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Department of Labor Cracks Down on Employers Garnishing Wages

The U.S. Department of Labor (DOL) has decided to take a stand against illegal wage garnishment by employers by taking legal action against a healthcare staffing agency with allegedly unlawful contracts. 

The DOL lawsuit targets Advanced Care Staffing LLC and the company’s CEO, Sam Klein. It alleges that the company required employees to sign contracts agreeing to pay back the wages they earned if they left the company within three years. Additionally, these contracts often required employees to cover the costs of lost future profits related to their employment as well as attorney and arbitration costs if they left during this period. The DOL argues that these contracts caused employees leaving the company to earn less than the federal minimum wage.

While employers are permitted to set terms and penalties in employment contracts to encourage employees to remain on staff, those penalties cannot bring the employee’s overall compensation below the local minimum wage. Additionally, workers cannot be ordered to pay back their rightfully earned wages. Finally, employers may not use mandatory arbitration to conceal illegal workplace and employment practices from the courts. 

As such, the DOL has requested an injunction against Advanced Care Staffing and Klein to bar them from continuing these practices. Additionally, the agency seeks back wages and liquidated damages on behalf of the workers impacted by these unlawful contracts. 

While there is a long way to go before the lawsuit is settled or decided in court, it demonstrates that the DOL intends to take a harder stance against illegal wage garnishment by employers. Learn about your right to fair wages, what counts as unlawful garnishment, and what you can do if your employer has garnished your paycheck without just cause. 

Your Rights to Fair Wages

Under the federal Fair Labor Standards Act (FLSA), all workers have the right to receive the federal minimum wage. Additionally, non-exempt workers have the right to overtime pay and other considerations. 

Furthermore, many states have laws providing employees with rights above and beyond the federal minimum. For example, the state minimum in California is $15.50 per hour for all employees, and many counties and municipalities require even higher compensation. 

Regardless of where you live, your employer must pay you according to the strictest standard, meaning the highest minimum wage applicable. While employers can withhold wages in certain circumstances, these withholdings may not bring you below the applicable minimum wage. 

If your employer does withhold wages unlawfully, you may have the right to take legal action against them. You could pursue back pay for the withheld pay and damages for related losses, depending on the situation. 

Can Employers Garnish Your Wages?

There is a difference between garnishing and withholding wages. Garnishments are legal actions taken to repay a debt owed by a worker. The employer withholds a certain amount from each paycheck and submits it to the government or another party to repay the employee’s creditor. Meanwhile, withholdings are actions an employer takes that remove earned wages from an employee’s paycheck for any reason. 

There are lawful reasons to withhold wages, such as taking money out for taxes, health insurance, accounting errors, or court-ordered garnishments. However, outside of court orders, most legal withholdings require the employee to agree to them in writing. Any withholding not agreed to in writing that is not required by law or a court order may be unlawful under the FLSA. 

Other withholdings that are considered unlawful include deducting the following costs from a paycheck if they bring the employee below the minimum wage:

  • Employer-mandated uniforms
  • Tools of the trade
  • Missing equipment 
  • Cash shortages or bad checks
  • Mistakes on the job

Many states restrict withholdings and pay docking even further. For example, California does not permit employers to dock employees’ wages for mistakes, missing equipment, or short registers unless the worker caused the damages deliberately or through gross negligence. 

Furthermore, exempt workers may not have their wages docked unless they have committed a serious safety violation. For instance, a salaried employee could have wages docked for ignoring fire safety regulations and putting others at risk. Employers can also put salaried workers on unpaid leave for violating written company policies; however, they cannot require the employee to work during this punitive leave. They may not apply this leave retroactively to the time the employee has already worked. 

What You Can Do If You’re Told to “Return” Wages

Under the FLSA, employers cannot legally require you to return any of your pay as long as there have been no accounting errors. Outside of situations permitted under state law, employers may not dock your wages and cannot withhold your final paycheck either.

Furthermore, contract clauses are unenforceable if they require you to compensate your employer, agree to unlawful withholdings, guarantee future profits with your wages, or otherwise consent to terms that would take your compensation below minimum wage. Enforcing it is considered wage theft, and you can pursue compensation for your stolen wages.

It is unenforceable if you have an employment contract similar to those of Advanced Care Staffing employees. Your employer cannot require you to pay back your rightfully earned wages. If your manager attempts to threaten or force you to do so or withholds funds or an entire paycheck, you can and should take legal action. At The Law Offices of Todd M. Friedman, P.C., we are prepared to answer your questions about what counts as wage theft and fight on your behalf. From our offices in Los Angeles, California, and around the country, our skilled employment law attorneys are available to represent you in your claim. We can help you demand fair compensation according to your contract and stand up against unlawful and unethical withholding practices. Learn more about how we can help you with your wage and hour claim by scheduling your consultation today.

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