Wage Theft and More

Wage theft. It's a fairly recent obsession of mine, filling a bunch of tabs awaiting a coherent bit of writing. I'm not sure I can be coherent, but here are the tabs.


An Epidemic of Wage Theft Is Costing Workers Hundreds of Millions of Dollars a Year. This report from the Economic Policy Institute provides the working definition of the problem:

Millions of Americans struggle to get by on low wages, often without any benefits such as paid sick leave, a pension, or even health insurance. Their difficult lives are made immeasurably harder when they do the work they have been hired to do, but their employers refuse to pay, pay for some hours but not others, or fail to pay overtime premiums when employees’ hours exceed 40 in a week.

The EPI authors explain,

Survey evidence suggests that wage theft is widespread and costs workers billions of dollars a year, a transfer from low-income employees to business owners that worsens income inequality, hurts workers and their families, and damages the sense of fairness and justice that a democracy needs to survive. A three-city study of workers in low-wage industries found that in any given week, two-thirds experienced at least one pay-related violation

The total stolen from workers through wage theft is -- get this -- three times as much as the amount taken in every robbery, burglary, larceny, and motor vehicle theft in the U.S. each year. And that's just the proven wage theft, the wage theft where someone complains. It doesn't count the many times when an employee doesn't report or can't report (probably very common when a worker is undocumented).

But which type of crime do you hear about on the evening news or in crime statistics?

Here's just one of many stories where a large employer was found to be stealing from its employees: Shell and Motiva Enterprises Pay Millions In Back Wages After Investigation:

...eight Shell Oil and Motiva refineries failed to pay workers for time spent attending mandatory pre-shift meetings. The companies required the workers to come to the meetings before the start of their 12-hour shift. Because the companies failed to consider time spent at mandatory pre-shift meetings as compensable, employees were not paid for all hours worked and did not receive all of the overtime pay of time and one-half their regular rate of pay for hours worked over 40 in a workweek. Additionally, the refineries did not keep accurate time records.

This tendency to not pay for time that's required for a job but not directly part of what might be considered productive labor is common in wage theft cases. Amazon's warehouse workers are currently suing because they are required to spend 25 minutes -- uncompensated -- every day (!) in a security checkout line to make sure they haven't stolen anything. The warehouse says that's not work, and clearly it's not, but it's also not something the workers have any choice about so they should be paid for the time.

A couple more: Chipotle makes workers stay late 'off the clock' without pay, New York attorney general to sue Papa John's franchisee for shorting wages. Remember, these are often the workers who are making minimum wage or just above it, and so can least afford to have their wages taken.

The relationship of wage theft to the institution of franchising can't be ignored. Franchising is basically a way for a large corporation to decrease its risk and responsibility for how it treats its workers by creating secondary companies that legally employ the workers. This whole fiction was recently unmasked in a decision by the National Labor Relations Board.

[It's worth noting that the franchisees themselves are not always happy about their relationship to their corporate overlords. Two stories: Disenfranchised: Why Are Americans Still Buying Into the Franchise Dream? from Pacific Standard magazine and Behind Big Macs, a drama over business control from Associate Press.]

Another way that corporations and their franchisees routinely steal from low-wage workers is by making them assistant managers or even managers. Because a manager supposedly has more discretion in work, they are exempt from the hourly wage rules of the Fair Labor Standards Act. So fast food companies, for instance, promote a worker to assistant manager and suddenly don't have to pay her overtime. The big dollar store chains, like Dollar General, are well known for this:

Each week, the company allotted [Dollar General Manager] Hughey around 125 hours to assign to the four workers in her charge, most of whom were earning close to minimum wage... But...the hours...allowed...rarely cover the work that needs to be done. The stores operate on something close to a skeleton staff, workers say.

Pressured to keep payroll down, Hughey spent most of her time unloading trucks, stocking shelves and manning the cash register, often logging 12-hour days, six days a week, to keep the store operating. She said she felt less like a manager than a manual laborer.

Dollar General saved a bundle by having Hughey do much of the grunt work. As a salaried manager, she was exempt from overtime protections and didn't get paid for extra work. Given that she often worked 70 hours a week, at an annual salary of $34,700, her pay sometimes broke down to less than $10 per hour -- hardly a managerial haul.

Managers supposedly get paid vacations, but if they can't find staff to cover their time off, they don't take it. If someone calls in sick for the early store-opening shift, it's the assistant manager or the manager who covers it, unpaid beyond their 40-hour check.

Part of the problem with the FLSA's regulation of these exempt workers is that the minimum weekly wage that controls whether they can be considered exempt or not has not been increased since 2004: you can make as little as $455 a week and be considered salaried. When that dollar amount was written into the bill by Congress, it was worth $28,874 a year in 2013 dollars, but now it's $23,660. As with too many laws that control wages, the amount is not indexed to inflation.

This weakness in the FLSA is by design:

As originally written in the 1940s, the Fair Labor Standards Act limited the percentage of the day that an employee could spend on non-managerial duties and still be exempt from overtime, which over the years came to be understood as no more than 50 percent [of their time].

But in 2004, President George W. Bush’s Department of Labor overhauled the rules, which accomplished two things: First, it raised the salary threshold below which all workers are entitled to overtime, from $250 per week to $455 per week. And second, it reorganized all the exemptions in such a way that more employees wouldn’t qualify because of what they did on the job. Under the new rules, people could be defined as managers exempt from overtime, for example, while doing grunt work and supervisory work simultaneously.

Current Secretary of Labor Tom Perez hopes to introduce an increase in that minimum, to about $50,000 a year, which seems only fair to me when paying a person who is supposed to be a manager of a business. That's not even the median wage for a family of four. And it's what the basic exempt wage limit from 1975 would have become by now, if it had been adjusted for inflation.

Exempt employees are supposed to be doing jobs that are "executive," "professional," or "administrative." I'm not sure where unloading trucks and running a cash register fits into those categories. But all of this messing with the FLSA indicates that our labor laws need to be overhauled to fit the way our current service economy works, instead of the manufacturing economy we used to have.

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Related thoughts....

Another way that companies undermine their workers is by using just-in-time scheduling. I've written before about workers in this situation, who are often called the precariat (a clever combination of precarious and proletariat). More recent stories on these practices cover Walmart, Popeyes, and Urban Outfitters. Schedules are completely unpredictable, making it impossible for people to get child care, work a second job, or get more education. It's almost as if these employers don't want their employees to better themselves so they can get a better job some day.

San Francisco recently responded to all of these employer practices by introducing a retail workers' bill of rights. "The proposed legislation would require that chain retailers provide schedules to workers at least two weeks in advance. Workers would also be entitled to additional pay if their schedules change at the last minute."

Here's a story that gives a clear idea of what it's like to work for a large sporting goods retailer. The pay ($10 an hour) sounds good relative to minimum wage, but his overtime goes unpaid altogether. Once he got a pair of socks.

And of course, I recommend reading Barbara Ehrenreich's classic book Nickel and Dimed: On (Not) Getting by in America.