Many hourly workers in 18 states are set to see small raises in the new year. But others are only now receiving money they worked for much earlier.
In 2015 and 2016, $2 billion came back to workers in 39 states, in the form of recovered wages. But many advocates say that falls far short of solving a problem that costs up to $50 billion a year.
“Workers continue to lose staggering amounts in wages every year,” said Celine McNicholas, one of the authors of a report from the Economic Policy Institute, a left-leaning think tank. That underpayment, which advocates call wage theft, also has ripple effects through the larger economy by keeping money out of the hands of consumers.
“Low-wage workers are particularly susceptible to wage theft. Those are the same folks who would be likely to spend that income,” McNicholas said.
The $2 billion is a partial figure, since the EPI report has no data for 11 states, including populous ones like Florida and Arizona. But even so, it’s instructive.
Workers who think they’ve been shorted have a few ways to try to get restitution. They can file a complaint with the U.S. Department of Labor, their state’s labor department (if it has one) or approach the state’s attorney general for help. Or they can sue their employer — a prospect that’s most likely to appeal to potential lawyers when many workers are alleging mistreatment.
In the two years covered by EPI’s report, more than half the recovered wages — $1.2 billion — came as a result of class actions. About $300 million was recovered by the federal Departmet of Labor, and the rest by states.
It’s notoriously difficult to track wage theft for a host of reasons. Often, workers who aren’t paid the legal minimum wage are paid in ways that don’t leave a paper trail, making record-keeping a challenge. Workers might be afraid to approach authorities when they suspect wage theft. And some may just not know that certain activities constitute wage theft, like being asked to work off the clock or not receiving an overtime rate when working more than 40 hours a week.
But the studies that do exist are sobering. A 2014 survey found that nine in 10 fast-food workers aren’t paid their full wages. Some “84 percent of workers at McDonald’s, 92 percent of workers at Burger King and 82 percent of workers at Wendy’s, report that they have experienced some form of wage theft at their jobs,” according to the report. Workers in construction and apparel are also particularly susceptible to wage theft, data shows.
Penalties are key to preventing underpayment, research suggests. A 2016 study found that states that penalize wage theft more strictly have fewer minimum-wage violations than those that don’t. The threat of successful class actions could have a similar effect, particularly for large employers with thousands of workers.
Suing isn’t an option for many workers, though. About half of nonunion private employees give up the right to sue their employer in public court and are required to go through private arbitration instead. A case currently before the Supreme Court could either reverse that situation or — more likely — codify it for good.
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