Bosses steal billions from their workers every year

Wage theft takes more from American workers than burglaries and robberies.

CREDIT: AP Photo/Paul Sancya
CREDIT: AP Photo/Paul Sancya

It’s been illegal for a company to pay an employee less than the minimum wage — today, at least $7.25 an hour, although in many states it’s higher — for nearly 80 years. So when Daniel started working at a restaurant in New York City almost a decade ago, he expected that’s what he’d make.

He was wrong. When he began his job, he says his boss paid him just around $5 an hour, despite the law at the time dictating that he had to make at least $7.25 an hour. Tipped workers can be legally paid less if their tips make up the difference, but when he worked in the front of the house as a waiter he said his boss pocketed almost all of the tips he and his coworkers earned.

“He took the whole money, everything,” he said. “It was a huge [amount] of money that he was taking from all of us.”

But he endured the treatment because he needed the work. “I was looking for somewhere I could move on, but you know, [if you] start at 10:00 in the morning and finish at 10:00 at night, [there’s] no time for you to look for work,” he said. So he stayed where he was and didn’t speak up for six years.

“It was very tight,” he said. But “I decided to continue because if I don’t continue, who is going to pay the rent.”

Eventually, though, he had enough. “One day I stopped and I said to myself, ‘We got to do something over here, because this guy — day by day he’s getting richer and richer and we aren’t progressing.’” He talked to his coworkers, but they were all too afraid to speak up and fight back.

He wasn’t deterred. He was lucky enough to connect with Make The Road New York, a social justice organizing group, which helped him come up with a plan to file a lawsuit. Eventually he and four other coworkers sued his former boss in early 2015.

Daniel won his case — but he still didn’t get all that he was owed. When his former employer offered to pay them part of the wages and tips he had stolen from them and change his practices, they decided to take the deal.

“We didn’t want to go too long [with] this process,” he explained. The constant meetings were too time consuming and it was dragging on too long. “I had to find work, a new job for my family… We decided to just take whatever he was giving us.”

Stories like Daniel’s rarely make the evening news. But this kind of illegal behavior — wage theft — is more common than robberies. American employers are stealing from their workers at an alarming rate.

In the ten most populous states in the country, employers steal $8 billion a year from their employees simply by paying them less than the legally mandated minimum wage, according to a new report from the Economic Policy Institute (EPI). For the 2.4 million workers who are affected — 17 percent of the low-wage workforce — that amounts to an average loss of $64 a week. Given that they’re making just over $200 a week, on average, they miss out on nearly a quarter of their earnings.

For someone working full-time under such conditions, he’ll lose $3,300 a year and bring home just $10,500 total — far below the poverty line.

In fact, the report notes, wage theft is pushing a huge number of families into poverty. The poverty rate among workers who are illegally paid less than the minimum wage is over 21 percent, or three times the poverty rate for all minimum wage workers. If, instead, they were paid what they should be, a third would be lifted out of poverty and the rate would fall to under 15 percent.

The Biggest Robbers In America Are Employers – ThinkProgressThe amount of money employers had to pay because they were found guilty of wage theft is nearly three times greater…thinkprogress.orgAnd even these staggering numbers are only a sliver of the problem. Given that the study looks at 10 states, which together represent 53 percent of all U.S. employment, the findings can be extrapolated to suggest that employers across the country steal a collective $15 billion from their employees each year. That figure exceeds the value of all property lost to burglaries, car theft, larceny, and robberies combined each year, which was less than $13 billion in 2015.

Yet wage theft is not discussed very much. “It’s a much more abstract problem,” said David Cooper, senior economic analyst at EPI and an author of the new report. “When someone breaks into your home and steals your jewelry, you know it, it’s tangible, you can feel it right away. If your employer is doctoring your hours or asking you to work off the clock, folks in a lot of cases don’t recognize that that’s theft in the same way as someone breaking down your door and stealing goods from your home.”

EPI’s figures also undercount the full extent of wage theft because they’re only focused on one type of illegal behavior: failing to pay employees the legally mandated minimum wage in their state. But wage theft generally encompasses any way that “employers are keeping money that workers are legally entitled to,” Cooper said: failing to pay overtime, pocketing tips, making employees work off the clock, denying them breaks, misclassifying them as exempt from minimum wage rules, and illegally deducting things from their pay.

Raul, an immigrant and also a member of Make The Road New York, wasn’t even paid anything when he worked at a supermarket for five years. He took the job with the promise that he’d make the minimum wage, but all he ever earned was tips he made from customers for packing their groceries or delivering them to their apartments. At the most, he figures he was earning just $4 or $5 an hour.

“It was very hard,” he said, speaking in Spanish through an interpreter. He had to pay rent and buy necessities while also finding money to send to his daughter back in Mexico.

Eventually he and about a dozen other coworkers filed a suit against the store — and won. The employer was found to owe them over a million dollars. But that wasn’t the end of the story. The store owner sold the supermarket and then disappeared, never paying a cent. “I never received a dollar from the case,” Raul said.

“I was exploited, I had a very bad experience,” he said. “That’s why I fight for the rights of my community against wage theft.”

Daniel, too, is still fighting to push back against wage theft. With Make The Road, he’s advocating for the state legislature to pass laws cracking down on the kind of wage theft he experienced.

“I hope the government does something,” he said.

It’s not an unsolvable problem. One deterrent would be ensuring that when wage thieves are caught, they have to pay. In most places, employers only have to pay a portion of back wages without any other penalty, thus ensuring that it’s cheaper to illegally underpay employees.

“One very concrete solution,” Cooper pointed out, “is having strong penalties.” Some states have passed laws requiring treble damages, or awarding victims three times the value of what they were cheated. In those states, workers experience lower rates of wage theft.

Workers also need more cops on the beat to make sure that employers are paying what they’re supposed to. At the federal level, the agency responsible for such policing, the Wage and Hour Division of the Department of Labor, employs about the same number of investigators as it did about 70 years ago, despite the workforce growing sixfold. In 1948 there was one investigator for every 22,600 workers; today it’s one for every 135,000. That’s led to a decrease in cases, which dropped by 63 percent between 1980 and 2015.

Some states have their own robust departments to complement the Wage and Hour Division’s efforts. Others, however, have nothing at all. Florida, which had the highest rate of wage theft among all of the states EPI looked at, also has the fifth-weakest wage laws in the country and in 2002 eliminated its agency that investigated and enforced wage theft.

“Unless you can make it really hurt for businesses to engage in this sort of behavior, in a lot of places the incentive is for them to screw their workers,” Cooper said, “because they’re probably never going to get caught, and if they get caught the worst that’s going to happen is they pay back wages.”