How To Make Sure Your Employer Isn’t Illegally Shorting You

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One of the smartest ways to improve your finances and work toward money goals is by increasing your income. If you’re interested in bringing in more money, start by making sure you’re getting adequately paid for work you already do.

Millions of workers each year are victims of wage theft, meaning they do not receive pay to which they are legally entitled, according to the Economic Policy Institute (EPI). Workers lose billions of dollars’ worth of pay and other benefits when employers fail to follow labor laws.

If you think you’re entitled to more pay than you’re getting, take a look at the most common violations of labor laws that lead to wage theft — then learn what you can do to get the pay you’re entitled to.

5 common forms of wage theft

Unfortunately, there are many ways that workers can lose out on fair pay. These are the most common, however, and can often lead to the biggest losses in wages.

1. Asking for off-the-clock work

The Fair Labor Standards Act’s (FLSA) main goal is to ensure that workers are fairly compensated for their work. The FLSA defines “hours worked” as including “all time an employee must be on duty, or on the employer’s premises or at any other prescribed place of work.”

This means that employers must pay you for any work you are required to do, or any time you’re required to spend onsite.

This extends to trainings and meetings, or if workers are encouraged to show up early to prep a workstation before clocking in or clean up after clocking out upon closing. Even time spent changing into a uniform could, in some cases, be considered “time worked.”

2. Failing to pay for overtime

The FSLA also has federal guidelines in regards to overtime pay. Workers must receive overtime pay, equal to time-and-a-half their regular pay, for hours worked past 40 hours in a work week.

Sometimes employers do not track, or workers do not report, overtime hours worked. Overtime infractions could also include employers who allow employees to take work home and continue it after hours.

This issue commonly arises when employees are improperly classified as exempt from overtime restrictions when they aren’t.

Mitchell Langbert, a Brooklyn College associate professor of business with a focus on human resources, says his students frequently raise situations in which they worked overtime for which they weren’t paid.

“One student recently said he worked in a drugstore chain and was not paid overtime to stock shelves and handle inventory because he was considered managerial,” Langbert says.

3. Misclassifying workers as exempt

Under FSLA guidelines, some employees are exempt from overtime pay due to the nature of their work, what they are paid, and how they are paid.

However, workers are often misclassified as exempt, which is one of the most common ways employees miss out on overtime pay.

Joseph Richardson, Esq., a labor and employment attorney based in Southern California, says that workers and employers think that exempt status is a question of whether pay is hourly or salaried, or how high the pay is. They might also think that because the employer and employee agree on exempt status, this agreement is enough.

“Neither is true,” Richardson says. “The key question is whether more than half of what an employee does falls into an exempt category, regardless of how much they are paid.”

Exempt categories are outlined by the FSLA:

  • Executive
  • Administrative
  • Professional
  • Computer
  • Outside Sales

In addition to performing duties defined by the FSLA as exempt, workers must also be salaried and earn a minimum of $913 a week, equal to $47,476 per year (beginning December 1, 2016).

4. Withholding tips

Employees who make tips of $30 or more a month fall under special rules about tipping. They are entitled to keep all tips they make, but this might reduce the hourly pay. However, the worker is always entitled to pay (combined tips and wages) equal to at least minimum wage for the hours worked.

Tips might also be pooled and divided among shift workers so that they are divided equally among all tipped employees. But payouts from pooled tips must only go to workers “who customarily and regularly receive tips,” according to the Department of Labor.

For example, a Manhattan restaurant manager was caught illegally taking a share of the tips he pooled for his staff, reports the Economic Policy Institute. This was illegal as managers do not receive customer tips.

5. Treating independent contractors like employees

Another issue of wage theft is having workers filed as independent contractors, but treating them like employees.

If you receive a 1099 instead of a W-2 for your taxes, you are classified as an independent contractor. But if you “perform services that can be controlled by an employer (what will be done and how it will be done),” you might actually be closer to an employee, according to tax laws.

Workers who are misclassified as independent contractors can lose out on a lot of wages and other benefits. These can include overtime pay, paid time off, health insurance coverage, and more. Independent contractors will also face a self-employment tax, and will have to pay their own payroll taxes.

What to do if you suspect you’re a victim of wage theft

If your pay doesn’t match up with what’s required under labor laws, take action.

“Seek information to understand your rights,” Richardson suggests. “This can be through an attorney, your state labor board, or through doing self-research.” Rules can vary widely from state to state, so make sure you’re checking both local and federal labor laws.

If you do think your employer is breaking labor laws, don’t assume it’s with the aim to steal wages from you. Many cases of labor law violations are inadvertent.

“Not all noncompliance is strategic and greedy,”  Langbert says. “Many firms do not understand the implications of the law because of its complexity.”

Bring your concerns up with your manager or your company’s human resources department. Try to avoid coming off as confrontational, and frame the conversation as you being helpful.

Hopefully, your employer will be receptive to the conversation and take efforts to investigate and comply with any laws they might be violating. This might include correcting their practices so you’re paid fairly and paying any back-wages you’re owed for past work.

As a worker, labor laws are in place to protect you and ensure you’re getting fair pay for your hard work. Make sure you’re getting the wages you’ve earned, and it could benefit both your bank account and your work-life balance.

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1 Important Disclosures for Laurel Road.

Laurel Road Disclosures

  1. VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes.

2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student Loan RefinanceFixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score
  2. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)

3 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

4 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision at http://www.citizensbank.com/EdRefinance, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
2.57% – 5.87%Undergrad
& Graduate
Visit Earnest
2.80% – 6.38%1Undergrad
& Graduate
Visit Laurel Road
2.48% – 7.52%2Undergrad
& Graduate
Visit SoFi
2.47% – 7.99%Undergrad
& Graduate
Visit Lendkey
2.57% – 6.65%3Undergrad
& Graduate
Visit CommonBond
2.72% – 8.17%4Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.