Workers Win Battles Against Wage Theft, But Can They Win the War?

In a recent survey, 9 out of 10 fast food workers say they’ve had wages stolen by their bosses and this type of thievery by employers is becoming more common. And it’s not just restaurant workers who are being victimized, but workers in a variety of hourly-wage jobs.

”The country suffers an epidemic of wage theft, as large numbers of employers violate minimum-wage, overtime, and other wage and hour laws with virtual impunity,” says University of Oregon economist Gordon Lafer in a recent report.

While wage theft exists for many blue-collar workers, restaurant workers are especially hard hit, according to the Economic Policy Institute report. The federal tipped minimum wage is only $2.13 an hour and employers are required to pay workers up to the full hourly minimum wage if their tips don’t make up the difference. However, the study says employers often don’t do this and enforcement is weak and disorganized.

According to the study, the federal government employed only one workplace inspector for every 141,000 workers in 2008, meaning that the average employer has only a slim  chance of being investigated in any given year. And as low-wage workers don’t have the money to hire a lawyer to sue for stolen wages, they may have very few legal options available to them.

Wage theft is not only common among tipped restaurant employees, but also fast-food workers toiling at franchises for McDonald’s, Burger King, and Domino’s, among others. This type of wage theft typically involves erasing hours from employee time cards, requiring off-the-clock work, not paying for overtime hours, and refusing to reimburse workers for fuel costs if they make deliveries using their own vehicles.

Wage theft has spread far beyond the food-service industry. The New York Times is reporting that hundreds of warehouse workers in MIra Loma, CA are suing the Schneider trucking company for $21 million in back pay and damages.

The Schneider lawsuit is just one of a wave of cases across the nation where workers are starting to fight back, accusing their employers of violating overtime laws, minimum-wage laws, tip stealing, and rubbing out worked hours from time sheets.

Recently, a federal appeals court in northern California ruled that 2,300 FedEx Ground drivers are not contractors, as the giant corporation claimed, but employees. This means FedEx may now owe hundreds of millions in back wages, lawyers for the drivers said.

“FedEx...contracts with drivers to deliver packages to its customers,” wrote Judge William Fletcher for the Appeals Court. “The drivers must wear FedEx uniforms, drive FedEx-approved vehicles, and groom themselves according to FedEx’s appearance standards. FedEx tells its drivers what packages to deliver, on what days, and what times.

"Although drivers may operate multiple delivery routes and hire third parties to help perform their work, they may do so only with FedEx’s consent,” the ruling continued.

FedEx Ground drivers had to pay for the privilege of working for the large delivery company, the lawsuit alleged. They were required to pay out of pocket for everything from the FedEx Ground branded trucks they drove (painted with the FedEx Ground logo), to fuel, various forms of insurance, tires, oil changes, maintenance, etc. as well as their uniforms, scanners and even workers compensation coverage.

After paying these expenses, a typical FedEx driver makes less than employee drivers at FedEx Ground’s competitors like UPS, and receives none of the employee benefits, like healthcare, workers compensation, paid sick leave and vacation, and retirement.

But corporations are quick to plead their innocence. They say that the federal government is behind the wage enforcement actions, doing so only to score points with the labor unions. They claim that they’ve actually become more thorough in complying with labor laws in recent years, in the wake of lawsuits filed against Walmart and other corporations.

Yet, labor advocates and state and federal authorities aren’t seeing it that way. They say a hyper-competitive business landscape is prompting employers to take short cuts toward profitability, and one of the easiest ways is to rip off their workers. From the Times:

David Weil, the director of the federal Labor Department’s wage and hour division, says wage theft is surging because of underlying changes in the nation’s business structure. The increased use of franchise operators, subcontractors and temp agencies leads to more employers being squeezed on costs and more cutting corners, he said. A result, he added, is that the companies on top can deny any knowledge of wage violations.

“We have a change in the structure of work that is then compounded by a falling level of what is viewed as acceptable in the workplace in terms of how you treat people and how you regard the law,” Mr. Weil said.

There is a concern in Seattle that the city’s new $15 minimum wage will be derailed by wage theft. The Seattle Weekly News reports that while both the Washington legislature and the Seattle City Council have passed laws to combat wage theft, the state mostly fails to retrieve workers’ shorted wages. Meanwhile, Seattle’s wage-theft laws have yet to bring about even a single prosecution of scofflaw employers.

Given such shortfalls and enforcement failures, labor advocates are wondering how under-resourced state and city agencies will ensure Seattle workers will actually be paid the $15 an hour they’re due under the new law.

“Everyone is aware that passing a $15-an-hour minimum wage was historic,” Rebecca Smith, deputy director of the National Employment Law Project, told the paper. “But if we cannot enforce that, we haven’t accomplished much.”

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