By Nelsy C. Gomez – Labor & Employment and Immigration Practice Groups, Cozen O’Connor

Wage theft is defined as an employer’s illegal withholding or denial of wages owed to an employee.

Most wage-theft claims, such as misclassification and failure to pay overtime, are litigated as violations of the Fair Labor Standards Act (FLSA). The Department of Labor is currently updating the FLSA’s recordkeeping regulations through a proposed “Right to Know Under the Fair Labor Standards Act” rule, which would require employers to tell workers whether they are classified as independent contractors or employees, and if employees, whether they are exempt or nonexempt and how their pay is computed.

Wage theft claims become more complex when they involve undocumented immigrant workers. Employers must verify employment eligibility using I-9 verification forms, which requires them to examine an employee’s evidence of identity and employment eligibility. Employers may not demand a specific document; instead, worker may choose from a list of acceptable documents on the Form I-9. Employers must accept such documentation at face value and may not investigate further, unless the document appears to be fraudulent. Requesting additional documents or information can result in claims of discrimination, And even improperly documented employees can initiate actions claiming wage theft.

Two recent federal initiatives will make the employment verification process, and the requirement to document that proper wages have been paid, even more complex for employers:

  • The Department of Justice Office of Special Counsel (OSC) and the National Labor Relations Board have reached a Memorandum of Understanding to share information, refer matters to each other, and coordinate investigations as appropriate. The OSC manages the Immigration Nationality Act (INA), which prevents discrimination based on national origin or citizenship status when an employee is hired or fired. The NLRB manages enforcement of the National Labor Relations Act (NLRA), which protects employees’ rights to unionize or de-unionize in order to increase wages and improve working conditions.
  • The U.S. Customs and Immigration Service (USCIS) will now inform employees about Tentative Non-Confirmations (TNCs), which result from discrepancies between the data employees provide during the I-9 employment verification process and Social Security records. The current system only allows the employers to receive notices of mismatches. Direct notification can be a powerful way for employees to confirm whether their payroll status and wage payments are correct.

Add to these initiatives the U.S. Equal Employment Opportunity Commission’s new Strategic Enforcement Plan, which emphasizes proactive identification of and enforcement action against hiring discrimination and FLSA violations, among other claims. The new message for employers is clear: Accurate, nondiscriminatory documentation of employment and payroll status are more essential than ever.

Nelsy C. Gómez is a member of the Labor & Employment and Immigration practice groups at Cozen O’Connor’s Houston office. She has extensive experience advising employers and foreign nationals on employment verification and concerns related to immigration law.