POLITICS

It's Shockingly Easy For Your Boss To Steal From You And Get Away With It

The bureaucratic nightmare of holding employers accountable for wage theft is a glimpse into America's two-tiered justice system.

Two years ago, Julio got a job painting apartment buildings in Miami. He was promised $15 an hour and scheduled to work 10 hours per day.

Almost immediately after Julio started, he noticed something fishy with his paychecks. He got paid for one week of work, then two weeks went by and he got paid for another week of work. The first time it happened, Julio’s boss denied that any pay was missing. When it happened again, his boss reminded him that he was undocumented — and threatened to call U.S. Immigration and Customs Enforcement if he kept complaining.

After two months of sporadic pay, Julio quit. He found a pro bono lawyer and filed a complaint with the Miami-Dade Wage Theft Program. But even though he had documented proof of his employment terms and his colleagues were willing to testify about Julio’s wage theft as well as their own, the chances of getting any compensation were slim.

That’s because it is shockingly easy for employers to steal from their workers, and it’s impossibly difficult for workers to do anything about it.

In order to agree to take his case, the wage theft program required Julio to prove that he was an employee rather than an independent contractor. The understaffed agency couldn’t provide translations of legal forms or offer assistance with gathering evidence from Julio’s employer. If he wanted to take the case forward, he would have to take time off work from his new job — which would mean losing wages again — and hope his former colleagues would also be willing to testify on his behalf during work hours.

The deeper Julio got into the process, the more hurdles appeared. The wage theft program initiated a mediation process, but Julio’s employer didn’t show up to meetings and didn’t respond to requests to turn over evidence. Even after Julio won his case, his employer ignored the order to give him the wages he was owed. Julio had to file a lawsuit in civil court and pay a series of hefty administrative fees to force his employer to pay him back.

“It’s been six months since I won my case and I still don’t have my wages,” Julio said through an interpreter. Due to fears of jeopardizing his current job, Julio declined to use his real name. “It’s an unfair system, but I know we’re going to win.”

Julio’s story is disturbingly typical for low-wage and hourly workers in the United States. For crimes committed against employers, such as robbery or vandalism, the justice system delivers punishments that are swift and severe. For crimes committed by employers, however, the justice system provides accountability mechanisms that are slow, weak and tedious — and it’s the responsibility of their victims to navigate them.

“If a worker takes $50 from a cash register, his employer can call the cops and have the entire force of the state come down on him the same day,” said Oscar Londoño, Julio’s lawyer and a staff attorney for the Community Justice Project, a pro bono legal services NGO. “But if the same employer steals thousands from his workers, it’s on them to spend months or even years pursuing justice.”

Workers protest wage theft in Orange County, California, in 2017.
Workers protest wage theft in Orange County, California, in 2017.

Death by Paperwork

While the hidden nature of wage theft makes its prevalence in the U.S. economy difficult to determine, existing research indicates that it is widespread, especially in industries where hourly pay is the norm.

In 2017, the Economic Policy Institute found that 17% of low-income workers were earning less than the minimum wage due to skimming by their employers. A 2009 survey carried out in New York, Los Angeles and Chicago found that three-quarters of low-wage workers weren’t compensated at a higher rate for overtime. Though the vast majority of wage theft goes unreported, the $933 million recovered by workers in court settlements in 2012 amounted to three times the cost of all robberies combined.

“Companies have built wage theft into their business models,” said Jason Conway, a wage theft lawyer in Philadelphia. “We’ve created a self-fulfilling prophecy. It’s easy for employers to commit wage theft and hard for workers to do anything about it. Over time, the people who are downtrodden get discouraged.”

The process of holding employers accountable for wage theft contains weaknesses, complications and administrative burdens at every level.

The first hurdle is the law itself. Many states offer limited legal protection for entire categories of laborers, including independent contractors and in-home child care workers. Others don’t require employers to provide written pay stubs. At the federal level, the Department of Labor can levy a maximum fine of only $2,014 on companies found to be stealing from their workers. 

Millions of workers are also being kept out of the legal process entirely. In a series of decisions handed down over the last decade, the Supreme Court has restricted the right of workers to file class actions and has upheld the right of employers to force workers into internal arbitration processes. Both measures make it more difficult for employees to bring wage theft complaints to the formal court system.

