There are millions of workers each year who are cheated out of hard-earned money by fraudulent employers. This practice is called wage theft. Employers are guilty of wage theft when they do not pay at least the minimum wage, require “off-the-clock” work, steal tips, do not pay overtime, do not give final paychecks, misclassify their workers as independent contractors, or do not pay their workers at all.
The amount of money returned to wage theft victims in 2012 was worth almost three times as much as all reported robberies, according to an estimate by the Economic Policy Institute (EPI) and FBI crime statistics. The amount returned to wage theft victims annually is nearly a billion dollars, but since most victims never report, the actual amount owed to workers is probably closer to $50 billion.
Wage theft is particularly harmful for low-wage employees. A study of low-wage workers in Chicago and surrounding areas found that about half of the workers were victims of pay violations, amounting to an average loss of $2,595 per year. A full-time minimum wage worker who prepares their work station for 15 minutes each morning before being allowed to clock in, and cleans up for 15 min off the clock at the end of their shift, will lose more than $1,400 each year. That is about an extra six percent taken out of an already tight budget. The risk for employers is extremely low; the maximum civil penalty is only $1,100.
Wage theft is also prevalent in Arkansas, where a recent survey suggests that wage theft may have a bigger impact on women and minority groups. The Northwest Arkansas Workers Justice Center (NWAWJC), a nonprofit organization, located in Springdale performed a statewide survey of Arkansas workers who classified themselves as wage theft victims. Over half (56 percent) of the people responding to the survey were women. Although over 70 percent of Arkansans are Caucasian, only 28 percent of the surveyed wage theft victims were white. 54 percent were Latino workers, 10 percent were African American, three percent were Asian, and five percent were classified as Other (Pacific Islander and Native American).
Wage theft is widespread because the laws protecting workers are minimal and not strongly enforced. Arkansas only requires that employers pay workers on a semi-monthly basis. Arkansas can help protect wage theft victims by requiring employers to provide paystubs that show hours worked and wages earned, and give notice of wages or paydays at the time of hire and when wages or paydays change. Arkansas workers also need strengthened anti-retaliation laws so that they are not afraid to complain or inquire about wage theft. To deter employers from illegally docking wages, we also need to enforce substantial costs to violators. Currently, Arkansas employers are only penalized if the theft is considered intentional, and the penalty can be as low as $50. Wage theft is all around us and it does not discriminate. It robs from the government’s tax coffers, resulting in cutbacks of vital services and puts ethical employers at a competitive disadvantage.