Brown Introducing Legislation to Crack Down on Companies That Cheat Workers out of Wages They Earned

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Office of Sen. Sherrod Brown
May 18, 2022

New Report Reveals More than 200,000 Ohioans Lose Out on Thousands of Dollars in Wages Each Year; Brown Bill Would Help Put Wages Back in Workers’ Pockets, Strengthen Worker Protections

WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) joined Policy Matters Ohio and Ohio workers for a news conference call to discuss his Wage Theft Prevention and Wage Recovery Act, new legislation to crack down on employers that unfairly withhold wages from their workers.

New analysis from Policy Matters Ohio finds that each year, employers steal from at least 213,000 Ohioans by paying them below the minimum wage, costing a worker who is on the job the full year an average of $2,900, or a quarter of their total wages they earned.

Brown’s new bill with Sen. Patty Murray (D-WA) and his colleagues would put hard-earned wages back in workers’ pockets and crack down on employers who unfairly withhold wages from their employees.

“It’s simple: If you put in the work, you should get paid for it. Companies should not be able to cheat workers out of the wages they earned and get away with it,” said Brown. “Our bill will give workers the power to fight back and recover their lost paychecks, and it will mean real consequences for employers that steal the wages Ohioans work so hard for.”

Brown was joined on the call by two Ohio workers whose wages were stolen by their employers.

“So many people keep quiet about wage theft for fear of losing their jobs. It’s time we put a stop to this,” said Ernest Hatten of Cleveland.

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Honest day’s pay

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Policy Matter Ohio
May 18, 2022

KEY FINDINGS: WAGE THEFT IN OHIO

  • Ohio employers steal from an estimated 213,000 workers a year by paying them less than the state or federal minimum wage.
  • If wage theft victims stayed on their job the full year, the total underpayment of wages to these Ohio workers would be $611 million each year.
  • While 3.8% of all Ohio workers have wages stolen each year, employers steal from 18.4% of workers paid $11.44 per hour or less.
  • Victims of minimum wage violations are underpaid an average of $55 per week, 24% of the weekly earnings owed to them. If they work year-round, they lose, on average, $2,873 per year and are paid only $9,011 in annual wages.
  • Women make up about three in five victims who are paid below the minimum wage.
  • Hispanic workers were 74% more likely to become victims than white counterparts, while Ohioans of other races — about three quarters of whom are Asian — were 51% more likely. Black workers were about as likely to indicate wages below the minimum wage as white workers, but Black workers spent more hours working for employers who stole from them and lost more wages, overall.
  • About 54,000 parents are paid below the minimum wage each year. Together they are raising about 108,000 children under 18 years old.
  • Low-paid workers in all industries are vulnerable, but half the wage theft cases occurred in the leisure and hospitality industry.

Introduction

Everyone who works should be paid their full wages for all the hours they put in. Too often in Ohio, employers steal from workers’ paychecks. By underfunding wage and hour enforcement, Ohio lawmakers make it too easy for employers to commit wage theft, and too hard for workers to be made whole. The scale of wage theft is difficult to measure, but we know that it far exceeds the number of cases ever reported. Most wage theft victims never come forward because they don’t know their rights, think nothing will be done for them, or fear retaliation from their employer.

Using Current Population Survey (CPS) data and a method developed by the Economic Policy Institute (EPI), this report quantifies the scope and cost of wage theft to Ohio’s working people. Employers steal from an estimated 213,000 Ohioans each year through minimum wage violations alone.[1] This report updates prior research released by EPI and reveals that, in the five years since that research was released, the scale of wage theft in Ohio has remained virtually unchanged.[2] Employers in all sectors steal from employees, but wage theft is most prevalent in industries that pay low wages, especially leisure and hospitality. Wage theft compounds financial hardships for people who are too often exploited at work due to their race, gender, immigration status or socioeconomic class.

This report quantifies the scope and cost of wage theft to Ohioans through minimum wage nonpayment alone. Because the vast majority of wage theft goes unreported, most types of wage theft cannot be measured. This report identifies minimum wage nonpayment — just one form of wage theft — from respondents to the Current Population Survey who identified their wage as less than the federal or Ohio minimum wage, regardless of whether they ever made a wage claim. These estimates have been produced by Policy Matters Ohio following a research methodology developed by EPI. Data are from the CPS Outgoing Rotation Group for years 2017-2019, using the extract from the Center for Economic Policy Research.[3] Exempt workers are identified wherever possible so that those estimated here to be wage theft victims were both paid less than the minimum wage and covered employees under state or federal law. Wages are reported in current year dollars. A full methodology is available from Policy Matters Ohio.

