What Is Wage Theft?

I will admit that until very recently, I’d never heard the term “wage theft,” but it’s a term that I’ve come across fairly frequently in the context of the current debate over raising the minimum wage, so I consulted Dr. Google.

Basically, “wage theft” applies to situations where an employer doesn’t follow applicable wage and/or hour laws–either paying an employee for less time than s/he worked, or at a rate below the legal minimum.

A landmark survey survey of thousands of low-wage workers in New York City, Los Angeles and Chicago found that 26 percent had been paid less than the minimum wage the week before they were interviewed. According to the 2009 report by the National Employment Law Project and two other groups, 76 percent of the workers who put in more than 40 hours did not get paid or were underpaid the required time-and-a-half overtime rate. About 17 percent of the workers put in unpaid time “off the clock” before or after their shifts, another violation. In the three cities alone, the study estimated, low-paid workers were losing more than $56.4 million per week to wage theft.

As one reporter noted, the central problem in enforcing wage and hour laws is that they are basically driven by the filing of a complaint, and most people earning less than minimum wage are understandably unwilling to risk their jobs by complaining, even assuming they know they have that right.

The impact of even a little “skimming” by employers can be significant.

The Economic Policy Institute calculates: “When a worker earns only a minimum wage ($290 for a 40-hour week), shaving a mere half hour a day from the paycheck means a loss of more than $1,400 a year, including overtime premiums. That could be nearly 10 percent of a minimum-wage employee’s annual earnings—the difference between paying the rent and utilities or risking eviction and the loss of gas, water, or electric service.” Overall, according to projections based on surveys of low-wage workers, “wage theft is costing workers more than $50 billion a year.”

In our downsized, privatized, anti-government environment, I guess having adequate personnel to enforce wage laws is just too much to expect.

Why is it I think that if pervasive theft was hurting employers rather than workers, the response would be different?


  1. I was talking to a small employer who ran a couple of restaurants. He only half jokingly said he expected his employees were going to steal from him a little bit. But, he didn’t pay them very much, and if they kept doing their jobs reasonably well and kept the theft to a level where he didn’t have to mess with it, he didn’t mind so much.

  2. I see. “I won’t pay you a fair wage– I prefer to incentivize dishonesty….” What’s wrong with this picture?

  3. SCOTUS recently heard a case on this issue. Employees required to submit to security check for up to an hour after clocking out. Employer refused to hire a few more security guards to reduce time.

  4. Right. On. The. Money. This is also a huge problem among the immigrant worker population. It’s all part of the larger picture in which the disadvantaged are being exploited by business owners(from local farmers to Wal-Mart). Ask ANY migrant farm worker! And we need to be talking about this stuff! Instead, everybody’s talking about some woman’s ass all over Facebook. We have so many dirty little secrets in this country it makes me ill. We need to give teeth to regulation enforcement, bolster unions, and fix immigration(comprehensive reform). Imho
    Thanks Sheila!

  5. Here’s a twist on “wage theft” theory; there were times when working for the City that special jobs required more work in addition to regular duties and of course more time. I was more than willing to work late or use lunch hours to get jobs done on time. The City didn’t pay overtime, I did NOT ask for or expect overtime pay for doing my job even if it took more time. They forced me to take compensation time off; this meant work piled up on my desk waiting for me to return. Naturally, this put me behind at times. I suppose this situation would fall under “wage theft” had I expected to be paid for giving of my time to the City. Laughable looking back on it, frustrating at the time.

    True wage theft and today’s minimum wage battle are not laughing matters; they add to the sad situation of today’s economy and people struggling to keep their heads above ever-rising flood waters of increasing prices and unchanging below standard income levels.

  6. Sheila: good point about the difference between harming employers and employees. NPR was covering a related topic this week: mine safety. Coal miners have been killed or injured in mining operations that have a long list of safety violations stretching across many years. The mine operators owe literally millions in fines. However, the operators are allowed to continue operating in violation of the safety standards and without paying outstanding fines and penalties. There doesn’t seem to be any incentive for state or federal enforcement maybe due to inadequate staffing or legal support or politics.

  7. There were a number of years I worked in a ‘salaried’ position in the financial services industry.
    I was expected to ‘get the job done’. I always worked more than 40 hours and sometimes up to 50.
    My ‘salary’ was $30,000 / year. Today, I think the position should have been re-classified as non-exempt.
    This is another form of wage theft.

  8. No less than Mitt Romney was sure that 47% of American were stealing from the others. Perhaps he was right. He might have just erred in who was stealing from who.

    However if one is a politician trying desperately to find a job, one should always err on the side of those whose support is most lucrative.

