Wage Theft: How are You Getting Screwed out of Wages?

By Kim Bobo

What is wage theft?                                                                                                          

Wage theft is the consistent stealing of workers’ wages. It happens by not paying workers the minimum wage. One out of every four workers is not paid the federally mandated minimum wage even though it’s the law. Wage theft literally takes money out of workers’ pockets and puts it in the hands of large employers. This is illegal behavior.

What are some examples of Wage Theft?

Not paying overtime. The law says since 1938 that if you work more than 40 hours you deserve overtime pay; that is time and a half pay. This is the where the largest dollars are stolen from workers, partly because it’s low and middle income workers who routinely don’t get overtime. Seventy six percent of low wage workers who work more than 40 hours a week aren’t paid overtime. For middle income workers they too often don’t get overtime. What happens is they are told that their firm doesn’t pay overtime, so the work needs to be completed within forty hours. Workers routinely can’t get their job done in 40 hours (because it’s not work that actually fits within 40 hours) so they work 45 or 46 hours and mark down on their time sheet that they only worked 40. A worker center in Chicago found that 98% of workers coming in weren’t paid the overtime they earned.

Shaving Hours. Wal-Mart specialized in this for many years. Managers were under such pressure to keep wages and wage costs down that they literally went into the records. When workers punched in 43 hours in a week, managers would alter the time clock by shaving off three hours so it looked like the workers only worked 40 hours. Wal-Mart settled 65 class action lawsuits around the country for this type of behavior.

Tip Stealing. Ten percent of all tipped workers don’t get all their tips. If you put your tip on a credit card, don’t assume it’s going to get to the worker. At my favorite restaurant in Chicago I went to put my tip on the credit card but before I did I asked the wait staff, “If I put it will you get it?” she said “No.”

Payroll Fraud. Payroll fraud is when employers lie about having employees and by calling them “independent contractors” instead. Payroll fraud steals about 30% of wages from workers. It also takes money out of public coffers, because employers don’t pay worker’s compensation or payroll taxes. It’s not complicated. When you get up in the morning if you say, “I’m going to work for myself,” you are probably and independent contractor. Conversely, if you get up and say, “I’m going to work for somebody else,” you are an employee. That’s the difference.

Deductions, Worker Fines, and Kickbacks. Employers, especially in restaurants, have taken to fining employees for certain things on the job. Break a plate, pay a fine. Slam the door too loudly, pay a fine. Then there are deductions from workers’ pay checks. Any time an employer takes money out of a worker’s paycheck for the company’s use, that’s a deduction. Then there are the kickback schemes. This is big in construction right now. In order to get around paying federally mandated “prevailing wage” laws for contractors doing work for the Federal government, some construction companies force workers to pay them money back. In Illinois they were literally driving workers to the check cashing station and taking money back from them. That is 100% illegal.

Withholding the last paycheck. Workers who get laid off, resign, or get fired often don’t get their last paycheck. Sometimes large companies close down and they don’t pay workers for the federally mandated sixty days after the company closes. Sixty percent of employers don’t follow the law when it comes to last paychecks.

Where does wage theft happen?

Wage theft is common place. Everyone has had an experience with it if they think back and talk to family members. It’s all around us, not just places like Chicago; it’s in places like Binghamton. It’s happening in restaurants, residential construction, retail, janitorial firms, landscaping, hotels, light manufacturing, warehousing, recreation, it’s everywhere. More often than not it’s the big companies, like Wal-Mart and McDonalds.

Do you have any success stories in fighting wage theft? And what is most effective?

Some workers from the local Best Western and Comfort Inn came into our worker center not long ago. These are name brand downtown Nashville hotels. The workers worked between 10 and 15 hours a day, six days a week. They were paid a flat $50 a day in cash, putting them far below minimum wage. Luckily we had a new worker center there which could provide these workers with resources and organizational assistance. So they got the religious folks, the Vanderbilt students, and the workers and they marched through town carrying mops and brooms all the way to the company’s headquarters. They got their wages back and they got a new plan at those hotels.                                                                                                                                        

These workers, like so many others, would not have gotten their wages back without a worker center. In an era of decreasing unionization worker centers are vital. Workers can come in, get advice, and get the ball rolling on correcting workplace safety and wage violations. As in the case in Nashville, worker’s centers help mobilize enough people from different parts of the community to affect positive change. We need workers centers in every city in the nation to successfully fight wage theft.

Cost of Wage Increases at Wal-Mart

             A report recently came out demonstrating that if wages were raised to $10.10 per hour, prices in Wal-Mart would only go up by a single penny! Thinkprogress.org, a liberal think tank, writes: “Ken Jacobs, chair of the Labor Center at the University of California, Berkeley, estimates that a minimum wage [set at $10.10] would add $200 million to Walmart’s yearly labor costs, which comes to just 0.8% of what it currently spends. That also represents just 0.06% of the company’s billions in yearly sales, Jacobs told Thinkprogress.org If the company decided to pass the entire cost increase on to its customers, it would mean an extra penny for a $16 product.”

Wal-Mart by the Numbers

$16 billion
Walmart’s annual Profit

$144 billion
Wealth of Walmart Owners (the six living Waltons)
(as much as 42% of Americans combined!)

$7 billion
Subsidies and Tax Breaks that Benefited Walmart & the Waltons

< $25,000
Most Walmart Workers Annual Wage






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