National Edition

Wage theft: How employers steal millions from American workers every week

Published: Tuesday, June 24 2014 6:00 a.m. MDT

"The problem is there are very complex rules for determining if somebody is exempt," he said. "You can legitimately classify somebody as exempt, but it isn't always clear and it is complicated. You have to get a lawyer in a lot of close cases to read case law and that sort of thing. Many employers unwittingly misclassify employees as exempt."

An emerging trend, according to Moody, deals with classifying workers as independent contractors. They do this so they do not have to count them as employees under the Affordable Care Act and so they don't have to withhold taxes for them or pay minimum wage or overtime. Unlike real subcontractors, who control much of their own work, these workers are tightly controlled by their employers.

Workers who receive tips are also in danger of wage theft. An employer is supposed to make up the difference if an employee's tips don't rise to regular minimum wage standards. But Milkman says in the course of her study, she talked with a housekeeper for a major hotel chain whose supervisor would enter the rooms first and take all the tips.

"This is only one example," Milkman said. "But (as this situation with the major hotel chain shows) wage theft is not limited to fly-by-night employers."

Moody says sometimes the problem is not a rogue employer, but a rogue manager who just isn't following the rules.

"And the company won't know about it until it is brought to their attention," he said. "If an employee does, hopefully the company will jump on it and get it corrected."

The solutions

The U.S. Department of Labor, in an email to the Deseret News, says that victims can confidentially call the U.S. Department of Labor's Wage and Hour Division at 1-866-487-9243 or visit it on the Web at dol.gov/whd to make a complaint. Even undocumented immigrants have rights to be paid, Milkman says.

But practically speaking, many will not make the call.

Some may fear speaking out, worrying that employers will try to find out who reported them and then retaliate.

Even when complaints are filed, Moody says, state and federal authorities have limited resources to investigate. Eisenbrey and Milkman say a solution would be for the government to fund more agents to investigate violations.

Instead, understaffed agencies are increasingly unable to effectively patrol the workplace: "So part of the effort has been to disincentivize the employers by increasing the penalties, which makes it more attractive for private attorneys to take these cases and pick up the slack from the government," Moody says.

Eisenbrey says the punishments for violations should be even stiffer. He would like to see criminal punishments for repeat offenders.

"All of these labor standards are fragile," Eisenbrey says. "It requires vigilance to maintain a notion of a 40-hour workweek. ... If we are not vigilant, enforcement will just slip away and employers will go back to the chaos of anything goes, and we'll end up with seven-day workweeks. It isn't enough to have laws on the books; it needs to be enforced."

Email: mdegroote@deseretnews.com

Twitter: degroote