New Wage Theft Laws Create New Risks for Business Owners

The Wage Theft Criminalization Bill that went into effect at the start of 2022 allows for new penalties against employers, meaning that you could be convicted of a felony and sentenced to jail time if found guilty of wage theft. Now is not the time to be caught out of compliance, so we’re clearing up some specifics on how the bill works and how you can ensure your business stays in the clear.

What qualifies as wage theft?

The law specifies that intentional theft of more than $950 from a single employee, or at least $2,350 total from two or more employees within a year, constitutes wage theft, which is classified as grand theft. Independent contractors are also included within the scope of the bill. Grand theft may be prosecuted as a misdemeanor or as a felony, depending on which charge prosecutors pursue. Sentences for the misdemeanor charge are up to one year in county jail, and for the felony charge, up to two or three years in county jail. The affected employees also have the right to pursue compensation for the missing amount via civil action.

There are several different ways in which wage theft can occur. Failing to pay an employee for overtime, tips, or hours worked all count towards the theft amount, as well as any other agreed-upon compensation, such as employee benefits. An important distinction to make is that the bill targets intentional wage theft, so business owners shouldn’t be convicted for simple mistakes. What is considered intentional theft is not clearly defined within the bill, however, so it is best to avoid putting yourself in a situation where you have to prove you didn’t knowingly withhold compensation from the people who work for you.

The penalties posed by this bill are severe for business owners and are intended to punish them for bad practices, but there is considerable potential for innocent employers to get tangled up in false or frivolous claims. If you find yourself caught up in a wage theft case or want advice about how to keep your business safe from wage-and-hour disputes, contact Integrated General Counsel to work with an employment attorney who can help you find your legal “piece” of mind.