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Labor Department Cracks Down on Businesses for Wage Violations

According to a recent Labor Department press release, the Secretary of Labor is currently at work on an aggressive new program that would share information across a dozen states and the IRS to crack down on businesses that cheat workers out of fairly earned wages.

With increased access to this information, Labor officials will be better positioned to identify businesses that mislabel workers as independent contractors to deny them minimum wage and overtime pay. Improperly classifying workers is a tactic that also lets businesses sidestep paying workers compensation, federal taxes and unemployment insurance for those workers.

According to Labor Department lawyer Patricia Smith, many businesses will likely face multiple fines as a result of enhanced information exchange between state and federal agencies: “There’s more of an incentive to be in compliance because the cost of what we consider to be illegal activity has increased,” Smith told the Wall Street Journal.

Previously, a business caught cheating its workers might pay a single fine to the state for failing to pay the proper unemployment insurance rates. Yet under the new program, a state could share that information with the Department of Labor, enabling the DOL to seek additional fines and penalties for wage violations at the federal level. Violations reported to the IRS could then result in fines for unpaid taxes.

Washington is one of handful of states that have agreed to collaborate with the Labor Department; others include Connecticut, Hawaii, Minnesota, Montana, Utah, Maryland, Missouri, and Massachusetts. New York and Illinois are in talks to join in the near future.

Since taking office in 2009, Labor Secretary Hilda Solis has tightened enforcement of federal wage and hour laws. Her particular focus has involved a crackdown on industries where “wage theft” is a problem: namely health care, hotel, restaurant, janitorial, and day care services.

If you believe your employer has misclassified your employment status or cheated you out of your wages through any other means, contact an Emery Reddy employment attorney for a consultation today. We help workers with wage and hour dispute involving:

  • Unpaid overtime wages
  • Failure to pay agreed-upon wages
  • Misclassification of a worker as exempt from overtime payment (for example, classifying an hourly worker as an independent contractor, professional, administrative, or outside salesperson)
  • Failure to pay for “off-the-clock” work (including pre-shift and post-shift work, on-call time, mandatory meetings or travel time)
  • Unpaid or denied rest breaks & lunch breaks
  • Withholding a portion of earned wages without an employee’s written agreement; other improper deductions from wages


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