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(Executive Summary)

(Full PDF of Report)

Scott, Delauro, Murray Introduce Bill to Stop Wage Theft and Improve Wage Recovery

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May 10, 2022
Press Release

As originally released by the Committee on Education & Labor

WASHINGTON, DC – Today, Chair of the House Education and Labor Committee Congressman Robert C. “Bobby” Scott (VA-03), Chair of the House Appropriations Committee Congresswoman Rosa DeLauro (CT-03), and Chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee Senator Patty Murray (D-WA) introduced the Wage Theft Prevention and Wage Recovery Act; comprehensive legislation to put hard-earned wages back in workers’ pockets and crack down on employers who unfairly withhold wages from their employees. This bill would give workers the right to receive full compensation for the work they perform, as well as the right to receive regular paystubs and final paychecks in a timely manner.

“It is unacceptable that dishonest employers can steal workers’ wages with little to no consequence. Each year, our most vulnerable workers are cheated out of billions of dollars. We cannot grow the middle class or expect workers to confidently return to the workforce when we don’t even have adequate deterrents to prevent wage theft,” said Chairman Scott. “Workers and employers must be able to trust that our labor laws will hold unscrupulous employers accountable for violating the law and help workers recover the wages stolen from them. This bill would take critical steps to help workers receive the full pay they’ve earned for all hours worked, including overtime pay, and level the playing field for law-abiding employers.”

“Simply put, the biggest economic challenge currently affecting workers across the country is that they are in jobs that do not pay them enough to survive. People are struggling. Every day, countless workers are punching in and working long hours for an honest day’s pay only to have their employers cheat them out of their wages. That is inexcusable, and Congress has the responsibility to act to ensure hard working people receive their hard-earned wages,” said Chair DeLauro. “The Wage Theft Prevention and Wage Recovery Act is comprehensive legislation that will strengthen current federal law and empower employees to recover their lost wages. Whether it is compensation for a day’s work or overtime, employees should be paid what they earn. This legislation puts workers first and boosts economic security for families while helping our economy grow.”

“No worker should ever be cheated out of the hard-earned pay they have worked for—it’s as simple as that,” said Chair Murray. “That’s why I’m proud to join my colleagues to reintroduce the Wage Theft Prevention and Wage Recovery Act, which strengthens federal protections to make sure all workers are paid for the work they’ve done—and can fully recover wages their employers have stolen from them. It’s time we pass this commonsense bill and ensure workers across the country get paid what they’ve earned.”

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We need new tools to deal with epidemic of wage theft

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What happened in Amherst should never happen again

TOM JURAVICH
Apr 30, 2022

MASSACHUSETTS NEEDS new legislation to curb wage theft because what happened in Amherst should have never happened and should never happen again. Nine undocumented Hondurans worked 10 hours a day, six days a week for five weeks in a row hanging sheetrock in a new apartment complex in Amherst. Collectively they were owed $50,173 for their labor – but they did not receive one penny in wages. …

Despite Beacon’s commitment to building affordable housing, their progressive social values did not guide the way the development was built. They relied on multiple subcontractors who used undocumented workers who were illegally misclassified as independent contractors. This allowed them to defraud the state by not paying taxes, unemployment insurance, and workers compensation.

Our recent study that examined the records of the Commonwealth found that more than one in six employees in construction are illegally misclassified, and that this costs Massachusetts as much as $82 million annually. And paying workers in cash as independent contractors has created a hothouse for wage theft, as we saw in Amherst.

Beacon Properties hired Keith Construction as the general contractor, which awarded Combat Drywall the contract to hang the sheet rock. Combat, however, has no employees to perform the work and subcontracted the work to Alvarez Drywall.

Alvarez is not registered with the secretary of state in Massachusetts as a business, has no website, no phone number, no real company identity. In fact, Alvarez is not a drywall company. It is simply a labor broker that brought undocumented workers to the job to work as “independent contractors” under Combat supervision. They were not employees and Alvarez would pay them in cash – or Alvarez was supposed to. …

The right to be paid for the work we do in a timely fashion is perhaps our most basic employment right in Massachusetts. No worker in the Commonwealth should ever have to suffer what the workers at the North Square apartments had to go through. We need to hold employers and lead contractors responsible and stop this kind of wage theft with the passage of H1959.

We should all be able to drive or walk through our communities and not have to worry about what is taking place at building and construction sites. As I drive by the North Square Apartments on my way to work now, it stands as a monument to the mistakes that we made and how this can never happen again.

