Simply passing more laws will not stop wage theft. This complex problem requires a network of solutions, including greater education on workplace rights, more organizing by workers themselves and improved government enforcement.
Many of the workers, community activists, union representatives and public officials interviewed for this series had suggestions for strengthening a system that is letting too many victims of wage theft fall through the cracks.
Education and awareness
Wage theft is a largely hidden problem.
People “sometimes feel like there’s something wrong, but they don’t know exactly what it is and they don’t know what to call it,” said Ernesto Velez, director of Centro Campesino, which does organizing among farm workers.
“If your job is always a cash job, if you’re always paid by cash, or by check with no deductions made, why would you question it?” notes Burt Johnson, general counsel for the North Central States Regional Council of Carpenters. “If you’re never paid overtime, why would you question … not being paid overtime? If you don’t normally get breaks, why would you question getting breaks? So there’s a big education problem here.”
John Aiken, director of the labor standards division at the state Department of Labor and Industry, said his staff participate in educational efforts throughout the year.
Examples include hosting a presentation about the Women’s Economic Security Act, publishing a newsletter with wage and hour information and producing a monthly e-bulletin to inform businesses about their responsibilities under wage and hour laws.
“One of our primary goals here at the Department of Labor and Industry is to provide education to both employers and employees,” said Jessica Looman, the department’s deputy commissioner. “I think the No. 1 strategy that we can use now and continue to use in the future is outreach and education.”
Still, a lot of people aren’t getting the message. The department has limited staff. Its communications strategy is rooted in decades-old practices – like the requirement that employers post minimum wage notices on bulletin boards.
Legislation introduced a year ago by state Senator David Tomassoni, DFL-Chisholm, and Representative Carly Melin, DFL-Hibbing, includes a provision to create a grant program whereby community organizations would be awarded funds to conduct education and outreach on wage theft. No action has been taken on the bill.
In addition to raising awareness, the government needs to gather more information on labor markets where wage theft is occurring. Last month, U.S. Labor Secretary Tom Perez announced a plan to compile better data regarding the “on-demand workforce” that includes many online workplaces.
Where workers are represented by labor unions, they are much less likely to be victims of wage theft. The recent unionization of home health care workers in Minnesota is one example.
For the 86 percent of the state’s workforce that lacks union representation, worker centers and grassroots organizations sometimes fill the gap. They perform a critical role, according to Madeline Lohman, senior researcher for The Advocates for Human Rights in Minneapolis.
“We found that it’s very clear that community-based organizations and educated workers make a huge difference in people’s ability to get a remedy” for wage theft, she said.
Both Minneapolis-based CTUL, Centro de Trabajadores Unidos en Lucha/Center of Workers United in Struggle, and the Greater Minnesota Worker Center, based in St. Cloud, have programs to educate and organize workers in industries where wage theft is common.
CTUL has been able to help workers recover more than $1.8 million in lost wages. And just this week, some of its members announced they had settled a class action suit and recouped $425,000 in back wages and damages.
It is important that workers take agency in addressing wage theft, said Lucila Dominguez, a former janitor who now helps to organize CTUL’s workplace rights efforts.
Workers “are the experts,” she said. “They live it every day. They should be leading the movement to change it.”
Last year, more than 200 workers received training on workplace rights through the Greater Minnesota Worker Center, said Ahmed Ali, lead staff organizer. In some cases, they were able to speak up to employers about their rights and make changes in their workplaces.
In other cases, workers were fired for standing up for their rights, Ali said.
A strong case can also be made for partnerships between labor and management to crack down on wage theft. The Fair Contracting Foundation has been successful in stopping hundreds of thousands of dollars of violations on publicly funded construction projects.
One reason the collaboration works is that both labor unions and responsible contractors have a strong financial interest in preventing cheating on projects such as the Minnesota Vikings stadium, the state Capitol renovation and the Green Line light rail.
But there are incentives for other employers to challenge bad behavior, too, notes labor economist Aaron Sojourner, a professor in the University of Minnesota’s Carlson School of Management.
“It’s incumbent on public authorities, on our society to make sure the rules of the economy are followed,” Sojourner said. “If you let them be ignored, then it’s really a detriment to the workers, but it’s also a detriment to any employer who plays by the rules. You’re putting them at an unfair disadvantage.”
