It can seem minor at the time. Maybe your employer insists you do prep work off the clock. Perhaps you’re told you’re not eligible for overtime pay, even though you worked more than 40 hours that week. Or maybe a new manager took over and now your share of the tips seems a bit smaller than before. The difference between your rightful pay and what you actually receive may seem relatively insignificant; not worth the risk of complaining.
The situations above are examples of wage theft, which is illegal.
How big of a problem is it? It’s impossible to know for certain, because only a minority of victims report wage theft. In 2012, however, state and federal agencies recovered at least $933 million for wage theft victims. By comparison, all the robberies committed that year combined for $341 million in stolen money.
According to the nonpartisan Economic Policy Institute, that $933 million in recoveries is probably the mere tip of a massive iceberg. A study of New York, Chicago and Los Angeles indicates that, in any given week, two-thirds of workers in low-wage industries experience pay-related violations. For workers earning $17,616 a year, the average amount lost annually to wage theft was estimated to be $2,634. Assuming a national estimate can be extrapolated from the three-city study, American workers are losing more than $50 billion a year to employer theft.
New York restaurant case illustrates the problem
In just one example, immigrant busboys at an upscale Manhattan restaurant called Veranda were earning no wages whatsoever for their work, but were subsisting on their share of pooled tips. When a manager began overseeing the distribution of those tips, however, he illegally took a share for himself, reducing the busboys’ compensation even more. They complained to the New York Attorney General’s Office, which filed suit.
The restaurant owner then tried to intimidate the busboys by requesting their immigrant worker authorizations. He subsequently cut their hours and ultimately fired them in retaliation. When the case was settled, Veranda agreed to pay each of the busboys $25,000 in restitution, and to pay 23 other workers a total of $150,000.
While an individual instance of wage theft may seem minor, the losses can add up quickly.
Want more timely employment law updates? Sign up for our newsletter.