Low-Income Workers Vulnerable to Wage Theft

Low-income workers are the most likely to have their rights under employment laws violated, according to the Economic Policy Institute and federal agencies.

Wage theft refers to employer practices that require employees to work without pay or reduce their pay below the federally mandated minimum wage. Examples include requiring employees to work after they have been clocked out, or failing to pay overtime. The Economic Policy Institute reports that over $8 billion in wages are lost to wage theft each year.

Lower income workers in construction, warehousing, the restaurant industry have been identified as particularly vulnerable and affected by wage theft. Advocates report that those industries have high turnover and workers can be subject to intimidation by their employers – both factors that make reporting wage theft difficult.

Advocates also report that wage theft varies across states. Some states, like California, aggressively prosecute complaints. In 2015 and 2016, California recovered $117 million in wage theft settlements and litigation for workers. Connecticut and New York also report high rates return. Indiana ranks lowest, only receiving $.19 per worker for its wage theft investigation efforts.

While the severity of wage theft may vary between states, advocates say that the resources each state provides to protect workers’ rights is the most important factor. In states that do not provide many resources to investigate wage theft, workers are hesitant to report because they are fearful of retaliation, say advocates.

Wage theft class action lawsuits play an important role in stopping employers from violating employment laws and returning stolen wages to workers, according to the Economic Policy Institute. Although the states investigate and prosecute wage theft, class action lawsuits account for the lion’s share of recovery for workers.

Wage theft settlements have increased over the past few years as well, according to EPI. For example, two settlements in class action lawsuits alleging FedEx misclassified workers paid out $466 million. In total, wage and hour class action lawsuits netted $1.2 billion for workers in 2015 and 2016.

The federal Department of Labor also holds employers accountable for wage theft. The agency recovered $513 million in settlements over allegations of wage theft and violation of federal law, including the Fair Labor Standards Act in 2015 and 2016.

Wage Theft

Employees are entitled to fair wages and work environments under state and federal law. Unfortunately, as demonstrated by the EPI and government reports, many employers choose to skirt these laws in the name of the bottom line.

In addition to failure to pay minimum wage, wage theft includes taking unfair deductions from employees’ paychecks, failing to pay overtime, misclassifying employees as exempt or as independent contractors, or requiring employees to continue working without pay.

Workers are protected from retaliation for making wage theft claims under the Fair Labor Standards Act. However, it can still be intimidating for an employee to make a complaint about unfair payment processes.

If you suspect wage theft, contact the attorneys at Bradley/Grombacher to evaluate your claim today.