Wage Theft Epidemic: Bosses Pocket 15 Percent of Workers' Pay
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This epidemic of wage theft goes largely unnoticed in the mainstream media and simply does not register on the policy agenda of most political elites. Some states and municipalities have taken on the issue, usually with prompting from labor and immigrant rights movements, resulting in anti-wage theft laws like the one in New York.
“By our estimation New York has the strongest law in the country,” says Tim Judson, workers' rights policy specialist with the Progressive States Network, and co-author (with Cristina Francisco-McGuire) of a new study, Cracking Down on Wage Theft: State Strategies for Protecting Workers and Recovering Revenues . “But wage theft laws are almost universally poor. In recent years a few states took strong steps, but even those laws have a ways to go before they are a model standard that could really be effective in cracking down on a problem this huge.”
New York's Wage Theft Prevention Act operates on three levels: punitive, protective and administrative. It increases penalties from 25 percent of stolen wages to 100 percent (if an employer steals $1,000, the worker could win back $2,000, instead of $1,250). If the employer doesn’t pay up in 90 days, the amount increases by 15 percent. The law expands whistleblower protections by providing protection to those who speak up for their colleagues and outlaws anyone (say, a manager’s son or a fellow worker) from threatening retaliation, like firing or cutting hours, where previously only the technically defined employer faced sanction. Fines of up to $10,000 can be levied upon those who, like Veranda's owners, try to punish workers for speaking out. The law also mandates clear and accessible record-keeping related to wage rates and pay days.
In Judson’s opinion, New York’s anti-wage theft law is so strong because it was drafted “hand-in-glove” between worker groups, chiefly Make the Road, and Eric Schneiderman’s unusually progressive attorney general’s office. But just because a wage-theft law is enacted doesn’t mean worker advocates can leave the fight, especially in states where the attorney general’s office isn’t so reliable. State labor law enforcement apparatuses are notoriously underfunded and understaffed. Non-governmental organizations often have to educate workers, ensure the law is carried out and put pressure on employers.
“The flip side of neo-liberal policies, where government functions are farmed out [to private entities], is that workers’ centers are doing the job of the Department of Labor,” says Adam Kader, director and co-founder of Arise Chicago, a workers’ center with Spanish-, English- and Polish-speaking members. “The state level Department of Labor [under the previous administration] was zero percent effective in our experience.”
In 2010, Illinois' wage-theft law was bulked up, due to the organizing acumen of Just Pay for All, a coalition formed to pass the law. It features a new administrative process routed through the Department of Labor to streamline the settlement of under-$3,000 cases. Another provision enables employees to file suit against individuals, instead of their companies, making it harder for employers to escape their obligations by declaring bankruptcy. If found guilty, employers will also have to pay a $250 fine, interest and the workers’ legal fees (previously they only had to pay back the exact amount they stole, which basically amounts to a non-consensual interest-free loan).
Although Arise supported passage of the law, they were not directly involved in the campaign. The law gives little additional power or enforcement ability to the state’s anemic Department of Labor. If the agency tells an equivalent of Veranda’s owner to pay up, say, the culprit will often ignore the order. It will then be kicked to the attorney general’s office, but Kader is not convinced wage-theft cases are at the top of AG Lisa Madigan’s priority list.