With only six Minnesota Department of Labor and Industry investigators devoted to wage and hour claims and complaints, the department pursued more than 1,600 complaints and claims in fiscal year 2015, resulting in about $862,000 recovered for Minnesota workers.
However, Commissioner Ken Peterson noted, “We could do more with more resources, there’s no question we could do more: we could be quicker, we could handle [cases] at a more rapid rate.”
In the late 1980s, the department had 8 or 9 inspectors for a workforce of 1.9 million, Peterson said. Today, the workforce has grown by a million but the number of inspectors has been cut by a third.
Several people interviewed for this series cited the need for more investigators. They also said inspectors need to be more diverse, multi-lingual and representative of today’s workforce.
The Advocates for Human Rights, which will release a study soon on wage theft and labor trafficking, recommends that agencies do a better job of sharing information and strategies.
“One of our key findings is going to be that there needs to be greater interconnection between regular labor enforcement and labor trafficking enforcement and that these two need to be more coordinated,” said researcher Madeline Lohman. “The kinds of services we provide for labor trafficking and protections we provide for labor trafficking might be helpful in a labor exploitation, wage theft context – and the kind of victim orientation that’s important in a wage theft context might be useful in a trafficking context.”
In addition, the government could make it easier for victims of wage theft to get help by creating a “one-stop shop” that would provide information and guide people through the process, Lohman said.
Community organizations in Minneapolis are pushing for local enforcement to stop wage theft. And groups such as Centro Campesino say it may be time to “deputize” community organizations so they can intercede to make sure workers are paid more quickly.
Other suggestions for improving enforcement include speeding up the processing of claims and meaningful punishment for violators.
Of the eight case files Workday Minnesota requested from the Department of Labor and Industry, the time it took to close a case varied from 36 to 595 days.
Investigator Sara Ellstra said that the time it takes to close a case depends on a number of factors, including the volume of records that need to be reviewed as well as how organized the employer’s records are.
In most wage complaints at the state and federal level, where employers have violated the law, they are ordered to pay back wages in the amount employees were shorted. Very few cases impose liquidated damages or civil penalties on employers.
Stiffer penalties would deter illegal behavior and fines could fund the hiring of more investigators, advocates say.
“I don’t think that the government or the companies would like for their wages to be stolen, so I don’t think that they should let it happen [to workers]. I do think there should be stronger punishment,” said CTUL organizer Dominguez.
The laws setting wage and hour standards at the state and national level are riddled with loopholes. The federal Fair Labor Standards Act, for example, exempts dozens of groups from overtime protections, ranging from boat salespeople and livestock auction workers to seamen.
The largest exemptions affect millions of workers “employed in a bona fide executive, administrative, or professional capacity,” who are salaried and can be required to work untold numbers of hours. In recent decades, advocates say these categories have been misapplied to cheat many workers out of overtime pay.
This summer, the U.S. Department of Labor is expected to issue final regulations raising the pay threshold for receiving overtime, from its current $23,660 annually to $50,440.
“The rules that establish which workers are exempt from overtime pay haven’t kept up with the cost of living,” the department said in announcing the change. “Today, certain professionals and managers are exempt from overtime if they make more than $23,660 a year and perform specific duties. This is less than the poverty threshold for a family of four.”
Others interviewed for this series said wage theft could be alleviated for a large group of workers – those who are undocumented – if the country were to adopt comprehensive immigration reform with a path to citizenship. Many of these workers are “in the shadows” and afraid to speak out.
The problem of retaliation is serious and must be addressed, advocates said. Even though it is illegal to fire someone for complaining to authorities about wage and hour violations, workers have no confidence that they will be protected.
“We really have to think about what are ways to change the laws to make sure that workers, yes, can get a higher wage, but how can they have a voice to make sure that they can complain, make sure that when their wages are stolen, they could go forward and talk about it without some consequence,” said Merle Payne, co-director of CTUL. “Until that happens, wage theft isn’t going to end.”
An investigation by Workday Minnesota found wage theft is larger and more widespread than most people realize. Minnesotans are losing millions of dollars every year.