Common Misconceptions About Wage Theft

Reviewed by Nola Stetson (NS), Editor-in-Chief — Wage Theft Practice. Updated May 2026.

Misconceptions about wage theft lead workers to accept violations as normal, abandon valid claims, or take procedural missteps that harm their cases. These are the most common myths — and what the FLSA and state law actually say.

Myth 1: “I’m salaried, so I don’t get overtime.”

Reality: Being paid on a salary basis is only one of three requirements for the overtime exemptions. You must also meet a salary level (currently $684/week under the most recent DOL rule) and a duties test. Many salaried workers — particularly those in assistant manager, customer service, or administrative roles who are not actually exercising genuine discretion and independent judgment — are misclassified as exempt and are owed overtime for every hour over 40 they worked on salary.

The consequences of misclassification are substantial. An employee who worked 10 hours of overtime per week at a $50,000 salary over two years could have back wages well into five figures, plus an equal amount in liquidated damages.

Myth 2: “My employer can deduct mistakes, shortages, or equipment costs from my paycheck.”

Reality: The FLSA prohibits deductions that bring an employee’s wages below the applicable minimum wage or — for exempt employees — reduce a salary in ways that destroy salary-basis status. Most states provide additional restrictions. Deductions for cash register shortages, customer walkouts, broken equipment, or stolen merchandise are frequently illegal when they reduce take-home pay below the minimum wage floor. Uniform and tool costs are only permissible if they don’t cut into minimum wage or overtime pay.

Some employers characterize these deductions as “employee agreements” or bury them in handbooks. A signed acknowledgment does not make an otherwise illegal deduction legal.

Myth 3: “I signed a contract saying I’m an independent contractor, so I have no wage rights.”

Reality: Worker classification under the FLSA is determined by the economic reality of the relationship, not by the label in any contract. The relevant factors include: the degree of control the employer exercises over how, when, and where you work; whether you have a genuine opportunity for profit or loss; whether you use your own tools or the employer’s equipment; the permanence and exclusivity of the relationship; whether the work is integral to the employer’s core business; and the level of skill and independent initiative required.

A worker who shows up at an employer’s location every day, uses employer-provided equipment, receives direction on how to perform tasks, and has no genuine ability to work for competing businesses is almost certainly an employee under the economic reality test, regardless of what a contract or 1099 says. Misclassification of this kind is widespread, particularly in gig economy, staffing, and service industry contexts.

Myth 4: “Filing a complaint will get me fired, and then I’ll have nothing.”

Reality: FLSA §15(a)(3) prohibits retaliation against workers who file complaints, initiate proceedings, or cooperate with investigations. If your employer fires, demotes, reduces your hours, or otherwise takes adverse action because you filed a wage complaint, that retaliation is a separate FLSA violation with its own remedies — including reinstatement, back pay for the retaliation period, and additional liquidated damages.

Internal complaints to HR or management can qualify as protected activity in many states even before a formal DOL complaint is filed. Document your complaint in writing (email is best), note the date, and keep copies. If adverse action follows within a period that suggests connection, consult an employment attorney immediately.

Myth 5: “The amount is too small to bother with.”

Reality: FLSA §16(b) makes reasonable attorney fees and costs mandatory awards for successful plaintiffs — paid by the defendant employer, not deducted from your recovery. This means that employment attorneys take FLSA cases on contingency even when individual back wages are $2,000 or $3,000, because their compensation comes from the employer separately.

More importantly, wage theft that appears small individually is often widespread. If your employer has been shorting overtime for five years across a workforce of 50 employees, the aggregate claim is potentially worth hundreds of thousands of dollars. FLSA collective actions allow similarly situated workers to join together, making even small individual violations worth pursuing when the pattern is systemic. The employer pays for everyone’s attorney fees if the case succeeds.

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