Wage Theft 1

I’ve read about it before in the newspaper, but never in [my] life did I think it would happen to me. … Now what? How do [I] go forward? – Freddy

Wage theft, or an employer’s underpayment or nonpayment of wages to workers who have earned those wages, is a growing epidemic. Recent studies and surveys confirm staggering rates of wage and hour violations—such as minimum-wage and overtime violations, the shorting of hours, and the refusal to pay workers at all—in low-wage industries across the country.[i]

One survey of more than 4,000 workers in New York, Chicago, and Los Angeles found that more than three in four workers surveyed were not paid the legally required overtime rate, 1 in 4 were paid less than the minimum wage, and 7 in 10 did not receive any pay for work outside of their regular shift.[ii] Industry and geography-specific research around the country confirms that far from being rare incidents, wage and hour laws are regularly and systematically violated in such core industries as construction, retail, home health, and restaurants.[iii]

In North Carolina, research is sparse, but data from the state Department of Labor’s Wage and Hour Bureau show that employers owed North Carolina workers more than $4.6 million in fiscal year 2010-11 and that, similar to national trends, complaints are concentrated in low-wage industries.[iv] While significant, these numbers likely underestimate the occurrence of wage theft in the state. Workers may not report wage theft because they fear retaliation or have difficulties seeking redress.

In the wake of the one of the worst economic downturns of the modern era, the fundamental contract between worker and employer—that the worker will be paid for the work performed—is being repeatedly broken. At the same time, core labor laws are failing to protect many of the state’s workers.

The consequences are severe for workers, honest employers, and communities. For workers, underpayment or nonpayment of a single paycheck can translate to an inability to pay bills or afford basic needs like housing and sufficient food. Those businesses doing right by their employees suffer when they are unable to compete with those breaking the law. And when unscrupulous employers shirk their legal obligations, tax revenues are shorted and local economies suffer.

[i] For a summary of research on wage and hour violations in the United States, see National Employment Law Project, 2012. “Summary of Research on Wage and Hour Violations in the United States,” available at www.nelp.org.

[ii] Bernhardt et al. 2009. “Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities,” National Employment Law Project.

[iii] See National Employment Law Project, 2012. “Summary of Research on Wage and Hour Violations in the United States,” available at www.nelp.org.

[iv] Sirota, Alexandra Forter and Sabine Schoenbach, 2012. “Wage Theft: Undermining the Value of Work,” North Carolina Justice Center.