What is wage theft?
Wage theft is the illegal underpayment or nonpayment of a worker’s wages. Wage theft happens in a variety of ways. Wage theft occurs when unethical employers break either federal or state laws by:
- Not paying the minimum wage.
- Not paying the overtime premium for hours worked over 40.
- Stealing workers’ tips.
- Not paying for all hours worked.
- Calling workers independent contractors when they are really employees, thereby not paying the employer side of payroll taxes, workers compensation insurance, unemployment insurance and overtime.
- Taking illegal deductions from workers’ pay.
- Giving workers paychecks that bounce.
In what sectors does it occur?
Although wage theft can occur in almost any sector, it is common in many sectors that pay low wages. Low-income workers are often the victims of wage theft, making it doubly hard to buy food and pay the rent. Sectors in Virginia in which wage theft is widespread include:
- Agriculture (farmworkers)
- Car washes
- Residential construction
- Home care/child care
How widespread is the problem?
Although there have been no comprehensive studies on wage theft in Virginia, the national studies indicate that one out of four low-wage workers is not being paid the minimum wage and three-fourths of low-wage workers who work more than 40 hours a week are not being paid all their overtime premiums. Several hundred thousand workers are probably being cheated of wages by unethical employers not paying minimum wage or overtime. Worker centers, legal clinics, social services and congregations that serve low-income families know all too well how common wage theft is in Virginia.
According to a 2012 Joint Legislative Audit and Review Commission (JLARC) report entitled Review of Employee Misclassification in Virginia, “A Virginia Employment Commission (VEC) audit of one percent of Virginia employers found 5,639 workers were misclassified in 2010. Based on findings in other states, Virginia could have on the order of 40,000 misclassifying employers and 214,000 misclassified workers.”
Who is hurt by wage theft?
Wage theft hurts:
- Workers and their families. Low-income workers who are not paid all their legally owed wages struggle to buy food and pay rent. Wage theft contributes to hunger and poverty in Virginia.
- Honest and ethical employers, which most employers strive to be, are undercut by employers who steal from workers. Wage theft places good employers at a competitive disadvantage, especially in sectors like residential construction and landscaping in which employers routinely bid on jobs.
- Employers who misclassify workers or underpay workers do not pay their fair share of taxes, thus shifting the burden to good employers and all taxpayers.
- All Virginians. Wage theft hurts all Virginians because it undermines economic growth. The fastest way to stimulate the economy is to put more money into the hands of low-income families because they spend it in the community, which stimulates jobs and economic growth. When workers aren’t paid all their wages, they are spending less in the community and turn to public services and private charities to feed and house their families, thus restricting economic growth throughout the Commonwealth.
Why is wage theft rampant in Virginia?
There are many causes for wage theft, but the primary ones are:
- Although there are many excellent employers in Virginia who pay workers fairly and legally, there are too many who cheat workers by not paying them all their legally owed wages. Some employers are extremely devious in how they bounce checks, record hours and misclassify workers. Others are simply not as diligent as they should be in ensuring that their managers and subcontractors are paying people legally. Either way, whether sins of commission or omission, workers are having their wages stolen and employers are breaking the law. The driving motivation is greed.
- Workers don’t know their rights. Most workers do not know what their rights are in the workplace and have no idea what to do if their rights are being violated. Workers’ lack of knowledge contributes to wage theft.
- Employers don’t know the law. Although some employers intentionally break the law, others have not paid attention to the laws governing payment of workers. But in the same way that employers can’t avoid paying taxes by claiming they didn’t understand the law, they shouldn’t be able to underpay workers by claiming they didn’t understand the law. Workers deserve all their wages and employers must obey the laws.
- Too few enforcement staff. The wage enforcement divisions of the federal Department of Labor and the Department of Labor and Industries (DOLI) do not have enough staff and resources to adequately protect Virginia’s workers.
- Virginia’s wage payment law is weak. Virginia has one of the weakest wage payment laws in the nation. It exempts large groups of workers (almost all are categories of jobs that were historically held by African Americans) and gives few enforcement tools to DOLI.
- Workers aren’t organized. It is difficult for workers to challenge wage theft by themselves because they fear losing their jobs. When workers are organized in unions, worker associations, worker centers or settlement houses, they learn their rights and can work together to fight wage theft. Virginia has a very low unionization rate and only two worker centers.
How can you stop or deter wage theft?
- Make sure your congregation, organization or place of business is paying workers legally.
- Ask how workers are paid when you hire contracted services.
- Learn more about wage theft by reading Wage Theft in America: Why Millions of Workers are Not Being Paid and What We can Do about It and organizing a study with your congregation or book club.
- Pay your restaurant wait staff in cash. Approximately ten percent of tipped workers don’t get all their tips.
- Educate workers in your community or congregation about their rights.
- Educate employers in your community or congregation about their responsibilities.
- Support workers who organize to challenge wage theft.
- Help build worker centers/legal clinics in Richmond and northern Virginia.
- Join the Virginia Interfaith Center for Public Policy in raising awareness about this problem in Virginia and strengthening enforcement throughout the Commonwealth. Sign up for advocacy alerts at virginiainterfaithcenter.org.
Download our Labor Day bulletin for your congregation or meeting:
Wage Theft Bulletin