Wage Theft

YES! Weekly | June 14, 2012
At some point, you just give up.

It didn’t take long for Ana Roberto and her coworkers to realize they were being forced to work upwards of 50 hours a week to help open a fast-food franchise on Lawndale Avenue and that the company was only paying them for 40 hours of work.

“We all went in and confronted them on payday and they promised they would pay us,” Roberto recalled. But they never did. Roberto was 18 then, and didn’t know she had other options.

Years later, working at another chain restaurant, Roberto contacted the Occupational Health and Safety Administration to report a few violations, and when her employer found out, Roberto said she was harassed to the point of wanting to quit.

It should be no surprise then, that even though she knew she was supposed to get pay stubs at a more recent job, Roberto didn’t see the point in filing a complaint with the NC Dept. of Labor. And while she was upset when she heard a coworker was paid $20 a day under the table for at least four hours of work, why bother looking into it, because what could she do?

Workers routinely aren’t paid the full amount they are owed. While it isn’t a legal term, the practice is commonly called “wage theft,” and it comes in many forms: missing hours on a paycheck, no overtime pay, a promised raise or paid vacation time that never materializes, being paid below minimum wage and many other examples.

Sabine Schoenbach, a policy analyst who researches wage theft for the NC Justice Center, defined wage theft as the “illegal underpayment or nonpayment of workers’ wages.”

A few industries are hit harder than others — home healthcare, construction, retail and restaurants — and while low-wage workers are more likely to experience it, Schoenbach said wage theft happens across the board.

Workers in the area, who didn’t give their names for fear of retaliation from employers, listed a wide range of ways they are denied what they are owed. Restaurant workers were promised raises they never received. A manager on Elm Street was forced to come in and do prep work without clocking in, some workers had to clock out while cleaning the shop.

A barista said she has to train people on her unpaid lunch break, and another worker said he was denied a regular bonus because his boss fudged the math on his performance numbers.

Paychecks bounced, wages were lowered without notification, businesses closed and never gave employees’ their last checks, workers were forced to pay for supplies and campaign workers said they were paid a fraction of what they were promised, if at all.

People working under the table were taken advantage of too. A cashier and a construction worker were paid under minimum wage, and another construction worker said he and a half-dozen other immigrants were never paid for a house they built. Babysitters received less than their promised rate.

Wage theft includes illegal deductions from wages too. Carol Brooke, who heads the Workers’ Rights Project for the justice center, said she frequently sees cases where employees are illegally required to pay for work uniforms, gloves, tools, aprons and other supplies.

“It can be devastating not to get a week’s worth of wages when you’re living on the edge,” Brooke said. “Workers continue to work when they aren’t paid because the thought is if they hold out they may get money that they so desperately need. It’s very common for people not to be paid at all for the work that they do. All of these violations are common.”

Some people eventually get paid by continually asking their bosses. One person who is employed in college athletics kept working even when he wasn’t paid in the hopes that it would get sorted out, and it was.

“The guy who was in charge of payroll and who was my boss was relatively new,” the employee said. “He was sick and he didn’t bother to give the payroll information off to someone. It was submitted as it was. I got $20 for a month and a half of work.”

Even though he was eventually paid, the long delay made it harder for him to move into an apartment. Other workers weren’t as lucky.

In November 2010, Demetria Hall said her employer at a childcare center started paying her a portion of her paycheck. Hall said she often received only $500 out of the $1,100 to $1,200 she was owed each month but kept working until April 2012 when she stopped being paid altogether.

“I was almost evicted, my lights were almost turned off and I had to borrow money from family members and friends just to stay afloat,” said Hall. “It’s very, very, very hard. I’m taking it hard because I worked hard and you expect to be paid for it.”

Workers like Hall have some recourse, including filing a complaint with the Wage & Hour Bureau at the labor department. Bureau administrator Mike Murrow said the department receives 5,500 wage complaints annually. Employers often make counterclaims against the employee, citing various reasons the employee isn’t owed the money, such as damaging company property.

Many workers don’t understand their rights, and some employers are counting on it.

Murrow said his department handles two types of wage claims. Violations of minimum wage and overtime laws, or “rate of pay” violations, average about 15 percent of the complaints received. The other 85 percent are “wage payment” violation claims where an employer fails to provide promised compensation above the legal limits.

When a complaint comes in, it is assigned to an investigative assistant the next morning and the business is contacted in two days.

“We try to collect folks’ money but there are certain cases where we can’t,” Murrow said. Often people don’t have enough information about the employer to track them down, especially if it is a contractor. Bureau staff can only go back two years, and it is rare that a case winds up in litigation because employers can’t be found, they make effective counterclaims or simply pay the amount owed.

Carmen Antonetty has been stiffed working as a dancer and a bartender for different promoters and contractors, but even if she wanted to report it she usually doesn’t have their names. Antonetty keeps doing the work because she loves dancing, and on a good night bartending she can walk away with a few hundred dollars. She’s chased people down to get paid before, but she said occasionally coming up empty is the price of doing business.

“I would probably shoot myself working at a call center or in retail,’ said Antonetty, who has had to borrow money when she doesn’t get paid. “I do hair — it just means I’ll have to step up with two more clients. You just hustle. You find a way.”

When claims do get filed and employers don’t respond, the bureau staff chooses cases to litigate based on a variety of factors, including the number of workers affected, the amount of money owed and if the business owner is a repeat offender.

“We can’t litigate every single case because we just don’t have the manpower for it,” Murrow said. The staff of 30, including three who can take complaints in Spanish, hasn’t been cut while he’s been there, but as claims rise over the years, the bureau’s resources have stagnated.

