Wage Theft - Expanded Definition

Wage theft is a common problem for many low-wage workers, as observed by Interfaith Worker Justice's network of workers centers. Unfortunately, enforcement by the Department of Labor (DOL) has been inadequate. To resolve this situation, IWJ proposes a partnership between workers centers and other worker advocates on the one hand and the DOL to monitor and enforce wage laws on a community basis.

Definition of Wage Theft:

Hundreds of thousands of workers, particularly those in low-wage jobs, suffer the theft of their earned wages by unscrupulous employers. This is a crime that robs from those with the least-the working poor, many of whom either do not know their rights or are afraid or unable to assert them.

Wage theft occurs when:

Workers are paid below the minimum wage, as determined by federal and state statutes.
Workers are paid partial wages or not paid for all the hours they worked.
Hourly workers are not paid time and a half for hours worked beyond 40 hours per week.
Workers are misclassified as independent contractors so that employers can avoid following Fair Labor Standards Act regulations and paying payroll and Social Security taxes.
Employers do not keep proper records of worker hours.
Workers are not paid at all.
Workers do not receive their final paycheck after employment is terminated.
Workers are not paid wages they have been promised.
Workers are not paid prevailing wage on projects covered by the Davis-Bacon Act.
Workers on HUD construction and maintenance projects are not paid prevailing wages.

Failures of Department of Labor Enforcement

The Department of Labor, the government agency mandated to protect workers, has inadequately enforced wage laws. A study by the Brennan Center for Justice revealed that between 1975 and 2004:

The number of DOL wage and hour investigators dropped by 14 percent.
The number of compliance actions (an indicator of the number of businesses investigated) declined 36 percent.
The number of workers due to receive back wages fell 24 percent.

During the same period, the workforce in the U.S. covered by the FLSA grew dramatically-a 55 percent increase in workers and a 112 percent jump in covered establishments. Wage and Hour Division (WHD) capacity shrank while its scope of coverage and potential caseload exploded.

There were promising efforts in the 1990s by the DOL to work with limited resources by emphasizing targeted investigations aimed at industries and employers known to engage in widespread wage theft. Industries with large numbers of immigrant workers have particularly poor track records. An FY2008 report of the Employment Standards Administration found that in companies investigated, there were violations of wage and hour laws in 90% of landscaping companies, 78% of construction companies, 67% of garment contractors, and 63% of agricultural businesses.

However, the current administration prioritizes a complaint-driven process (along with voluntary rather than mandatory compliance programs). Targeted investigations (as opposed to those initiated by an individual filing a complaint) made up 30 percent of all WHD investigations in 1996-1997, but only 23 percent in 2006-2007.

The Role of Workers Centers

In many cases, community-based workers centers have taken on the role of the DOL. Low wage workers are highly unlikely to file complaints with the DOL; if they are aware of DOL's role at all, they are unlikely to visit a government office and take time off work to lodge a complaint.

If a worker is represented by a union or workers' center, that organization will often file on the worker's behalf. Unfortunately, many of the claims face delays, bureaucratic obstacles, and sometimes even settlements of 50 cents on the dollar owed.

Community-based groups like workers centers thus often subsequently or simultaneously take action and put pressure on supervisors and employers to attempt to recover workers' stolen wages.