The next hurdle is filing a case. The Department of Labor’s Wage and Hour Division is tasked with receiving wage theft complaints, but budget cuts have reduced staff and increased wait times. Despite significant growth in the US population and wider array of responsibilities, the division had fewer investigators in 2012 than it did in 1978.

“The government has to tiptoe,” Conway said. In most investigations, government agencies can only examine complaints from a single worker at a time. As a result, they often miss larger-scale violations and repeat offenders. “It’s frustrating because you keep sending them these complaints that should trigger a larger investigation, but all they can do is look at them one at a time.”

While many states and cities have set up their own bodies to investigate wage theft, they present their own hurdles. In Miami, Londoño said, the county wage theft program encourages workers to have a “hallway conversation” with their managers before pursuing a wage theft case, a recommendation that can invite retaliation. Even when the agency takes a case, it can only initiate a voluntary mediation procedure. If a worker doesn’t appear for a court date, the case is dismissed. If a worker needs an interpreter and doesn’t supply their own, the case will be postponed.

“The process creates countless opportunities for workers to lose,” Londoño said.

Gregory Baker, the division chief of Miami’s Office of Consumer Protection, the agency that administers the wage theft program, acknowledged these limitations and pointed out that his agency has only eight staff members to process every single wage theft and consumer protection complaint across the city. The wage theft process in Miami, is in fact, one of the better programs in the country, he said, because workers in other cities have to file their complaints in small claims court.

“Does the system work in 100% of cases? No it doesn’t,” Baker said. “But if you go to the court system, you might end up in the same spot and it’s an even more difficult process.” 

Miami's wage theft program is difficult to navigate — but it may be one of the better options in the United States.
Miami's wage theft program is difficult to navigate — but it may be one of the better options in the United States.

Even When You Win, You Lose

The biggest hurdle may also be the last: recovering damages once you have proven that your wages were stolen.

Like most civil matters in the United States, the majority of wage theft cases are resolved through settlements. Conway noted that these payments usually amount to far less than the employer owes their employee.

“Companies win twice,” Conway said. “They save money on wages, then they save again when they negotiate the settlement down. The amount they pay ends up being a fraction of the benefit they accrue by underpaying their workers.”

The cost of this imbalance is immense. A 2015 study by a consortium of workers’ rights NGOs found that New York City employers had skirted at least $125 million in court-ordered payments to their employees between 2003 and 2013. Even in California, known as one of the most aggressive states for prosecuting wage theft, victims only received back pay in 17% of the cases they won in court.

“We can confirm that an employer stole someone’s wages, but after that, all we can do is say, ‘Pretty please pay it back,’” said Claudia Navarro, a community organizer at the Miami Workers Center, a labor rights nonprofit. One of the group’s members, a domestic worker, obtained a judgment for $13,000 in back pay from her employer after years of labor violations. After the judgement came down, her former boss stopped replying to calls and other correspondence. She’s been waiting more than two years to be paid.

Londoño also noted that employers seem to be becoming more brazen in recent years. Some are responding to court judgments by declaring bankruptcy and reincorporating under a different name. Others have begun to preemptively establish multiple names and owners, making them easier to close down in case they lose a court judgment.

But most companies are simply a hassle. In Julio’s case, Londoño had to use an old paycheck to figure out which bank his employer used, then file paperwork to freeze the company’s assets, and then file more paperwork to ask the court to transfer the funds to Julio.

“This is not the voluntary act of a bad actor. It’s a structural part of our economic system,” Londoño said. “It’s become one of the most significant forms of economic redistribution toward the wealthy.”

Londoño said he worries about the effect that this normalization of theft is having on employers. Each time a worker comes into his office, he asks them about their work history. He said he hears about the same employers again and again.

“Think about what it means to know that you can get away with crime on this scale,” Londoño said.

For Julio, at least, good news appears to be on the horizon. Nearly a year and a half after he first filed his complaint, he received confirmation that his stolen wages are finally on their way to his bank account.

“I know it’s hard,” Julio said, “but you don’t win if you don’t fight.”  

 

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