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Report: Wage theft, payroll fraud hurting construction workers

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By JONAH CHESTER (April 11, 2022)

MADISON – A new report finds declining wages in the construction industry, fueled by wage theft and payroll fraud, are pushing more construction workers into social-support programs.

The analysis, by the Labor Center at the University of California-Berkeley, found between about 12% to 21% of construction workers across the country are either misclassified as independent contractors or paid under the table, depriving them of health insurance and other employer-provided benefits.

Peter Barca, secretary of the Wisconsin Department of Revenue, said the practice is cheating.

“These scammers, many of whom are coming into the state surreptitiously, they’re cheating the state out of revenue,” Barca asserted. “Worse, they’re cheating workers by misclassifying them. They’re cheating law-abiding companies within the state, and they really cheat everybody.”

The report noted 15% of construction workers in Wisconsin do not have health insurance, more than twice the rate of all workers in the state, and $207 million is spent annually on social-support programs, such as SNAP and Medicaid, to support families of construction workers.

Last month, a task force empaneled by Gov. Tony Evers released new recommendations to tackle wage theft and payroll fraud, which include bolstering penalties and tracking policies for the illegal practices.

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Lost taxes and salaries: RI unions kick off a campaign to make wage theft a felony

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Patrick Anderson
The Providence Journal
Feb. 16, 2022

In a renewed campaign to make wage theft a felony in Rhode Island, union leaders are pointing to new research that says more than 9% of the state’s employers misclassify workers as independent contractors.

The paper from academics at the University of Massachusetts Labor Center and a construction-industry research group analyzed the results of state labor department unemployment insurance audits of Rhode Island employers from 2016 to last year.

It estimated that that $185 million in workers’ wages and salaries went unreported to the Department of Labor and Training in 2019, and that it cost the state from $25 million to $54 million in lost taxes that year.

‘Restoring worker rights’
The paper’s authors, Russell Ormiston of Allegheny College and Tom Juravich of UMass Amherst, conclude that changes in state labor law “offer considerable promise in restoring worker rights and ensuring greater justice in Rhode Island’s workplaces. The first is to make wage theft a felony.”

That’s music to the ears of the Rhode Island AFL-CIO, which has put making wage theft a felony offense at the top of its legislative priorities for this year.

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Mills administration cracking down on employer wage and hour violations

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BY PETER MCGUIRE | STAFF WRITER
February 6

The state Department of Labor returned about $470,000 in unpaid wages to Maine workers in 2021, almost double the amount in 2019. Now it is naming violators online.

Since Gov. Janet Mills took office three years ago, the Maine Department of Labor has escalated its pursuit of illegal workplace practices including wage theft, child labor and false record keeping, a significant departure from past practices at the agency.

The number of inspectors at the department’s Wage and Hour Division has doubled. The amount of unpaid wages recovered for workers has skyrocketed. In an unprecedented move, two employers have been shut down permanently for wage theft. And now, the department will regularly publish business names and violation details in an online database.

Collectively, the changes reflect a shift in the department’s effort to find and resolve a serious offense against some of Maine’s most economically vulnerable workers. But labor advocates say a lot more could still be done.

“It is just a matter of trying to make the best use of limited resources to protect workers from abuses, and protect law-abiding employers from unfair competition that comes with employment law violations,” said Michael Roland, director of the state Bureau of Labor Standards. “We just felt we could be more effective given the resources we have.”

In 2018, there were just four inspectors working at the bureau. As of this year, it has nine inspectors and an assistant attorney general specifically tasked with pursuing wage and hour cases.

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Council moves to put a stop to wage theft

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FRIDAY, JANUARY 28, 2022
BY JO CLIFTON

Austin is taking a step toward joining El Paso and Houston in punishing employers that engage in wage theft, with a resolution City Council approved unanimously on Thursday. A dozen people signed up to tell Council members to approve the resolution, which was sponsored by Council Member Ann Kitchen.

The resolution directs City Manager Spencer Cronk to create a system for the city to receive complaints from workers about construction employers who fail to pay wages owed to employees, fail to maintain payroll records or improperly classify employees as independent contractors. Staff members are expected to come back to Council with an ordinance establishing criminal penalties and a civil complaint procedure relating to wage theft. …

District Attorney José Garza sent a letter to the mayor and Council urging them to approve the resolution. He noted that his office has launched an economic justice enforcement initiative, with some emphasis on deterring wage theft. However, he wrote, “As we have undertaken this initiative, it has become clear to us that there are not sufficient systems in place to support wage theft victims or deter these legal violations from recurring. We need additional partners in this work. I am hopeful that this resolution presents an opportunity for our office to deepen its collaboration with the city and strategize how we can strengthen avenues available for wage theft victims to seek justice.”

