Wage Theft: The Need for Robust Wage and Hour Enforcement

By Alejandra Gramajo (IWJ work-study student) 

As wage theft continues to hinder the lives of workers, the House Appropriations Committee has acknowledged new solutions are necessary in their most recent hearing on wage theft this past Tuesday. In Chicago alone, a survey of workers in low wage jobs found that 67 percent of individuals who worked more than 40 hours a week, were not paid overtime even though they were entitled to it.[1] This shows just how difficult it can be to enforce wage laws within a state. Enforcing these laws across state lines is even more difficult and is a power that is mainly focused within the U.S. Department of Labor (USDOL).

After all, there are limitations on what states and their corresponding agencies can do about wage theft. Illinois Attorney General, Kwame Raoul, established a Workplace Rights Bureau to fight wage theft in his state. Though other states have become more active on labor issues, limited statutory authority persists. Without authority to enforce wage laws, it becomes difficult to defend the rights of workers.

“The U.S. Department of Labor (USDOL) is the only public enforcer with the ability to investigate wage compliance issues across state lines,” says Attorney General Raoul.[2] Their role is imperative as new provisions have barred workers from seeking any means of action. In particular, the recent U.S. Supreme Court Decision in Epic Systems, allows employers to force mandatory arbitration agreements to their workers, restraining them from pursuing private action.[3] This leaves the USDOL as their only resource.

Clearly, changes in both the state and federal level is necessary. Though a movement toward reform has begun, many states still haven’t taken the proper steps to combat wage theft. In states such as Georgia, Alabama, and Florida there is no state level enforcement to regulate the behavior of employers. As ranking member of the labor appropriations subcommittee, Rep. Tom Cole states, the federal government must play a central role in this issue.

Though the Department of Labor has the means and resources to focus on wage theft and related issues, the prioritization isn’t there. Instead, the USDOL has focused on other projects, such as PAID, in which employers can voluntarily self-report any violations.[4] This program is based on the hopes that the employer will voluntarily compensate any wages that were stolen. Consequently, the lack of punishment for employers fails to incentivize any changes in behavior or actions.

In the last five years, the Department of Labor has managed to recover more than $4.3 billion dollars; however, according to the Economic Policy Institute, this is hardly 10 percent of the total costs in stolen wages.[5] Wage theft is difficult to track but with the right allocation of resources and prioritization methods, it isn’t impossible for workers to recover lost wages.

Laura Huizar, Senior Staff Attorney with the The National Employment Law Project (NELP) and a witness at Tuesday’s hearing, suggests that addressing the importance of compliance assistance is a beginning step. It is also crucial to prioritize strategic enforcement at the federal and state level. She states that it is essential for the USDOL and Wage and Hour specifically to have the resources they need to carry out their mission. Compliance assistance is NOT enough.

Given the magnitude of issues that wage theft brings to the lives of innocent workers, adequate funding is essential to invoking any means of change. Congress must allocate the resources necessary to the Wage and Hour Division so they can fulfill their mission. Only through cooperation, adequate funding, and the prioritization of enforcement and better strategic planning, can we begin to properly enforce basic labor protections for all workers.

[1] Eisenbrey, Ross. “Testimony on the Department of Labor’s regulation expanding overtime rights for salaried employees.” The Economic Policy Institute. June 23, 2016. https://www.epi.org/publication/testimony-on-the-department-of-labors-regulation-expanding-overtime-rights-for-salaried-employees/

[2] Raoul, Kwame. “Combatting Wage Theft: The Critical Role of Wage and Hour Enforcement.” The House Commitee on Appropriations. April 9, 2019. https://appropriations.house.gov/legislation/hearings/combatting-wage-theft-the-critical-role-of-wage-and-hour-enforcement

[3] Harvard Law Review. “Epic Systems Corp. v. Lewis.” April 11, 2019. https://harvardlawreview.org/2018/11/epic-systems-corp-v-lewis/

[4] Wage and Hour Division. “PAID” U.S. Department of Labor. https://www.dol.gov/whd/paid/

[5] McNicholas Celine. “Two billion dollars in stolen wages were recovered for workers in 2015 and 2016—and that’s just a drop in the bucket.” The Economic Policy Institute. December 13, 2017. https://www.epi.org/publication/two-billion-dollars-in-stolen-wages-were-recovered-for-workers-in-2015-and-2016-and-thats-just-a-drop-in-the-bucket/