4 Pay Practices That Feel Illegal But Surprisingly Aren’t

Paying Some Employees Less than Minimum Wage

I’m sure you’ve heard of minimum wage. You know, the absolute least amount of money a job can pay without breaking the law. What you may not have heard about, though, is the subminimum wage. It’s a loophole in federal law that lets companies get away with paying less than minimum wage to workers who are too young to drink. Companies that employ minors can (legally) pay as low as $4.25 per hour for a limited time, usually the first 90 days of their employment.

But they’re not alone. There is also a subminimum wage law for disabled workers, and it’s worse.

Federal labor law carved out a rule that lets companies pay pennies to disabled workers. Unlike the youth subminimum wage, this one isn’t limited to the first 90 days of employment. The rule was created in the 1930s with noble intentions: to encourage companies to hire disabled veterans returning home from war. But as time has passed, companies have used it to exploit workers and keep them trapped in low wage, dead-end jobs.

In recent years, this pay practice has caught the attention of lawmakers and the media. Many have sponsored bills to end the subminimum wage in their states. Those bills have been successful in states like Vermont, Oregon and Maryland. But similar bills in Congress have so far failed to end subminimum wages on a national level. So this discriminatory practice is still widely used and perfectly legal, at least in Texas.

Not Paying Unused PTO When You Leave the Company

Another pay practice that may surprise you involves paid time off or PTO. There aren’t any federal laws requiring you to be paid for unused PTO when you leave your job. So many states have come up with their own. But Texas isn’t one of them. In Texas, it’s usually not illegal for your employer to pocket your earned but unused PTO when your employment ends. It only becomes illegal if your employer promised in a legally-binding contract or a written policy that it would pay it out but didn’t. Feels unfair, I know. But it’s still not illegal (in Texas).

So, if you’re thinking about quitting your job and you have unused PTO consider using it before you resign. At the very least dust off your employee handbook to double check your employer’s policy about paying out unused PTO. That way you won’t be surprised if it’s not in your final paycheck.

Offering “Unlimited” PTO

While we’re on the topic of PTO, let’s talk about a policy that’s become increasingly popular with employers: unlimited PTO. You may have seen it in a job posting or heard about it from a friend. Maybe even your employer just announced that it’s switching to an unlimited PTO model. With unlimited PTO, there’s no official ceiling on the number of days off you can take. Most often the only real limitation is that you have to get manager approval before you take time off.

Sounds awesome, right?

Not quite. Although it’s marketed as an employee perk, unlimited PTO ends up benefiting the company more than you. That’s because when companies adopt an unlimited PTO model, you end up taking less time off. And, in states where employers are required to pay out unused PTO upon the worker quitting or getting fired or laid off, they don’t have to anymore because it’s unlimited and not earned like before.

Think about it: have you ever received a paycheck for “unlimited PTO”? Yeah, me neither.

Still though, this pay practice remains legal in Texas and many other states.

Keeping Pay a Secret…at least in Job Postings

Imagine you’re searching online for a job, and a posting catches your eye. Everything looks good except there’s a key detail missing: the pay. There’s not even a range anywhere to be found. It might surprise you, but this is totally legal in most states. That’s because there is no federal law requiring employers to disclose upfront how much they’re willing to pay someone to fill a job.

Several states have passed laws requiring companies to include salary ranges in job postings. But Texas isn’t one of them. So, if you work in Texas, you may have to do a little digging to find out if it’s worth applying for the job. Browse sites like Salary Transparency Street and Glassdoor to get the skinny on pay. Or, if it’s an opening at national company, check out the company’s similar postings in a neighboring state with pay transparency laws on the books to get an idea of the job’s going rate.

Most people assume that if an employment practice feels unfair, it must be illegal. But employment laws don’t always work that way. Plenty of practices that frustrate employees remain perfectly legal. That’s why it’s important to understand not just what feels wrong, but what the law actually allows. If you think your employer has crossed the line from legal-but-unfair into actually illegal, that’s when you should contact an employment lawyer. The employment lawyers at Davis Employment Law offer a complimentary case evaluation, and can help answer questions you may have about your pay.