FAQs

Frequently Asked Questions

Down with Wage Theft Campaign

What is wage theft?

The failure to pay workers the wages owed to them – commonly called wage theft – is an epidemic locally, statewide and nationwide. While most Houston employers do right by their workers, too many do not. Being paid less than the minimum wage, being shorted hours, being forced to work off the clock, not being paid overtime, or not being paid at all are pervasive practices among many industries.

How prevalent is wage theft?

A seminal 2009 study of nearly 4,500 low-wage workers found that more than two-thirds experienced at least one pay-related violation in their previous work week, including a quarter of workers who were paid less than minimum wage, and three quarters who were not paid overtime wage owed to them. [1]

This study confirmed the findings of literally dozens of surveys and studies that have found staggering rates of violations of wage and hour laws around the country. Here in Texas, a study found that 38% of construction workers in Texas were misclassified as independent contractors, one in five workers reported being denied payment, and 50% of workers surveyed were not paid overtime wages[2]. Across various industries, employers in the city of Houston had 19,798 wage and hour violations since FY 2008, which amounts to over $18 million in back wages.[3]

Who does it affect?

The consequences of wage theft are severe – for workers, for local economies and law-abiding businesses, and for taxpayers.  Although wage theft happens across various industries, it disproportionately affects low-wage workers. It is also especially egregious in that it affects those who are already live in poverty.[4]

How does wage theft affect communities and tax payers?

Local economies also suffer when wage theft becomes a way of doing business. Responsible businesses often can’t compete with wage cheats that shave their operating costs by breaking the law. And the less money wage earners bring home, the less they have to spend at local businesses, dealing a further blow to local economies already suffering the effects of the Great Recession.

When workers go without pay, tax revenues are shorted as well. Employers that cheat workers also rob state, local, and federal budgets of payroll taxes and contributions to the unemployment and workers compensation systems. A recent report among Austin construction workers found that at least $8,618,869 of federal and state unemployment taxes were lost in 2009 due to employer’s misrepresentation of worker income and failure to pay payroll records. [5]

Why can’t current laws protect workers against wage theft?

Many workers never make complaints about these violations, fearing retaliation if they speak up. This fear is well-founded – according to one major study, 43% of workers who raised complaints faced employer retaliation such as termination or suspension, cuts in wages or hours, and threats to call immigration authorities.[6] The state of Texas currently does not have any anti-retaliation laws that protect employees for making these types of complaints.

Public enforcement of wage and hour laws cannot keep up with violations. On the federal level, the U.S. Department of Labor has only 1,000 investigators for the more than 7 million workplaces nationwide.[7] Moreover, the DOL can only investigate wage and hour violations in workplaces of employers who are involved in interstate commerce and are grossing over $500,000 annually.[8]

On the state level, the Texas Workforce Commission is the only agency charged with enforcing the Texas Payday Law. Currently, there are only 24 investigators in the state, working out of Austin, to handle the thousands of wage claims the agency gets every year from across the state. As a result of this policy and lack of resources, the TWC has not conducted a field investigation since 1993.[9]

A third recourse for workers is filing a suit, either criminally through an attorney or in a civil procedure with Small Claims court. Although a typical wage theft case of $800 may be an entire month’s rent, utilities, and food for a low-wage worker and their family, that amount hardly provides a high enough profit margin for an attorney to take on the case in court, even with liquidated damages and attorney’s fees upon favorable judgment. If this same worker chooses to file in Small Claims Court without an attorney, he or she faces an upfront cost of $104 just to file a small claims petition. Even with a favorable judgment, there is no guarantee that the worker will actually recover the stolen wages. A writ of execution and abstract of judgment will cost the worker an additional $135[10]. That amounts to a total of $239, not including travel costs and work hours lost to attend court and follow up with this process.

What does the proposed ordinance say?

See the full language here on the City of Houston’s website: http://www.houstontx.gov/ordinancefeedback/wagetheft-final.pdf

What companies would the ordinance apply to?

  • Any company that has a documented record of wage theft (criminal conviction, final decision from the Texas Workforce Commission, or final decision from the court)

How would a worker file a complaint and what would they need?

  • The office of the general inspector would take claims with proof of the final finding of wage theft and full information on all the employers involved
  • If the employer has a contract with the city or is working under a contract, it would be good to bring as much information on the nature of the work and its relation to the city’s services
  • The office of the inspector general has attorneys on staff that know labor law and are well prepared to also help advise workers who might have claims that are on-going

What would the sanctions be?

  • All companies found guilty of wage theft would be listed on a public database on the city website for five years
  • Such companies found guilty of wage theft (criminal or civil) would be barred from receiving a contract or sub-contract with the city
  • For companies with a criminal conviction of wage theft, they will also NOT be able to access specific city permits of licenses (not all licenses are included)
  • City contract work might include: debris clean-up, landscaping, janitorial, street pipe work, metro line construction, public housing construction, etc

How does this affect my business?

The proposed system takes into account an ethical, pragmatic, and profitable approach to doing business that benefits employers, employees, consumers, and the community. The ordinance will level the playing field, and ensure that responsible businesses can thrive in our city. Wage theft creates an unfair advantage; businesses that pay fair wages cannot compete against employers who cut costs by stealing their workers’ pay. When workers are underpaid or not paid at all, productivity decreases and results in lower quality products and services. Wage theft not only steals from the worker, but ultimately from the local economy. This can destroy community businesses, as working families cannot spend wages they haven’t received.

 


[1] Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities (New York: Center for Urban Economic Development at UIC, National Employment Law Project and UCLA Institute for Research on Labor and Employment, 2009), available at http://www.nelp.org/page/-brokenlaws/BrokenLawsReport2009pdf.

[2]  Cox, Lauren; Timm, Emily; Tzintzun, Cristina. Building Austin, Building Injustice: Construction Working Conditions in Austin, Texas. Workers Defense Project, June 2009.

[3] U.S. Department of Labor. Wage and Hour Compliance Action Data. Retrieved from  http://ogesdw.dol.gov/raw_data_summary.php

[4] Bernhardt et al. (2009)

[5] Cox et al. (2009)

[6] Amy Amy Traub and Andrew Friedman, “Workers Deserved to be Paid,” Albany Times Union, April 5, 2010, available at http://www.drummajorinstitute.org/library/article.php?ID=7387, last accessed December 10, 2010.

[7] U.S. Dept. of Labor, FY 2012: Congressional Budget Justification: Wage and Hour Division, at 20-23, http://www.dol.gov/dol/budget/2012/PDF/CBJ-2012-V2-03.pdf (accessed on May 13, 2011) (showing increased funding for enforcement in 2010, 2011, and proposed increases for 2012).

[8] 29 U.S.C.  § 206,207

[9] Julien Ross, A Fair Day’s Pay: The Problem of Unpaid Workers in Central Texas, 10 TEX.HISPANIC J.L. & POLICY 117, 154 (2004).

[10] Harris County Justice of the Peace Courts website, http://www.jp.hctx.net/info/CombinedCivilCourtCosts.pdf, accessed 02/07/2012

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