New legislation in the House and Senate will make wage and hour violations WAY MORE expensive for employers (and criminal too)

Last week, the House and Senate introduced a bill called the Wage Theft Prevention and Wage Recovery Act. One of the bill’s primary goals is to ensure that workers receive timely regular paystubs and final paychecks. That seems non-controversial.

But as you read deeper into the proposed legislation, you’ll find that, perhaps, the main objectives of this legislation aren’t just pay stubs, but something else entirely.

Congressman Robert C. “Bobby” Scott (VA-03) and Congresswoman Rosa DeLauro (CT-03) have sponsored the bill in the House, while Senator Patty Murray (D-WA) has introduced the legislation in the Senate.

According to a “fact sheet” from Congressman Scott, the bill is a response to a “problem,” namely, “[t]oo often, dishonest employers are able to steal worker pay in violation of the FLSA without the worry of significant consequences.”

Apparently, up to 20 million workers do not receive a regular pay stub detailing their earnings and deductions. Although I don’t see the direct correlation between a missing paystub and not paying an employee what they earn — let alone “wage theft” — I understand how greater transparency here would help and isn’t much to ask.

The Fair Labor Standards Act (FLSA) does not require detailed pay stubs or recordkeeping, which help confirm pay accuracy. The proposed legislation would require regular pay stubs verifying:

• If the employee is classified or exempt from minimum wage and overtime requirements;
• Total gross and net wages paid;
• The applicable pay period;
• The rate of pay, hours, overtime hours, and overtime rate applied;
• Any additional compensation or deductions from pay
• Additional information the Secretary reasonably requires.

But that’s not all that’s in the Wage Theft Prevention and Wage Recovery Act.

According to the “fact sheet,” the “FLSA’s civil penalties and liquidated damages provide little deterrent to keep employers from committing wage theft, as willingly violating the FLSA is likely cheaper than paying employees.”

What’s the solution? The bill proposes increasing liquidated damages on violations of the FLSA’s wage and hour provisions from double damages to triple damages, and from triple to quadruple damages where an employer retaliates against an employee for filing an FLSA claim.

Civil money penalties would also increase drastically from $1,100 to $20,740, and $103,700 for repeated or willful violations of wage and hour laws. Additionally, an employer who violates the FLSA’s tipped wage provisions will be subject to a civil monetary penalty of $11,620 (from $1,100).

The legislation also adds civil monetary penalties of $50 (initial) and $100 (repeated or willful) for violations of pay stub disclosure violations, and $1,000 (initial) and $5,000 (repeated or willful) for violating FLSA recordkeeping provisions.

FLSA violations become criminal, and the DOL can refer violators to the DOJ for violations of the FLSA recordkeeping, wage and hour, and retaliation provisions.

(Here’s a fun fact! The FLSA currently holds individuals liable as “employers” for wage and hour violations. I should have led with this.)

The statute of limitations for wage or hour violations would extend from 2 to 4 years, and from 3 to 5 years where the employer’s actions are willful.

Finally, the new bill would end the arbitration of wage and hour claims and eliminate any efforts to avoid class/collective actions.

If the sponsors of this legislation had stuck to the primary objective of more transparent pay practices, it might have had a reasonable chance of becoming law. Now, it has practically none with this kitchen-sink approach.