A couple dozen employers in the Miami Valley region have been cited and fined by federal authorities in recent years for not paying hundreds of workers the minimum wage, according to a Dayton Daily News analysis of federal data, and experts believe the true extent of the problem is much greater than that.
“One of the core problems is that dishonest employers calculate that there will be no consequences if they steal from workers and all too often they’re right,” said Michael Shields, a researcher with Policy Matters Ohio.
U.S. Sen. Sherrod Brown, D-Ohio, is cosponsor of the Wage Theft Prevention and Wage Recovery Act and says the legislation would increase penalties on employers who steal wages and assist workers with recovering stolen earnings and protect them from retaliation.
Wage theft stiffs millions of U.S. workers each year out of tens of billions of dollars their employers owe, says the Economic Policy Institute.
Some research suggests that economic losses from wage theft exceed financial losses from shoplifting.
Dishonest employers in Ohio steal from about 213,000 workers each year by paying them less than minimum wage, according to research by Shields.
Not all wage theft victims stay on their jobs a full year, but those who do on average lose nearly $2,900, or about a quarter of their earnings, Shields said.
If all victimized workers stayed on their jobs the full year, the total amount of unpaid earnings in Ohio would exceed $600 million annually, his research found.
Shields said wage theft often goes unreported because workers do not know the law or their rights or, most commonly, they fear retaliation from their employers.
Citations, backpay and fines
A Dayton Daily News analysis of U.S. Department of Labor enforcement data found that the agency has recovered more than $115,200 in unpaid wages in the last seven years owed to local workers who were not properly paid the minimum wage or overtime.
More than 560 local workers were harmed by not being paid what they were owed by employers in Dayton, Fairborn, Hamilton, Lebanon, Springboro, Springfield, Troy, Urbana and Xenia, the data show.
Violators included pizza shops, fast-food establishments, restaurants, home health care providers, food marts, staffing companies and other service providers.
Across the state, employers have been required to pay back wages and damages for wrongfully labeling restaurant workers as volunteers to avoid paying them; deducting lunch-time hours even if workers did not take a break; and not paying employees when their commissions fell short of meeting or exceeded the minimum wage.
And Shields said the labor department enforcement data does not begin to reflect the true extent of wage theft because only a tiny share of victims come forward.
About 4% of all Ohio workers have some of their wages stolen by their employers each year, Shields said, but more than 18% of workers earning less than $11.45 per hour are victimized.
“Wage theft can happen to anybody,” he said. “But low-paid people are five times as likely to experience wage theft.”
Unfair impact
Women, people of color and immigrants also are more likely to be victimized, he said, and the leisure and hospitality industry accounted for more than half of wage theft cases his study identified.
To prevent wage theft, there must be harsher penalties for violations and tougher enforcement of wage and hour laws, he said, and local communities can help by approving anti-wage-theft ordinances like measures passed in Columbus and Cincinnati.
Wage theft is “not fair, it’s not right, it’s something that needs to stop,” said Earnest Hatten, a northeast Ohio resident who says he had money stolen from his paycheck by his employer.
Sen. Brown. says the Wage Theft Prevention and Wage Recovery Act would increase the economic damages awarded in wage theft cases to three times the amount employers owe in unpaid wages.
He said the legislation also would require employers to provide their employees with initial disclosures of the terms of their employment, as well as regular pay stubs, and there would be heavy penalties for employers who retaliate against employees who report wage and hour violations.
“This is so important and we give workers the power to fight back,” he said.
The chamber says while the bill may sound well-intentioned it actually creates onerous federal requirements that “add complexity and confusion without actually improving worker protections.”
“The ultimate goal of this bill is to promote expensive class action litigation that does little to help businesses and employees by precluding the enforcement of predispute arbitration clauses,” the chamber said.
Other critics say the bill’s proposed penalties are excessively steep and would not allow for discretion or flexibility based on the size of the business or the type of violation.
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