Wage Theft Goes Unpunished

If you rob a liquor store and get caught, you may serve time in prison.

But nothing much happens when an unscrupulous employer steals money from an employee’s paycheck.

That’s the sad conclusion of a national report recently released by the Progressive States Network (PSN), entitled,  Where Theft is Legal: Mapping Wage Theft Laws in the 50 States.

The PSN report finds that state laws are grossly inadequate to combat the epidemic of “wage theft” by unscrupulous employers in the United States. Some states levy no fines at all for wage theft, according to the report, while most others invoke penalties smaller than a speed­ing ticket.

 Wage theft is the systemic non-payment of wages that owed to workers.

The PSN estimates that more than 60% of low-wage workers suffer wage violations each week. On average, the PSN reports, low-wage workers lose $51 per week to wage theft, or $2,634 per year.  For low-wage workers, that amounts to 15% of their annual income, at average earnings of $17,616 per year.

The problem also costs states millions of dollars each year in lost revenue.  Yet, according to PSN, the vast majority of states have few, if any, protections against wage theft.   “Our comprehensive survey of state laws … reveals that 44 of the 50 states (plus Washington, DC) do not receive passing grades on combat­ing the wage theft epidemic,” states the PSN report.

Even states that ranked highly in the PSN survey –  New York and Massachusetts –  received barely passing grades.

Two states — Alabama and Mississippi — scored zero points in the survey, indicating they essentially offer workers no protection at all against wage theft.

Wage theft typically occurs when employers misclassify workers as exempt employees under federal or state wage and hour laws to avoid paying overtime. For example, a cashier may be called a manager even though he or she has no management duties.. Or employers fail to pay workers the minimum wage or cheat them of earned benefits.  Subcontracting employers often try to shirk their responsibilities under wage-and-hour law by claiming that a temp agency or another inter­mediary is actually the sole employer responsible for wage payment.

The PSN reports the ability of the federal and state governments to enforce wage and hour laws has sharply declined in recent years.

The U.S. De­partment of Labor (USDOL) has only one enforcement agent for every 141,000 workers, down from one per 11,000 workers in 1941.  The PSN reports that state revenue shortfalls and layoffs have resulted in less than 15% of the enforcement coverage offered by state agencies several decades ago.

In 2008, the National Employment Law Project (NELP) and a team of advocates, policy groups, and academic research centers surveyed workers in Chicago, Los Angeles and New York and  found:

  •  64% of low-wage workers experience wage theft each week.
  • 26% are paid under the legal minimum wage.
  • 76% of workers owed overtime go unpaid or underpaid.

Since the NELP report, New York passed the Wage Theft Prevention Act of 2010, which is considered to be the strongest state law in the country, with beefed up anti-retaliation provisions, requirements for notification, and a remedy that allows workers to recover damages.

Founded in 2005, the PSN provides coordinated research and strategic advocacy tools to state legislators and their staffs, empowering these decision-makers to adopt progressive policies.