Wage Theft Cheats American Workers Out of Millions Every Year

Flickr / Marcin Wichary.

Wage theft is alive and well, impacting the lowest-paid workers to those in Silicon Valley. It is pervasive, and costs employees millions in lost pay annually - money that could be spent aiding the economic recovery.

Wage theft often strikes the lowest-paid workers...
Employers cheat workers out of wages in myriad ways. Recent lawsuits filed in three states against McDonald's alleges that the fast food giant held back overtime pay, made employees work off the clock, and even doctored time cards to reduce work hours.

Other ways that workers are fleeced include actions such as classifying a worker as a contractor rather than a permanent employee; paying tipped employees sub-minimum wage, then not allowing workers to keep all their tips; and making illegal deductions form employees' paychecks. In Iowa alone, low-paid employees lose $600 a year in income due to wage theft. 

...but other industries are involved, too
These practices are not limited to low-wage occupations, however. Major League Baseball has come under scrutiny lately for paying clubhouse employees a daily rate, then working them so many hours that their pay averaged to less than minimum wage. The San Francisco Giants have settled with clubhouse workers as well as security guards, and the Miami Marlins are also being investigated. Recently, the Baltimore Orioles and Oakland Athletics have also come under the DOL's microscope. 

The National Football League has its share of problems, too. Cheerleaders for the Buffalo Bills, Cincinnati Bengals, and Oakland Raiders have sued the teams, claiming that not only were they grossly underpaid - sometimes, as little as $2 per hour - but also had their personal hygiene habits somewhat creepily regulated. Despite all this, they were considered contractors, rather than employees.

Then, of course, there is the issue of wage suppression by tech companies like Apple and Google, which, along with others, agreed to non-poaching agreements that software engineers alleged significantly held down wages. They sued, and the employers agreed to settle. 

An ongoing problem that appears to be worsening
The absolute amount that workers are denied each year is unknown, but it seems likely that it is at least $1 billion, considering Iowa's own losses of $600 million. The Economic Policy Institute notes that the DOL was able to secure $280 million in back wages for over 300,000 workers in 2012, an amount that is double the value of criminal robberies for that year. Still, EPI says that the amount recovered is tiny compared to all wage theft that occurs each year.

Unfortunately, the issue doesn't seem to be resolving itself. New York instituted the Wage Theft Protection Act in April of 2011, but is currently embarrassingly behind on its caseload, according to a recent audit. The explosion of cases could be part of the problem: the audit noted 17,000 open cases in August of last year, compared with 7,000 in early 2008. 

Sadly, there seems little support in Congress for victimized workers, and a bill that would have barred companies with a history of wage theft violations from being awarded federal contracts was voted down in late May. 

 So, even as employers who practice wage theft are allowed access to public money, too many American workers continue to labor without collecting all of their earned pay. No doubt, this has done incredible damage to the country's overall standard of living, as well as the still-struggling economy. How much damage? It seems likely that we will never know.

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The article Wage Theft Cheats American Workers Out of Millions Every Year originally appeared on Fool.com.

Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and McDonald's. The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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