Is Your Employer Stealing from You? A Handy Guide to Spotting Wage Theft

By Shounak Dharap

Wage theft is the illegal practice of not paying workers for all their work, and encompasses various forms of wage law violations. In California, tens of thousands of workers lose millions of dollars in wage theft by employers every year. This article is a reference guide to some of the most common areas of wage theft: minimum wage, overtime, tips, meal and rest breaks, reimbursements, and employee misclassification.

Minimum Wage

Minimum wage laws set the minimum hourly pay an employer must provide to an employee. As of January 1, 2023, the minimum wage in California is $15.50 per hour—much higher than the federal minimum wage of $7.25. Many cities and counties have even higher minimum wages. For example, as of July 1, 2023, the minimum wage in San Francisco is $18.07 per hour. So which minimum applies? Employers must adhere to the strictest standard—that is, the applicable minimum wage most favorable to its employees. These minimum wages apply to adults and minors alike, and employers can’t force employees to agree to a pay rate lower than minimum wage.

Example: Maria works at a retail store in San Francisco where the minimum wage is $18.07 per hour. However, her employer pays her only $15.50 per hour, arguing that it’s the state minimum. If Maria works 40 hours per week, she is getting paid $620 for a week of work. She should be getting paid $722.80. This discrepancy of over $100 is wage theft.


Workers who are protected by overtime laws are called nonexempt employees, because they aren’t exempt from overtime protections. Exempt workers, like salaried managers and certain professionals, are not protected by overtime laws and not owed overtime based on the hours they work.

Nonexempt employees are entitled to overtime that is 1.5 times their regular rate of pay, for all hours they work more than 8 hours per day or 40 hours per week. They’re also owed double time—2 times the regular rate of pay—for all hours they work more than 12 hours in a single day.

If a nonexempt employee works all 7 days in a week, they must be paid 1.5 times their regular rate of pay for the first 8 hours they work on the 7th day, and 2 times the regular rate of pay for all hours they work over 8 hours per day on the 7th day.

Example: John works as a security guard and often works 10-hour shifts. He is paid $20 per hour. That is his regular rate. His employer only pays him his regular rate for all 10 hours. If John works 5, 10-hour days, he is paid $1.000 for a week of work. But since he is working 2 hours of overtime every day (and 10 hours of overtime per week), he should be getting paid 40 hours at his regular rate and 10 hours at his overtime rate, which is $30. He should actually be getting paid $1,000 for his week of work. This $100 underpayment is wage theft.


In California, tips belong to the employees. That means employers or their agents—i.e. managers—can’t take a portion of employee tips for themselves. This is known as a tip credit, and is unlawful.

Employers can, however, implement a tip pool policy under which employees pool their tips amongst each other. But even in a tip pool, the employer or agent cannot participate and take a share of the pool.

Example: Emma, a server, receives tips from customers. At the end of the night, the manager makes the servers put all their tips into a jar and then splits it among everyone equally, taking an equal portion for himself. This is wage theft, since the employer’s agent isn’t allowed to take a portion of employee tips.

Meal and Rest Breaks 

Most workers must receive a 30-minute unpaid meal break when working more than 5 hours per day, and an additional 30-minute meal break when working more than 12 hours per day. They must also receive a paid 10-minute rest period for every 4 hours worked.

These breaks must be uninterrupted, meaning an employer cannot ask or expect the employee to work during that break. If the employer does not provide a break, they must provide one hour of additional pay—called premium pay—for all meal breaks missed during a day, and one hour for all rest breaks missed during a day.

Example: Cecilia works as a cashier at a retail store. She is scheduled to work from 9 am to 5 pm. Because the day is particularly busy, her manager asks her to delay her meal break until after the customer rush subsides, which doesn’t happen until 2 in the afternoon. Because she took her meal break after 5 hours of work, she is entitled to one hour of premium pay. Additionally, because the line of customers at her cash registers doesn’t subside all morning and there are no other staff members to relieve her, Cecilia misses one of her 10-minute rest breaks. She is therefore entitled to another hour of premium pay for the missed rest break.


Employers must generally reimburse employees for supplies reasonably necessary for the performance of their job. For employees who are required to drive their personal car, this includes mileage reimbursement (65.5 cents per mile in 2023). This can also include cell phone data plans for employees who have to use their personal cell phones, uniforms, and tools.

Remote or hybrid workers must similarly be reimbursed for necessary expenses they incur in order to perform their work from home, including, for example, computers and accessories and internet access.

However, this doesn’t give an employee free reign to purchase high end equipment and then submit for reimbursements without prior approval. Employers can require that an employee seek approval before purchasing equipment and establish other restrictions—for example limitations on the quality, brand, or price or a particular purchase.

Example: Pat works remotely as an IT specialist. In order to do his job, he needs a high speed internet connection and a computer. He goes to his supervisor and asks if he can purchase those items and submit the receipts for reimbursement. His supervisor says: “We’re not going to pay for tech for you to use at home. You have to buy it yourself.” This is unlawful, as those expenses are necessary for him to perform his job duties, and the denial of reimbursements is wage theft.

Employee Misclassification 

Sometimes, the way a worker is hired can set up a pattern of ongoing wage theft. Employers sometimes wrongly classify workers as independent contractors rather than employees to avoid providing them with the wage protections of employment. Similarly, employers also misclassify workers as exempt (for example, salaried managerial workers)—even though they do the same job as a nonexempt employee—in order to avoid paying them overtime or other wage protections.

Example: John, an employee at a fast food restaurant, is promoted to shift supervisor and paid a salary instead of an hourly wage. Despite his new role, his duties remain largely the same as when he was a crew member; he spends 90% of his time taking customer orders, preparing food, and cleaning the restaurant. The only difference is that now when he works 60 hours of week he doesn’t get any overtime. This is misclassification, and it is a form of wage theft.

Many times, wage theft is unreported because employees are simply unaware they are entitled to more. It’s important for employees to routinely examine their pay stubs for compliance with the wage laws discussed here, and if any issues are found, employees should contact an attorney right away to discuss their options. At Arns Davis Law, our attorneys routinely litigate wage theft cases, including through representative enforcement actions under the Private Attorneys General Act, in which the actions are litigated with the plaintiff standing as a proxy for the State of California to hold lawbreaking employers accountable.

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