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Wage theft runs into the billions

Wage theft does not top the list of concerns for most employers or employees. Nevertheless, the Economic Policy Institute (EPI) found that 2.4 million workers in the ten most populous states lose $8 billion in combined income annually. That amounts to about one-third of all property theft each year. This averages to be about $64 per worker per week for an annual total of $3,300. Here in California, the Department of Labor claims there are 372,000 minimum wage violations each week.

What is wage theft?

Wage theft is defined in several different ways and perpetuated by small businesses and major corporations. Examples include:

  • Employers who rob employees by taking money out of their check or stealing tips.
  • Mislabeling workers as independent contractors when they do the same work as regular employees.
  • Asking employees to work while off the clock.
  • Denying meal breaks
  • Not paying minimum wage
  • Not paying overtime

Some small businesses may look at some of these and regard them as the price of doing business. For example, breaks in restaurants may only come when it is slow, or the waitstaff is expected to share tips with management or ownership.

Hard for employees

Recent rulings outside of California have favored employers over employees -- including last year's Epic Systems Corp. v. Lewis, where the Supreme Court ruled it was legal to require employees to sign away rights to join class-action lawsuits. Moreover, many of the employees do not have the ability, knowledge or money to mount a fight to collect stolen wages.

Employers beware

The DOL is usually in charge of enforcing wage theft law. In 2018, it returned a record $308 million to employees. This includes $130,000 judgment against Virginia-based home-care agency that misclassified employees as contractors (the owner had to repay the money).

Some cities are taking this crime seriously, with one owner of several Papa John’s franchises in New York sentenced to 60 days in jail for failing to pay minimum wage or overtime. Here in California, the state's Labor and Workforce Development Agency cited RDV Construction for nearly $12 million in fines.

Labor activists claim that many rules are not being enforced, and fines go uncollected. Still, the tide is moving towards more accountability, particularly among low-income workers in the hospitality industry, janitorial services, fruit pickers, warehousing, and elderly care. Business owners with concerns about potential fines or even jail time can serve their own best interests by working with an experienced employment law attorney.

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