What is wage theft and how to know if you are a victim of it
“Wage theft,” a term for when money that is rightfully owed to workers is withheld by their employers, has recently become a topic of renewed interest.
In the aftermath of the protests following the murder of George Floyd, some experts (including former labor secretary Robert Reich) were quick to point out that the cost of the damage suffered pales in comparison to the amount of money stolen from employees each year.
Wage theft is a crime that costs Americans billions of dollars a year, but it is rarely prosecuted, and the penalty for those convicted is significantly less than most theft offenses (the maximum penalty for employers who are convicted of wage theft is only $1,000 for each offenseaccording to the Ministry of Labour).
A 2017 study from the Economic Policy Institute (EPI) found that 2.4 million employees in the ten largest US states are losing $8 billion a year to just one form of wage theft – employers paying less than the minimum salary. In states with the most severe cases like Pennsylvania and Texas, researchers found that the average victim lost 30% of their annual salary to wage theft.
If you assume that the patterns of wage theft in the other 40 states are similar — and take into account that the national minimum wage has increased by about a dollar since 2017 — workers nationwide “are losing about $17 billion per year just at minimum wage”. violations,” says David Cooper, senior economic analyst at EPI. (By comparison, shoplifting accounts for $14.7 billion in annual losses, according to personalities from the liberal think tank Demos.)
While there is a legally mandated national minimum wage ($7.25/hour), there are protections to enforce the wage floor for exempt positions, such as tip employees, farm workers, and commercial fishing and of the cannery. This leaves these groups, which are often dominated by immigrants, more vulnerable to wage theft.
Minimum wage violations aren’t the only way employers steal from their employees. Any scenario where you find yourself working without pay, such as taking tables after clocking in, having deductions from your pay to top up costs like a prepaid lunch without your consent, or being misclassified as an independent contractor or sub -dealing in lieu of a full-time employee is illegal.
The latter can be a particularly tricky situation.
According to the taxyou can only be considered an independent contractor if you control what and how the work is done (i.e. a plumber who is hired to install the plumbing for a new development with his own tools and who is reimbursed for all expenses). Companies have been known to try to circumvent these requirements to avoid paying for benefits such as health care and workers’ compensation. The carpool company Uber has been in the crosshairs employee versus independent contractor debate because drivers control their hours but do not get reimbursed for fuel or damage repair. As it stands, that debate has landed in the company’s favor, as Uber ranks as a “digital marketplace” and its drivers “small business owners” who find customers through the app – although a california law requiring drivers to be considered employees is currently making its way through the courts.
Few people are as aware of wage theft as, say, the neighbor who steals their Amazon packages (or “porch pirates”). There’s no “gotcha” style video compilations bosses who make their staff work off the clock to save money. And the victims are usually not middle class obsessed with the video doorbell who have the time—and power– to speak.
“People of color, younger workers, and immigrants have less bargaining power, historically,” Cooper says. “Any time a worker feels like they can’t speak up, they’re more likely to be victimized.”
So legally what can you do if you believe you are not get paid what do we owe you?
First, employees should always ensure that their time and compensation is well documented: incorrect documentation or, in many cases, no documentation at all is one of the biggest problems when it comes to is to prove that wage theft has taken place.
“Believe it or not, most states don’t require companies to provide pay stubs,” says Cooper. “The only requirement is for workers to get documentation showing what their salary will be when they start work, which creates opportunities for exploitation.”
If you feel comfortable, ask your employer to make sure your hours, wages, and deductions are properly recorded. If they refuse, you can (and should!) keep your own independent record of your hours and pay in case you have to file a claim with the Department of Labor.
The second step to take, and this is important, is to seek out support services to help you navigate your options and possibly file a claim.
Instead of going it alone, where you have relatively little bargaining power due to the nature of your position, Cooper suggests reaching out to union leaders, legal aid groups, and state and local agencies that address these types of issues.
“An individual’s claim may be small in the eyes of a lawyer,” Cooper said. When claims can be consolidated through class action, there is a greater chance that victims can receive compensation for at least a portion of their lost wages.