- Basics
Wage theft occurs when employers violate--and government fails to enforce—basic wage and hour standards. Wage theft takes many forms, and includes being paid less than the minimum wage, working off the clock without pay, getting less than time and a half for overtime hours, having tips stolen, and seeing illegal deductions taken out of paychecks. And, as we have learned from a string of high profile cases and a growing body of research, the practice is widespread. It occurs in industries that span the economy—retail; restaurants and grocery stores; caregiver industries such as home health care and domestic work; blue collar industries such as manufacturing, construction and wholesalers; building services such as janitorial and security; and personal services such as dry cleaning and laundry, car washes, and beauty and nail salons. Immigrants, women and people of color are particularly hard hit, although all workers are at risk.
By any measure, wage theft in America is threatening to become a defining trend of the 21st century labor market. In recent years, workers have recovered tens of millions of dollars in unpaid wages from their employers in a range of industries. For example, Staples paid $42 million in illegally underpaid wages to its assistant store managers, New Jersey truck delivery drivers received $2 million in an unpaid overtime settlement, Wal-Mart settled an unpaid wages case for $35 million in Washington State, and New York car wash workers received $3.5 million in unpaid overtime.
- Current Landscape
Fighting wage theft chiefly involves strengthening and enforcing state laws, although there are some policy levers (such as business licensing) available to local governments as well. The National Employment Law Project's, Winning Wage Justice report (2011) details numerous state and local legislative initiatives to toughen penalties on employers, beef up enforcement efforts, protect workers from retaliation, tighten the exclusions which leave many workers exempt from wage and hour laws, rein in the willful misclassification of employees, ensure workers are paid for all hours worked, and create or sustain the mechanisms that allow workers to collect wages due.
- FAQ
Aren't there laws already in place to address this problem?
Yes, but repercussions for violating the law are often not strong enough to dissuade employers and declining resources and ineffective strategies by government enforcement agencies mean that employers have little fear of getting caught. Inadequate protections for workers who want to make claims of wage theft result in high rates of retaliation. And new forms of work and production, including outsourcing to subcontractors and misclassifying workers as independent contractors, have created confusion and allowed employers to move growing numbers of workers outside the reach of the law.
Who's harmed by wage theft?
The case for fighting wage theft is first and foremost about fairness and justice—but it is also about economics. There is the significant cost to workers and their families, which in one week alone is estimated to be $56.4 million in New York, Chicago and Los Angeles combined. There is the cost to taxpayers in lost revenues when employers fail to pay payroll taxes. There is the cost to our local economies, with fewer dollars circulating to local businesses, stunting economic recovery. And there is the cost to growth and opportunity as generations of workers are trapped in sub-minimum wage jobs.
- Learn More
The National Employment Law Project’s exhaustive 2011 study, Winning Wage Justice documents both the prevalance of wage theft and a broad array of local and state solutions and campaigns. Data and campaign resources are also available from Interfaith Worker Justice and from their dedicated wage theft website. For background on the “race to the bottom” encouraged by uneven and lax enforcement of state wage and hour laws, see the the 2010 study by Ohio's Policy Matters, Investigating Wage Theft: A Survey of the States, and the April 2011 study by the National State Attorneys General Program at Columbia Law School. The 2009 study, Broken Laws, Unprotected Workers surveyed more than 4,000 workers in low-wage industries in Chicago, Los Angeles, and New York, and found that 26 percent had been paid less than the minimum wage in the preceding week, and 76 percent had either been underpaid or not paid at all for their overtime hours. The Restaurant Opportunities Center series, Behind the Kitchen Door, documents wage and hour violations in a number of settings (including Detroit, Chicago, New Orleans, LA, and Washington.
Local (zipcode), state and national data can be found at the Wage and Hour Divisions's Enforcement data portal.
