Wage Theft Prevention and Wage Recovery Act
- Sponsor
- Rep. DeLauro, Rosa L. [D-CT-3]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jun 25, 2026
Bottom line
This bill aims to deter wage theft and improve workers' ability to recover stolen wages by increasing penalties, enhancing transparency requirements for employers, and extending legal recourse options.
What it actually does
This bill amends the Fair Labor Standards Act of 1938 (FLSA) and the Portal-to-Portal Act of 1947 to strengthen protections against wage theft. It introduces new requirements for employers regarding disclosures, paystubs, and timely final payments, and establishes a federal right to full compensation at agreed-upon rates. The bill significantly increases civil and criminal penalties for wage and hour violations, extends the statute of limitations for wage theft claims, and creates a rebuttable presumption in favor of employees when employer records are incomplete. Additionally, it authorizes a new grant program to support entities in preventing wage and hour violations and assisting in wage recovery.
Proponents argue
Proponents argue that wage theft is a pervasive and growing problem costing workers billions annually, disproportionately affecting women, immigrants, and racial minorities. They contend that current federal laws lack sufficient penalties and enforcement mechanisms to deter violations and adequately compensate victims. This bill would strengthen worker protections, ensure fair compensation, and level the playing field for law-abiding businesses by increasing accountability for non-compliant employers.
Opponents contend
Opponents might argue that the bill imposes excessive regulatory burdens and costs on businesses, particularly small businesses, through increased disclosure requirements, higher penalties, and extended statutes of limitations. They might contend that these measures could stifle job creation, lead to frivolous lawsuits, and create an overly litigious environment, ultimately harming economic growth and employer-employee relationships.
The bill is moderately complex due to its amendments to existing labor laws and the introduction of a new grant program, requiring careful reading to understand its full implications.
Section 101, amending FLSA by inserting new Section 5
Employer Disclosure and Paystub Requirements
This provision mandates that employers provide new employees with initial disclosures within 15 days, detailing their pay rate, classification (exempt/non-exempt from minimum wage and overtime), employer name, and contact information. Employers must also provide modification disclosures within 5 days of any changes. Additionally, it requires employers to issue detailed paystubs for each pay period, including hours worked, gross/net wages, pay rates, overtime compensation, deductions, and employer contact info.
Supporters argue
Supporters argue these disclosures are crucial for workers to understand their compensation and identify potential wage theft, empowering them to challenge violations.
Critics contend
Critics may argue that these requirements impose significant administrative and compliance burdens on employers, especially small businesses, without clear evidence of a proportional benefit in reducing wage theft.
Tradeoffs
Balances worker's right to information with employer's administrative burden.
Section 101, amending FLSA by inserting new Section 5(c)
Mandated Timely Final Payments upon Termination
This provision requires employers to provide a final payment, including all compensation and accrued benefits, to a terminated employee within 14 days of termination or on the next regular payday, whichever is earlier. Employers violating this face a penalty of continuing wages (at the regular rate) for up to 30 days.
Section 102, amending FLSA by inserting new Section 8
Federal Right to Agreed-Upon Compensation
This provision establishes a federal right for employees to receive compensation at the rate specified in their employment contract or agreement, if that rate is higher than the minimum wage or overtime rate required by the FLSA. It ensures workers are paid what they were promised, not just the legal minimum.
Section 103(b) and (c), amending FLSA Section 16
Enhanced Penalties for Wage and Hour Violations
This provision significantly increases damages for wage theft. For unpaid wages or overtime, liquidated damages are raised from an equal amount to two times the unpaid amount, plus interest. For retaliation (Section 15(a)(3)), damages are increased to three times the wages lost, plus interest. Civil fines for minimum wage, overtime, or full compensation violations are increased to up to $25,150 per affected employee for initial violations and up to $250,150 for repeated/willful violations. New civil fines are also introduced for disclosure, paystub, and recordkeeping violations.
