Wage theft is all around us. Millions of workers each year are robbed of billions of dollars, often forcing them to choose between paying the rent or putting food on the table. It robs from the government’s tax coffers, resulting in cutbacks of vital services. Wage theft puts ethical employers at a competitive disadvantage and can destroy community businesses, as working families cannot spend wages they haven’t received.
What is wage theft and what laws does it break?
- Commonly, wage theft is a violation of the Federal Labor Standards Act (FLSA) which provides a federal minimum wage ($7.25/hour) and requires employers to pay time and a half for overtime worked over 40 hours a week.[i]
- Wage theft also occurs when employers make illegal deductions from your paycheck or steal tips, when they make you work off the clock, or withhold payment after being terminated.[ii]
- Wage theft can also include violation of tax laws, through the misclassification of employees as independent contractors, which excludes employers from having to pay overtime or benefits, as well as their share of payroll taxes, passing on the burden to the worker.
- In the most egregious cases, wage theft occurs when an employer simply refuses to pay any wages to a worker for any amount of hours worked.
How big is the scope of the wage theft problem?
- Wage theft is a $30 billion a year problem nationally.
- According to the DOL’s Wage and Hour Division, employers in the city of Houston had 19,798 wage and hour violations since FY2008.[iii]
- The industries with the most violations have been construction (17%) and full service restaurants ( 16%).[iv]
- Based on Department of Labor records, since FY 2008 employers have agreed to pay out $18,235,720.30 in back wages to Houston workers and$1,661,630.50 more have been recovered through civil monetary penalties.[v]
- Since 2007, Fe y Justicia Worker Center has documented more than $3.5 millon in stolen wages and has been able to recover more than $1.4 million through negotiations, legal actions, and public campaigns.[vi]
- Although these figures are alarming, still more cases exist that are never reported due to lack of information about workers’ rights or for fear of retaliation.
[i] Fair Labor Standards Act, 29 U.S.C. §§201-209 (“FSLA”)
[ii] Texas Payday Law (Chapter 61, Texas Labor Code)
[iv] U.S. Department of Labor. Wage and Hour Compliance Action Data. Retrieved from http://ogesdw.dol.gov/raw_data_summary.php (Total Construction cases comprise highway, street, and bridge construction combined with commercial/institutional construction)
[vi] Working Without Pay, Fighting for Justice: A Report on Wage Theft in Houston and How We can Stop It. Houston Interfaith Worker Justice Center, November 2010. http://www.hiwj.org/images/stories/wage_theft_report__11.16.10.pdf