Wage Theft and Its Consequences

Written By Lindsay Fallon, Outreach and Development Coordinator at Towards Justice, and Chelsea Miller, Summer Law Clerk at Towards Justice. 

While not a household concept, wage theft is a rampant problem. The Colorado Fiscal Institute estimates that $750 million in earned wages is stolen from Colorado workers each year, and the Economic Policy Institute estimates that $50 Billion is stolen from workers nationwide on an annual basis. This widespread theft disproportionately victimizes low-wage workers, immigrants, women and racial minorities. It can drive workers to financial ruin, increase stress, upend relationships, undermine civic participation, and hamper economic mobility.

There are many ways that wage theft can happen.  The most obvious is non-payment of wages—when employers do not pay workers for some or all of the hours worked.[i] Underpayment of wages—when employers pay workers less than promised, or pay less than the state or federal minimum wage, or deny workers overtime wages—is another form of wage theft.[ii] Employers engage in wage theft when they misclassify workers—either as independent contractors to avoid paying worker’s compensation, unemployment compensation, and income tax, or as exempt salaried workers to avoid paying overtime hours.[iii] Wage theft also occurs when employers illegally deduct the cost of tools, materials, and transportation necessary to do the job from workers’ paychecks (deduction violations) and when employers pay workers who receive tips less than is required by law, or force workers to share tips with managers or employers (tip violations).[iv]

Wage theft primarily harms low and medium-income workers, including construction workers, agricultural workers, nursing home workers, garment factory workers, and restaurant workers. In a survey of low-wage workers in New York, Los Angeles, and Chicago, one quarter of workers were paid less than the required minimum wage, two of every three workers experienced meal or break violations, and three of every four workers were underpaid or not paid at all for overtime work.[v] Disturbingly, almost 70% of the workers had experienced at least one pay violation in their previous week of work.[vi]

The sheer amount of money stolen from workers across the U.S. is staggering, but the impacts of wage theft go far beyond that dollar amount. Many of these impacts are fairly obvious: people who work long hours without overtime pay are deprived of the opportunity to either get another job or to spend more time with their families and friends; wage theft can deprive people of the money needed to save for a home or to send kids to college; for the lowest paid workers, wage theft is the difference between paying the utilities or losing service, between paying rent or getting evicted, between providing food or going hungry.[vii] But, the impacts of wage theft are not limited only to the victims of wage theft. In fact, wage theft harms all Americans in many ways.  Read More about Wage Theft and Its Consequences HERE


What to do if a worker becomes a victim of wage theft?  Contact Towards Justice at (720) 441 2236 or info@towardsjustice.org

Towards Justice is a non-profit organization that empowers America’s chronically marginalized workforce to address systemic injustice, defend family financial stability, and ensure that work is the most effective strategy for economic success in our country.

Towards Justice offers bilingual (English/Spanish) free and confidential legal intakes and case analysis to wage theft victims in Colorado.  For more information visit our website: www.towardsjustice.org

[i] Bobo, Kim. Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—And What We Can Do About It (New York: The New Press, 2009), 23-41.

[ii] Bobo, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—And What We Can Do About It, 23-41.

[iii] Bobo, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—And What We Can Do About It, 23-41.

[iv] Bobo, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—And What We Can Do About It, 23-41.

[v] Bernhardt, Annette, et al. “Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities,” National Employment Law Project, 2009, http://www.nelp.org/content/uploads/2015/03/BrokenLawsReport2009.pdf.

[vi] Bernhardt, “Broken Laws.”

[vii] Bobo, Wage Theft in America: Why Millions of Working Americans Are Not Getting Paid—And What We Can Do About It, 21-22; Meixell and Eisenbrey, “An Epidemic of Wage Theft.”

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