Section 103(d), amending FLSA Section 16(a)
Stricter Criminal Penalties and Mandatory Prosecution for Willful Violations
This provision increases the maximum criminal fine for FLSA violations from $10,000 to $100,000 per affected employee. Crucially, it mandates that the Secretary of Labor refer cases to the Department of Justice for prosecution if an offender willfully falsifies records (Section 11(c)), violates wage requirements (Sections 6, 7, or 8), and engages in retaliation (Section 15(a)(3)).
Section 103(b)(3)(A)(vi), amending FLSA Section 16(b)
Invalidating Predispute Arbitration Agreements for Wage Claims
This provision explicitly states that the right to bring an action, including joint, class, or collective claims, in court under FLSA cannot be waived by an employee as a condition of employment or in a predispute arbitration agreement. This effectively bans mandatory predispute arbitration for wage theft claims under FLSA.
Section 104, amending FLSA Section 11(c) and Section 15
Enhanced Record Access and Evidentiary Presumption for Employees
This provision grants employees the right to request and receive copies of their payroll records for up to 5 years prior to the request, with employers required to comply within 21 days. It also establishes a rebuttable presumption: if an employer violates recordkeeping requirements, an employee's credible evidence and testimony regarding uncompensated work are presumed accurate, unless the employer provides precise counter-evidence.
Section 201, amending Portal-to-Portal Act Section 6
Extended Statute of Limitations for Wage Theft Claims
This provision extends the statute of limitations for wage theft claims from 2 years to 4 years for ordinary violations, and from 3 years to 5 years for willful violations. Additionally, it tolls (suspends) the running of the statute of limitations during the period when the Secretary of Labor is investigating or taking enforcement action against an employer, until the matter is officially resolved.
Title III, Sections 301-304
Federal Grant Program for Wage Theft Prevention and Recovery
This title establishes a grant program, administered by the Secretary of Labor through the Wage and Hour Division, to provide funding to eligible entities (nonprofits, employers, business associations, higher education institutions, or partnerships thereof). These grants support activities like educating employees and employers, assisting workers in filing claims, aiding enforcement agencies in investigations, and monitoring compliance. The grants are competitive, with priority given to entities serving high-risk industries/areas and those with a track record of preventing wage theft.
This provision adds a sentence to FLSA Section 16(b) stating that the right to bring an action, including joint, class, or collective claims, in court under this section cannot be waived by an employee as a condition of employment or in a predispute arbitration agreement, overriding the Federal Arbitration Act for FLSA claims.
Section 103(b)(3)(A)(vi), amending FLSA Section 16(b)
Why it matters:This is a substantively significant change to labor law and arbitration policy, often a point of contention. Placing it as an additional sentence within an existing subsection might make it less conspicuous than a new, clearly titled section. While technically an amendment, its placement could be seen as an attempt to minimize its immediate visibility.
Case for: Supporters argue that this is essential to ensure workers have full access to justice and can pursue collective actions, which are often the most effective way to challenge systemic wage theft.
Case against: Opponents argue that this undermines the Federal Arbitration Act and removes a valuable, efficient dispute resolution mechanism, potentially leading to increased litigation costs for businesses.
Estimated impact: This provision would significantly alter the landscape of wage dispute resolution, potentially shifting thousands of cases from arbitration to federal courts and enabling more class-action lawsuits.
Section 10 of the FLSA (29 U.S.C. 210) previously dealt with 'Investigations and Inspections' and is repealed by this bill. The new Section 8 (Right to Full Compensation) is inserted after Section 7, and the old Section 10 is simply repealed as a 'conforming amendment.'
Section 102(b), repealing FLSA Section 10 (29 U.S.C. 210)
Why it matters:This is likely a technical cleanup. The original Section 10 was related to child labor investigations and was largely superseded or made redundant by other provisions and agency authorities over time. Its repeal is a technical adjustment rather than a major policy shift, hence its placement as a conforming amendment.
Case for: Proponents would argue it's a necessary technical cleanup to remove an outdated or redundant section of the FLSA, streamlining the statute.
Case against: No specific opposition is typically raised against such technical conforming amendments unless they are found to inadvertently remove a critical, active authority.
Estimated impact: Minimal direct impact on current operations, as the section was likely already inactive or superseded. Its repeal clarifies the statute.