Fixing Our Wage Theft Laws to Protect Workers, Responsible Businesses, and State Budgets

The Great Recession's jobs crisis arrived on top of the wage theft crisis. While more than 20 million Americans search for jobs, thousands of workers who have jobs are not getting paid for the work they do. Wage theft occurs when an employee does not receive some or all of they pay owed them. Unscrupulous employers pay below minimum wage, pocket tips meant for their employees, neglect to pay time and a half for overtime, and force workers to work off the clock.

Wage theft hits low wage workers hardest. A 2009 study found that an incredible 76 percent of low wage workers in our nation's largest cities claimed they had been underpaid or not paid at all.

Still, wage theft is everyone's problem. The Economic Policy Foundation found that U.S. workers annually lose $19 billion in earnings due to unpaid overtime alone. Imagine what $19 billion in additional wages pumped in our economy could do right now. Imagine what income taxes paid on that $19 billion in unpaid overtime could do for our federal and state budgets. In 2010, New York State a loss of $427 million in state revenue.

What is to be done? There are two solutions to the wage theft crisis -- community education and systems change. Part of the reason why wage theft pervades is that few know about it or what to do if it occurs to them. That's why in Colorado and other states, government and community organizations are teaming up to educate employees, business owners, union representatives, faith leaders, and others on wage theft. Colorado's Wage Theft Taskforce, led by Interfaith Worker Justice Colorado and made up of representatives from the federal and state departments of labor, nonprofit organizations, and public interest lawyers, has educated over 2,000 community members in its five year history.

However, education alone isn't enough to solve the problem. Victims of wage theft often find themselves without effective recourse. Over 5,200 employees contact the Colorado Department of Labor every year about wage and hour violations; however, there are only a few employees to address these wage theft cases and the other 30,000 cases a year they are responsible for. In Oregon, due to budget cuts, the state has reduced its investigators from five to two. Colorado also has an anachronistic 60-day window to submit a wage claim letter; workers who do not file these letters within the two month period of no hope of recovering their wages.

There is hope though to solve these systems problems. Last year, Illinois passed a law to improve its wage theft enforcement system. One critical piece of this landmark legislation was a fee structure that allows the Illinois Department of Labor to retain some of the wages and penalties it recoups in order to fund further investigation and enforcement. Already this provision has supplied $58,000 for the department, almost enough to hire an additional full time employee. This helps prevent another Oregon from occurring in Illinois.

And Colorado is looking to follow Illinois's lead, by passing a wage theft law that funds investigation, enforcement, and community education and eliminates the 60 day window, among other provisions. Illinois, along with New Mexico, New York, and Massachusetts, has already proven that strengthening our wage theft laws make good sense. Workers who are victims of wage theft have a better chance to recover stolen wages. Ethical businesses no longer have to fight the race to the bottom when their unscrupulous counterparts are held accountable. And government budgets begin to grow with additional income tax revenue, leading to more teachers in classrooms, state patrol on our highways and construction workers repairing our bridges. Fixing our wage theft laws is a critical piece of our nation's economic recovery.