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Pennsylvania returns over $3.5 million in wages to wronged workers in 2021

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Monday, January 3rd 2022
By Kurt Martone

HARRISBURG, PA. (WENY) — The Pennsylvania Department of Labor and Industry investigated over 4,000 alleged labor law violations requested from Pa. workers in 2021. The department returned over $3 million worth of missed wages to workers across the Commonwealth.

“Pennsylvania workers are entitled to every dollar they earn, and that’s why the department’s Bureau of Labor Law Compliance works so hard to hold employers accountable when they wrongfully withhold wages or violate any of Pennsylvania’s labor laws,” said Jennifer Berrier, secretary of the Pennsylvania Department of Labor and Industry.

WENY reached out to the Department of Labor and Industry to find the amount of lost wages given to residents of Bradford and Tioga counties.

Since 2015, the department has collected over $38 million in unlawfully held wages for workers in Pennsylvania.

BY THE NUMBERS:

The bureau returned over $2 million to workers employed by 900 employers in violation of the Wage Payment and Collection Law.

One million dollars was returned to workers whose employers violated the Prevailing Wage Act.

The other, over $500,000, in missed wages was returned to workers whose employers violated the Minimum Wage Act.

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More than $3 billion in stolen wages recovered for workers between 2017 and 2020

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Economic Policy Institute | December 22, 2021
Report by Ihna Mangundayao, Celine McNicholas, Margaret Poydock, and Ali Sait

Over the last four decades, the U.S. economy has been marked by extreme inequality, which has only been exacerbated by the COVID-19 pandemic. In the midst of this global pandemic and an economic crisis, the number of individuals with household weekly earnings below the poverty line rose to 65.1 million, a 28% increase from February to June 2020 (Saenz and Sherman 2020). In contrast, CEO pay rose by nearly 19% in 2020 (Mishel and Kandra 2021). This rise in poverty and pay inequality is compounded by wage theft, which robs millions of workers of billions of dollars from their paychecks each year (Cooper and Kroeger 2017).

What this report finds: Each year millions of workers across the country are victims of wage theft—meaning they are paid less than the full wages to which they are legally entitled. Between 2017 and 2020, more than $3 billion in stolen wages was recovered on behalf of workers by the U.S. Department of Labor, state departments of labor and attorneys general, and through class and collective action litigation.

Why it matters: This staggering amount represents just a small portion of wages stolen from workers across the country. And while wage theft impacts workers broadly, it disproportionately affects low-wage workers, many of whom already are struggling to make ends meet. Wage theft also disproportionately impacts women, people of color, and immigrant workers because they are more likely than other workers to be in low-wage jobs. Finally, these stolen wages hurt local economies and tax revenues.

What can be done about it: Increase funding for the Department of Labor’s Wage and Hour Division to boost institutional and investigative capacity; engage in proactive and strategic enforcement in those industries where violations are especially severe or rampant; enhance civil monetary penalties for wage and hour violations; protect worker rights to collective action, as union workers are less likely to experience wage theft because they have the bargaining power to establish mechanisms to combat the practice; and strengthen and boost funding for state and local enforcement.

Wage theft occurs any time employees do not receive wages to which they are legally entitled for their labor. This could take many forms, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts.

Even the theft of seemingly small amounts of time can have a large impact. Consider a full-time, minimum wage worker earning the federal minimum wage of $7.25 an hour who works just 15 minutes “off the clock” before and after their shift every day. That extra half-hour of unpaid work each day represents a loss to the worker (and a gain to the employer) of around $1,400 per year, including the overtime premiums they should have been paid. That’s nearly 10% of their annual earnings lost to their employer that can’t be used for utilities, groceries, rent, or other necessities.

Background and prior studies
While quantifying the true extent of wage theft can be a challenging undertaking—much of it goes unreported—existing reports and studies paint a clear picture: Wage theft is a costly and undeniably pervasive problem that affects millions of workers across the country.

Cooper and Kroeger (2017) investigated just one type of wage theft and found that in the 10 most populous states in the country, 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Extrapolating from these 10 states, Cooper and Kroeger estimate that workers throughout the country lose $15 billion annually from minimum wage violations alone.

The personal cost of wage theft to these workers is significant: Cooper and Kroeger found that on average, the workers suffering from minimum wage violations in these 10 states were cheated out of $64 a week—about $3,300 annually for year-round workers. These workers lost almost one-quarter of their earnings, receiving on average only $10,500 in annual wages instead of the $13,800 they should have received.

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