit a local office. There is no charge to file or for the investigation, complaints are confidential, and help is available in many languages. Your immigration status does not affect your right to be paid for work you did.

Have your name and contact details, the employer's name, address and phone number, your manager's name, the work you did, and how and when you were paid. Pay stubs and your own daily record of hours and tips help a great deal. You can also file with your state labor department, or talk to a lawyer about a private lawsuit; many take wage cases without charging upfront.

7Keeping your own records

Your employer must keep time and pay records, but your own notes are often the strongest evidence. Each day, write down the date, when you started and stopped, any unpaid meal breaks, and tips received. Keep pay stubs, photos of posted schedules, and texts or emails about hours. Store copies somewhere other than an employer's phone or computer, which you may lose access to.

8What happens after you file

The Wage and Hour Division reviews the complaint and may investigate, which can include reviewing payroll records and interviewing workers. If it finds a violation, it can supervise payment of back wages, sometimes for other workers as well. It does not take every case, and its investigation does not stop the time limit for a private lawsuit, which keeps running until you file in court. If your claim is old or large, talk to a lawyer early.

9Protection from retaliation

An employer cannot fire, demote, cut hours or otherwise punish you for asking about your pay, filing a complaint, or cooperating with an investigation. If that happens, report it to the Wage and Hour Division as well.

If you lose your job or your hours are cut, you may qualify for unemployment benefits while the wage claim is pending. If you are owed overtime, remember that only federally required overtime counts for the new tax deduction for overtime.

10Common mistakes

• Assuming a salary means no overtime is owed.
• Waiting to act, as the oldest unpaid weeks drop out of the time limit.
• Relying only on the employer's records of your hours.
• Not counting short breaks and pre-shift work as paid time.

12What this does not tell you

Exemptions and coverage are detailed, and state laws often give more protection than federal law. This guide is general information, not legal advice.

The salary level for exempt workers has changed over the years through rules and court decisions. Check the Department of Labor for the current figure.