MEDIA RELEASE: Two new reports highlight wage theft and its impact on NC's workers, communities, economy

RALEIGH (March 6, 2013) — Wage theft is a rampant issue in North Carolina that harms workers, their families, communities, and local economies, according to two new reports. The issue demands stronger laws and better enforcement mechanisms to make it easier for workers to file complaints, receive what they are owed, and keep employers from harming more workers in the future.

Wage theft occurs when an employer underpays or fails to pay wages to workers – either through failing to pay minimum wage or overtime, revoking employees’ tips, making illegal paycheck deductions, misclassifying employees as independent contractors, or simply failing to pay promised wages.

The available data understates the massive scope of wage theft in North Carolina, according to a new report from the North Carolina Justice Center, one of two reports released today on the issue.  Data from the North Carolina and U.S. Departments of Labor shows that employers engaging in wage theft robbed North Carolina workers of at least $33 million between 2007 and 2011, which the report said is an underestimate. National survey data and industry-specific studies show that wage theft is particularly widespread in low-wage industries. This is of high concern, the report said, as low-wage industries are also the state’s high-growth industries.

North Carolina policymakers should take additional steps to address wage theft, the report said. Laws should focus on making it easier for workers to make claims and have access to quick, effective ways to recover lost wages. In addition, the report calls for increasing penalties to deter employers from making wage theft a common practice.

“Only with effective collection mechanisms, tough enforcement, and adequate penalties for breaking the law will delinquent employers be persuaded to pay their workers what they are owed,” said Sabine Schoenbach, policy analyst with the North Carolina Justice Center’s Workers’ Rights Project and author of the report.

Picking Empty Pockets,” a report from the Immigration/Human Rights Policy Clinic at the University of North Carolina’s School of Law, analyzed the state and national issue of wage theft through the stories of five North Carolina workers, while also offering an overview of federal, state, and local remedies. Most of the individuals interviewed for the report were unaware that wage theft is illegal in North Carolina, or that there are avenues for recourse.

Wage theft may directly affect as many as three million workers across a range of earning levels, ages, immigration statuses, and races, the report said. Some of the worst wage theft occurs with immigrant and undocumented workers. They are often threatened with or fear being reported to U.S. officials, and therefore do not file complaints against their employers.

The report found that worker misclassification is a rampant issue, as employers label workers as independent contractors or consultants, and pay them off the books without tax deductions, in turn barring these workers from receiving wage and hour protections.

Lawmakers should prioritize remedying wage theft, the report said, as it violates domestic legal norms at all levels. The current wage theft problem in North Carolina also violates standards set by international human rights treaties and norms that protect workers, particularly undocumented workers who are vulnerable to exploitation and are twice as likely as a U.S.-born worker to suffer a wage theft violation. State leaders should implement methods to protect against harassment and retaliation, and pass laws that provide all workers with the same protections and recourse under state wage laws, regardless of their legal status.
   
“Wage theft exacts a heavy toll on both individuals and communities,” said Professor Deborah Weissman, who teaches the Immigration/Human Rights Policy Clinic, which authored the report. “This toll is increased by the low visibility of wage theft, as low wage theft visibility only leads to more wage theft, thus perpetuating a vicious cycle.”

Read the NC Justice Center's report here, and the UNC report at this link.

FOR MORE INFORMATION, CONTACT: Sabine Schoenbach, sabine@ncjustice.org, 919.856.2234; Carol Brooke, Director, NC Justice Center’s Workers’ Rights Project, carol@ncjustice.org, 919.856.2144; Professor Deborah Weissman, Reef C. Ivey II Distinguished Professor of Law, UNC Immigration/Human Rights Policy Clinic, 919.962.3564; Jeff Shaw, Director of Communications, jeff@ncjustice.org, 503.551.3615 (cell).
 

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