Calculator Methodology

Published by The Click Lab Agency LLC. Last reviewed September 2026. Not legal advice.

This page documents every step of the wage theft damage estimate: how the calculator determines the unpaid wage shortfall for each violation type, how liquidated damages are applied, what state law multipliers represent, and where the estimate diverges from what a court or Department of Labor investigation would calculate. The worked examples on the calculator page apply these rules to three concrete pay situations.

Step 1: Weekly unpaid wage shortfall

The calculator multiplies weekly unpaid hours by the applicable rate for the violation type selected:

• Unpaid overtime. The FLSA requires time-and-a-half for all hours over 40 in a workweek for non-exempt employees (29 U.S.C. §207). What is owed depends on what was already paid. If the employer paid the overtime hours at straight time and simply skipped the premium, the unpaid amount is the half-time premium: regular rate × 0.5 × overtime hours. If the hours were not paid at all, the unpaid amount is the full overtime rate: regular rate × 1.5 × hours. The calculator asks which situation applies and uses the matching multiplier. Earlier versions of this tool applied 1.5× in both cases, which overstated premium-only claims by a factor of three; that was corrected in September 2026.
• Minimum wage violation. Difference between $7.25 an hour (the federal minimum under 29 U.S.C. §206) and the actual rate paid, multiplied by weekly hours. This models the federal floor only. Most states and many cities set a higher minimum, and the shortfall against that higher rate is the number that matters in those jurisdictions.
• Off-the-clock work. Regular hourly rate times unpaid hours. If off-the-clock work pushes total weekly hours above 40, those hours are owed at 1.5× and should be entered as an overtime violation.
• Tip theft. Stolen tips are estimated at the regular hourly rate as a floor. If you have records of actual tips taken, use the true amount. Under 29 U.S.C. §203(m)(2)(B), an employer may not keep any portion of employee tips regardless of whether it takes a tip credit.
• Misclassification. Estimated as missed overtime, using the same premium-only or full-rate logic as the overtime option. Misclassification cases often involve additional recoveries — denied benefits, the employer’s share of FICA, expense reimbursement — that are not modeled here.

Weekly shortfall is multiplied by the number of weeks in the selected lookback period to produce total back wages.

Step 2: Lookback period and willfulness

Under 29 U.S.C. §255(a), an FLSA claim reaches back two years from the date suit is filed, or three years if the violation was willful. “Willful” means the employer knew or showed reckless disregard for whether its conduct was prohibited (McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988)). Ignoring a complaint, an audit, or a DOL letter is the kind of evidence that supports willfulness. The calculator does not decide willfulness for you; enter 104 weeks for the standard period or up to 156 for a willful claim. Many state statutes reach further: three years in California and Massachusetts, six in New York, and ten under Illinois’s Wage Payment and Collection Act.

Step 3: Liquidated damages

Under 29 U.S.C. §216(b), an employer who fails to pay required wages is liable for an additional equal amount as liquidated damages. Section 260 gives courts discretion to reduce or deny liquidated damages only if the employer proves both (a) subjective good faith and (b) objectively reasonable grounds for believing it complied with the Act. Both elements are required; good faith alone is not a defense, and the burden is on the employer. Courts describe this as a “substantial burden,” and it is rarely met, which is why the calculator applies full liquidated damages by default.

State law multipliers reflect stronger statutory penalties:

• FLSA default (2× total). Back wages plus an equal amount in liquidated damages. Applied when no state enhancement is selected.
• Double damages states. California Labor Code §1194.2 provides liquidated damages equal to unpaid minimum wages; New York Labor Law §198(1-a) provides 100% liquidated damages on any unpaid wages; Illinois’s Wage Payment and Collection Act, 820 ILCS 115/14, imposes 5% of the underpayment for each month it remains unpaid, which for a claim that has been outstanding more than 20 months exceeds a simple doubling. The calculator’s “double” option applies a flat 2× as a conservative approximation of all three.
• Triple damages (Massachusetts). The Massachusetts Wage Act, G.L. c.149 §150, mandates treble damages as a non-discretionary remedy with no good-faith defense (Rosnov v. Molloy, 460 Mass. 474 (2011)).

The state options replace, rather than stack on, the federal liquidated-damages calculation. A worker generally cannot recover both FLSA liquidated damages and state liquidated damages for the same unpaid wages, though courts are split on the details.

Exemption and misclassification tests, in brief

The calculator assumes you are a non-exempt employee. Two questions decide that. First, are you an employee at all? Federal law uses an economic-reality test that looks at control, opportunity for profit or loss, investment, skill, permanence, and whether the work is integral to the business. California and Massachusetts use the stricter “ABC test,” under which a worker is an employee unless the hiring entity proves all three of: freedom from control, work outside the usual course of the business, and an independently established trade. Second, if you are an employee, are you exempt from overtime? The white-collar exemptions require both a salary above the DOL threshold and duties that actually meet the executive, administrative, or professional definitions in 29 C.F.R. Part 541. A manager title with no real supervisory authority does not create an exemption.

Known limitations

• Attorney fees. Mandatory for prevailing plaintiffs under §216(b), separately recoverable, and not included in the output.
• State and local minimum wages. Only the federal $7.25 floor is modeled.
• Prejudgment interest. Not modeled; note that New York adds 9% statutory interest.
• Fluctuating workweek (29 C.F.R. §778.114). Employers using this method owe a half-time premium computed on a declining regular rate; requires a separate calculation.
• Regular-rate adjustments. Nondiscretionary bonuses, shift differentials, and commissions are part of the regular rate under 29 C.F.R. §778.108–.115 and raise the true overtime rate above the base hourly figure entered.
• Non-FLSA claims. Final-paycheck timing, meal and rest premiums, expense reimbursement, and prevailing-wage violations are governed by state law and not modeled.
• Collective and class actions. The calculator estimates one worker’s claim.

Sources

• Fair Labor Standards Act, 29 U.S.C. §§203, 206, 207, 216(b), 255, 260
• 29 C.F.R. Part 541 (exemptions); Part 778 (overtime compensation)
• U.S. Department of Labor, Wage and Hour Division, Fact Sheets #17A, #22, #23, #56A
• California Labor Code §§203, 226, 226.7, 1194, 1194.2; Cal. Bus. & Prof. Code §17200
• New York Labor Law §§198, 663; N.Y. C.P.L.R. §5004
• Illinois Wage Payment and Collection Act, 820 ILCS 115/14; Illinois Minimum Wage Law, 820 ILCS 105/12
• Massachusetts General Laws c.149 §§148, 150; c.151 §§1A, 1B
• McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988); Rosnov v. Molloy, 460 Mass. 474 (2011)

Changelog

• September 2026. Corrected the overtime formula to distinguish premium-only claims (0.5×) from wholly unpaid hours (1.5×). Added willfulness, good-faith defense, and exemption sections. Added the state-by-state table and three worked examples to the calculator page. Added sources and this changelog.
• May 2026. Initial methodology published with the two-step shortfall and liquidated-damages model.

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