  9. I’m willing to bet that wage theft has become much worse during this long recession. Since employers know that their employees don’t have the option of leaving them for another job, they will bend and break the laws to put more money into their own pockets.
    A few years ago I was a salaried employee of an employer that blatantly abused the hourly employees. While the company was growing (thanks to tax abatements and other incentives) the line for employees to clock in took 30 minutes, then 45 minutes. So, this meant that the employees had to show up for work that much ahead of time to be able to clock in on time so they wouldn’t be punished for clocking in late. The funny part of this was, the President was aware of this and didn’t care until he was out in the plant one day and saw the employees standing in a long line waiting to clock out. He came into the office in a rage and demanded that the operations manager get another time clock immediately and wanted it installed the next day. He was NOT going to pay those people just to wait to clock out. That same operations manager had made multiple requests to the President for permission to purchase another time clock as the number of employees kept growing. The President, however, didn’t care how long the employees had to stand in line on their own time. It really was quite funny to see him throw a fit when he realized that it was costing him too.
    As a salaried employee I was informed my 4th day on the job that I would have to spend every other weekend counting inventory. There were three of us that were expected to be there both on Saturday and Sunday all day. Of course, this really reduced our ‘hourly’ wage. Hourly employees were recruited to help out and they were thrilled to be paid OT wages. As a salaried employee I didn’t stick around long. Maybe you’ve seen the commercials for their energy drink.

  10. Jan Gehris hit the nail on the head in her comments above. I would only assert that the scope of this form of wage theft is far greater than anyone knows. It is using the lure of hiring or promoting employees into their first salaried (exempt) position and then placing work demands on them that require even the most productive and experienced workers to put in more than 8 hours per day or 40 hours per week on a recurring basis over a long period of time. In addition to financial services, other industries that exploit this to a greater degree than others are information technology services and K-12 education. Even though many teachers in the latter category are represented by unions, in many states including IN, they no longer have bargaining rights for issues related to working conditions.

  11. How many Teachers are personally financing materials for the classroom ?

    BTW. Pete …

    (However if one is a politician trying desperately to find a job, one should always err on the side of those whose support is most lucrative.)

    Very nice, I like the above statement.

  12. As a former IT professional, this was how they abused us. They gave us non-exempt (no overtime) positions but made us work weekends, holidays and overnight to update server equipment and said, sorry, you signed up for this even though we didn’t. We had to have cell phones on us, turned on, 24/7/365 so that we were available if our systems failed. In order to get these jobs, you needed a bachelor degree and certifications in the software you monitored or maintained. Kinda of like Teachers have to get master’s degrees. But wage theft is real and that’s why I left the business. I wanted off that tread mill.

  13. Years ago, I was a hourly wage employee in retail and was promoted to a “management” position that was not salaried. After several months went by, I calculated the hours I was expected to work off the clock as a manager, and discovered that I was the lowest paid employee in the store according to actual hours worked. I left the business shortly thereafter.
    More recently, my employer expected us to be at our position and ready to work at an exact time. That meant that we had to spend anywhere from ten to fifteen minutes prior to that exact time preparing our work station. The extra time was unpaid. Our performance evaluations would reflect poorly if we were not “on time”, meaning prepared to do our job at the precise time required, no allowance (or pay) for preparation or shutdown. Promotions and bonuses were awarded to the most “productive”. I did this for many years as I had few options available, especially as I aged into my late fifties and beyond.

  14. Another frequent abuse in the food-services industry is to have wait staff (making $2.13 per hour) perform work designed to be done by staff like cooks, line preps, hosts, etc who all make at least minimum wage. Why pay a line cook $7.50 an hour to clean and prep their area when one can pay a waitress $2.13? Why pay a hostess $8.00 per hour for dong something a waitperson can be made to do – while also not earning tips – for much less.

    It happens all day, every day, in nearly every chain restaurant you’ve ever been to.

  15. Or, as I learned tonight from my daughter who worked as a server at a BW3: a manager forced servers to clock out BEFORE doing their “out work” so that manager’s labor numbers stayed low. And servers were required to sign a guarantee that they’d be responsible for any bill that a diner “dashed” on. That is wage theft.

  16. I worked in restaurants for longer than I want to admit and Joe is right. But we were paid minimum wage (3.15 an hour) to do the clean up work. We had to clock out and clock back in after our last table paid to finish the clean up. If we did the clean up while we waited for that table to leave, we got screwed out of that measly few pennies. That’s when wait staff made 2.01 an hour back in the 80s.

    Only once did my diners dash before paying and my manager wanted me to cover their bill! I even went to the hotel behind the restaurant to see if they had indeed booked a room there but they had lied to me about that and since my manager saw my tears and how I would have worked 5 hrs on a Friday night with only 10 bucks left in tips (after covering their bill), he didn’t force me to pay for their meal. He scolded me but good for not paying attention. I told him that I was doing clean up work and maybe he should not have put them in the corner table further away from me, the closing server, so that I could keep an eye on them. But he put them so far away there was no way I could do the clean up and watch them too. I had already worked from 8-4 that day at my day job with a 30 min commute one way and then worked 6-11 as the closer because I was the last one in. I hated Fridays back then and I was only about 25 yrs old. I probably wolfed down dinner to get me through to midnight when my shifts finally ended. Oh and the bus boys were paid minimum wage or more and we had to share our tips with them.

    That was how I spent my mid-20s and it about killed me. I had strep throat for months that I couldn’t shake and my doctor suggested that I quit one of my jobs. I did quit the waitress job a few months later. I had had enough of working my fanny off and making no money. It took me 20 yrs to finish my degree but I did finally without any debt. I had to find a company that would reimburse me while I worked full time.

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