How companies rip off poor employees — and get away with it
U.S. companies that cheat their workers out of pay are unlikely to be fined or punished even after they're caught
May 4, 2021, 8:02 PM
13 min read
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A recent article in The Wall Street Journal says new problems are emerging for employees at home.
The Associated PressAlready battered by long shifts and high infection rates, essential workers struggling through the pandemic face another hazard of hard times: employers who steal their wages.
When a recession hits, U.S. companies are more likely to stiff their lowest-wage workers, research shows. Some businesses pay less than the minimum wage, make employees work off the clock, or refuse to pay overtime rates. In the most egregious cases, bosses don’t pay their employees at all.
Companies that hire child care workers, gas station clerks, restaurant servers and security guards are among the businesses most likely to get caught cheating their employees, according to a Center for Public Integrity analysis of minimum wage and overtime violations from the U.S. Department of Labor. In 2019 alone, the agency cited about 8,500 employers for taking about $287 million from workers.
Some major U.S. corporations were among the worst offenders. They include Halliburton, G4S Wackenhut and Circle-K stores, which agency records show have collectively taken more than $22 million from their employees since 2005.
The Center for Public Integrity, a nonprofit investigative newsroom based in Washington, analyzed data provided by the Labor Department in response to a Freedom of Information Act request. The data used in the analysis covers the period from October 2005 through September 2020 and includes all cases in which the agency determined there were minimum wage or overtime violations.
Most businesses contacted about this story declined to comment and several business and industry groups contacted by Public Integrity did not immediately respond to requests for comment.
Victims of wage theft toil on the lower rungs of the workforce. People like Danielle Wynne, a $10-an-hour convenience store clerk in Florida who said her boss ordered her to work off the clock, and Ruth Palacios, a janitor from Mexico who earned less than the minimum wage to disinfect a New York City hospital at the height of the pandemic.
Companies have little incentive to follow the law. The Labor Department’s Wage and Hour Division, which investigates federal wage-theft complaints, rarely penalizes repeat offenders, according to a review of data from the division.
The agency fined only about 1 in 4 repeat offenders during that period. And it ordered those companies to pay workers cash damages — penalty money in addition to back wages — in 14% of those cases.
On top of that, the division often lets businesses avoid repaying their employees all the money they’re owed. In all, the agency has let more than 16,000 employers get away with not paying $20.3 million in back wages since 2005, according to Public Integrity’s analysis.
“Some companies are doing a cost-benefit analysis and realize it’s cheaper to violate the law, even if you get caught,” said Jenn Round, a labor standards enforcement fellow at the Center for Innovation in Worker Organization at Rutgers University.
The federal data provides a revealing — though incomplete — look at a practice that can push America’s lowest-paid workers further into poverty. The data doesn’t include violations of state wage-theft laws or cases where employees sued. And it misses the workers who don’t file complaints, either because they’re afraid to or are unaware of their rights.
But some economists say wage theft is so pervasive that it’s costing workers at least $15 billion a year.
Companies are more prone to cheating employees of color and immigrant workers, according to Daniel Galvin, a political science professor and policy researcher at Northwestern University. His research, based on data from the Census Bureau’s Current Population Survey, shows that immigrants and Latino workers were twice as likely to earn less than the minimum wage from 2009 to 2019 compared with white Americans. Black workers were nearly 50% more likely to get ripped off in comparison.
Through much of the Jim Crow era, the federal government ignored racial disparities in pay. It wasn’t until the Great Depression that Congress first tried to establish a national minimum wage and overtime pay for workers. To get Southern Democrats to vote for the Fair Labor Standards Act of 1938, Northern Democrats agreed to exclude agricultural laborers, nannies and housekeepers from the law’s protections. In the South, most of those workers were Black. Out West, a large number were Mexican American.