The most extreme case Murrow can recall was over a mere $86 and took four years to complete because the employer kept appealing, but they eventually won. The employer was forced to pay and, like all cases like this, was forced to cover the employee’s legal costs.

Most of the cases are less than $500, with the largest one Murrow can remember totaling $250,000, but the bureau doesn’t take claims under $50. Industries with high turnover rates are more likely to violate wage-and-hour laws, he said.

Murrow once went into a business and found a man who hadn’t been paid overtime for 15 years and never said anything, and said an employer in the Outer Banks told his employees that overtime laws didn’t apply because they were on an island. Employers are required to pay time-and-a-half for overtime hours, but 75 percent of workers in a justice center study weren’t paid the legal rate.

Many of the people interviewed for this article didn’t know they could even file a complaint with the labor department. One worker said she filed a complaint with her company’s internal process that went nowhere and figured that was her only option. When she realized the labor department took complaints, she said she wanted to file one.

There are countless reasons jilted employees don’t ever file complaints besides ignorance of the law or the labor department, including an expectation the claims won’t go anywhere or a fear of retaliation.

“The reluctance of people to bring these claims is why employers do it,” said Eric Fink, an associate professor at Elon Law School who teaches labor and employment law. “It’s a rational business decision. It happens almost entirely to non-union, predominantly low-wage workers who are least likely to do something about it.”

When she was 15, Lauren Justice worked retrofitting lights at stores throughout the region, but she said they were only ever paid part of what they were owed.

“It totaled out where everybody was owed a couple thousand dollars,” Justice said. “Every Friday he said he’d pay the next week.”

Eventually everyone quit, and even if she had known how to file a complaint she wouldn’t have — her uncle was the boss.

While the number of complaints has risen since the recession began, the number fell last year and Murrow speculated it could be because people could be more afraid of losing their jobs because the process isn’t anonymous and retaliation is common.

“We can’t guarantee you that there will be no reprisals because employers do what they want to do,” Murrow said, adding that there is a division in the department for discrimination and retaliatory discharge that could handle such cases.

When one employee in the beauty industry confronted her boss about receiving less than minimum wage because she only received commission, her employer said she was lucky to have a job. She isn’t paid for an hour of required work every day, but she feels she can’t file a complaint because she needs the boss’ recommendation for any future job.

“You end up feeling powerless,” she said. “In this capitalist system money is valued over people and we’re pitted against one another. You go somewhere else and you’re going to be under that same umbrella. Maybe that’s another reason people don’t do anything.”

Fink also said wage theft was connected to other economic problems.

“It’s part of a larger system of problems,” he said. “In a bad economy, employers have an even greater incentive to cut costs however they can.”

Workers realize they are expendable, and sometimes their employers explicitly remind them, a few said. High unemployment means low-wage workers regularly feel they are replaceable and that it would be difficult to find other jobs.

Undocumented workers have an added level of fear for retaliation. Roberto and others said kitchen workers in restaurants they’ve worked at had hours shaved off their paychecks because employers realized they didn’t speak English well or sometimes lack the legal status to stand up for themselves.

Still, some workers do file complaints, like Hall, who contacted the labor department last week. On top of her complaint with the bureau, someone at the Legal Aid office will represent Hall to try and secure her unemployment and the Greensboro Housing Coalition helped her pay rent.

One pizza delivery driver said he tried contacting the labor department because his employer over-reported their tips in order to decrease base pay.

“It’s kind of hard to convince them when you have cash tips,” he said.

Now at a new pizza place, he doesn’t see any reason to file a complaint, even though canceled orders are deducted from workers’ pay and overtime is paid in cash, if at all.

Increased education can help deal with wage theft, as Murrow’s story about the overtime-free island illustrates. Workers can call bureau’s 1-800 number with questions, and Schoenbach said justice center staff conducts know-your-rights workshops on wage theft. They hope to teach some in the Triad soon.

Brooke and Schoenbach said stronger penalties for businesses that don’t comply and increased resources for the wage-and-hour bureau to investigate violations would also help.

Brooke said another effective option for workers is to organize.

“The critical thing is talking to your coworkers and grouping together, both because I think you’ll have a better legal recourse, but also because there also might be organizing options,” Brooke said. “In some locations, worker centers have been able to get workers to picket employers houses and been successful in embarrassing them.”

Brooke said the Farm Labor Organizing Committee, which is pressuring Reynolds American in Winston-Salem to improve conditions, has had a number of successes. Construction and farm workers who come to the union often have minimal information on their employer, organizer Justin Flores said, adding that they have solved dozens of cases of wage theft in the last year by pressuring employers, but that it is significantly easier with a union contract.

“Once they see there’s some sort of organization behind a worker they’ll sometimes straighten up and get them paid,” Flores said, adding that the Department of Labor wasn’t necessarily the most effective but that the real fault was with the employers. “[The larger] companies could easily provide better conditions and that’s why we have this big fight with Reynolds American. For every worker being exploited, there is somebody who is benefiting.”

Under the Fair Labor Standards Act employers are banned from retaliating against workers for complaints. If employees band together regardless of whether it’s as a formal union, retaliating against their “concerted activity” is an “unfair labor practice,” meaning workers can file with the National Labor Relations Board, Fink said.

Fink recently helped form a Greensboro branch of the Industrial Workers of the World. The solidarity union doesn’t rely on legal procedures to protect workers from things like wage theft, though it has won significant legal victories recently for unlawful firings and owed back wages.

“One of the things we’ve talked about is focusing on wage theft, because our members have experienced it,” Fink said. “One of the best tools for workers to prevent any type of abuse is to organize, in advance or in response. If it’s happening to you, it’s probably happening to your coworkers.”

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