To put it another way, wage theft is the illegal withholding of wages or denial of benefits that are rightfully owed to any employee. Wage theft particularly affects low wage or illegal immigrant workers in the United States.
The Economic Policy Institute (EPI) came out with a highly detailed and insightful report on wage theft in September 2014. According to their analysis, wage theft has considerably negative consequences. Neglect of payment for minor things, such as preparation for service before regular business hours, customer assistance done off the clock, and clean-up after the establishment closes, accumulates over time. Employees who earn a weekly minimum wage paycheck ($290 for 40 hours) may lose up to 10% ($1,400) of their annual income if they fail to get reimbursed for even a ½ hour of their work day. This amount may not seem like much, but it makes the difference between having a home and living on the streets.
The Center for Urban Economic Development, National Employment Law Project, and the UCLA Institute for Research on Labor and Employment conducted an important 2008 research study on wage theft in three cities, New York, Los Angeles, and Chicago. According to their findings, approximately 66% of the workers surveyed dealt with at least one weekly wage violation. On average, the annual illegal loss of wages per employee was $2,634 out of a total income of $17,616. Overall, workers lost close to $3 billion in low wage industries across the three cities mentioned above. The EPI report states:
“If these findings in New York, Chicago, and Los Angeles are generalizable to the rest of the U.S. low-wage workforce of 30 million, wage theft is costing workers more than $50 billion a year.”
Wage theft is an insidious national crime. A comparison of wage theft to crimes that are more well-known reveals wage theft’s true magnitude and impact. FBI’s Uniform Crime Reports indicate about $14 billion lost in burglaries, larcenies, stolen cars, and robberies in 2012. That is $14 billion in controversial, stigmatized theft versus an estimated $50 billion in wage thefts.
Below are a few more recent statistics that illustrate the epidemic proportions of wage theft in the United States:
Protecting your company from wage theft not only fosters your employees’ financial security, but also minimizes the risk of legal liability if employees sue for insufficient compensation. Establish firm payment systems to care for your employees and avoid major penalties from our legal system.