Wage theft: abusive employers fuel nationwide epidemic

By Paddy Ryan

Wage theft - the non-payment or the under-payment of an agreed upon wage - has been a growing problem across the country, seen in every industry from retail and service to manufacturing and construction. Wage theft primarily affects low-wage unskilled workers, forcing most families who rely on minimum wage below the federal poverty line. Unfortunately the issue has been widely under-publicized and, therefore, vastly unknown to a majority of the American public.

But many recent studies have been conducted over the past few years that are now shining a beacon of light on how bad the growing epidemic of wage theft has become. Universities, labor organizations, community groups, non-profits, and others have been collecting data on the subject for long enough now that a lot of valuable new information has been discovered.

The most common forms of wage theft: the refusal to pay proper overtime, the refusal to honor the minimum wage, and illegal paycheck deductions like transportation costs. Illegal transportation deductions are most frequently seen in the temporary employment industry, where low-wage 'temp agency' workers are driven to and from the job site.

"Although this practice is of dubious legality, many agency workers have little practical alternative but to accept these [transportation] charges if they hope to have a job."

Studies have been conducted across the United States regarding the wage theft epidemic. An especially disheartening independent study from 2009 - Broken Laws, Unprotected Workers - found that a whopping 76 percent of workers claimed they had been underpaid or not paid at all by their employer. The study – conducted by the National Employment Law Project – surveyed over 4,000 low-wage workers throughout the cities of New York, Chicago, and Los Angeles.

In 2010, the Seton Hall Law School Center for Social Justice released a report entitled All Work and No Pay, which documented rampant wage theft throughout the low-wage community in New Jersey. According to their survey results, "54% of the workers statewide were paid less money than they were promised by at least one employer."

One of the most recent independent studies was conducted by New Labor - a community outreach & labor organization - along with Jason Rowe of Harvard University. The study surveyed 291 workers in the New Jersey logistics industry and found that over one-third (36.1%) of those surveyed were not paid in full for the wages that they had been promised. That's almost 4 out of 10 low-wage workers that have been underpaid, or even unpaid, by their employer!

Wage theft doesn't only affect low-wage workers either; it affects everyones paycheck by driving down salaries across the economic spectrum.

"There is a cost to our local economies, with fewer dollars circulating to local businesses, stunting economic recovery. And there is a cost to growth and opportunity as generations of workers are trapped in sub-minimum wage jobs."

Fighting Back

In 2011, the National Employment Law Project released a guide to combating wage theft entitled Winning Wage Justice, An Advocate's Guide to State and City Policies to Fight Wage Theft.

NELP's guide contains seven basic principles to help stop wage theft:

1. Raise the Cost to Employers for Violating the Law.
2. Make Government Agencies Effective Enforcers of the Law.
3. Better Protect Workers From Retaliation.
4. End the Exclusions in Minimum Wage and Overtime Standards.
5. Stop Independent Contractor Misclassification and Hold Subcontractors Accountable.
6. Ensure Workers Are Paid for All Hours Worked.
7. Guarantee that Workers Can Collect from Their Employers.

NELP was able to publish its suggestions with the help of new information, released by organizations like New Labor and Seton Hall, who have provided a better understanding of the problem, and how to successfully combat it.

However, only a limited number of states are actually listening to these suggestions and trying to do something about the problem.

In both New York and California, Wage Theft Prevention Acts were passed in 2011. The New York Wage Theft Prevention Act, expands the civil and criminal remedies that are available when employers fail to comply with the provisions. The California Wage Theft Prevention Act of 2011 differs significantly from the New York law because it requires that notices be given only to non-exempt (hourly) employees. Massachusetts also has wage theft legislation in place, along with Connecticut, Illinois, and (surprisingly) North Carolina.

But all of these state laws need to be strengthened.

According to a new study from the Progressive States Network,

As it turns out, one of the most important findings of this report is that state wage theft laws, in general, are almost universally inadequate. In our scoring system, the two highest-rating states, New York (with an overall grade of C+) and Massachusetts (with a grade of C), only receive 77% and 74% of the total possible points respectively, and it is a steep fall from there: Connecticut, Illinois, North Carolina, and California follow with grades of D, and the other 44 states and Washington, DC receive F’s. Further underscoring the deep drop-off, the tenth-ranked state receives only 52% of the total points, and the bottom eleven states all receive 25% or less. Two states — Alabama and Mississippi — scored zero points.

However, there is some good news. The legislation passed in 2011 has let workers reclaim millions of dollars in stolen wages throughout New York and California.

The National Employment Law Project reports that, "In the past year alone, workers recovered tens of millions of dollars in unpaid wages from their employers in a range of industries. For example, ... New York car wash workers received $3.5 million in unpaid overtime."

Unfortunately, only six states currently have laws dealing with wage theft, and all of those laws need to be strengthened. The fight against wage theft is just beginning and there is much more to be done. Most workers are not as lucky as those workers who were able to recover millions of dollars in lost wages. Many will continue to suffer from the abuses of wage theft, and still desperately need help. It will take a team effort by the liberal media, an informed and concerned citizenry, community organizations, advocacy groups, Democratic politicians, organized labor and the like, to put an end to wage theft for good.

So in that same spirit, please, if you care about the civil rights of workers and the future of organized labor, share this diary. Thank you.