Sam Talbot Contemporary Labor Issues Professor Ed Ott December 17, 2010 Introduction Over the past several years, an ugly secret has been brought to light in the United States: employers steal from their employees. Not just a few unscrupulous employers, or small businesses, or in marginal, declining or unprofitable industries. To the contrary, recent studies have shown beyond a reasonable doubt that wage theft is both wide-spread and virulent, and that current enforcement of wage law is utterly inadequate.
While the full magnitude of wage theft in the U. S. is still unknown- no comprehensive assessment has been undertaken- it has been revealed to be a crime which is so pervasive that it constitutes the norm rather than the exception in entire sections of the U. S. economy; a crime which is orchestrated by- and for the benefit of- many of the most powerful corporations, the largest banks, the richest private equity firms, and the wealthiest families; a crime which is persecuted systematically, calculatedly, and with ruthless abandon.
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In other words, wage theft must be considered not as incidental product of our economy, but as one of its fundamental features, a rottenness in our system of wage labor. How are we to process what this means about our society, and what can organizers do to help? In this paper, I attempt to sketch out an overall portrait of wage theft, document what is clearly known, and introduce some of the forces that are in play which may be of assistance to the organizer.
I believe, too, that I can offer a special insight into this issue, because I was myself a victim of wage theft- for 50 weeks in 2008 and 2009, the managers at the Fortune 500 Company I worked for as a cook illegally deducted pay from my weekly check. Over that year, about $2,500 was stolen out of the $26,500 I rightfully earned- almost 10% of my earnings. In the final section, I give a personal account of this experience. The Shame of Wage Theft An unjust system rightfully produces a feeling of shame in all those who participate in it.
It is hard to imagine a greater shame than for a rich and powerful country like the United States to allow its workers to be preyed upon with such abandon. It is hard to imagine a greater shame than for a culture which holds the property rights of the wealthy in such high regard to allow these same rights to be so unaccountably violated when it comes to the hard-won earnings of those who work. It is hard to imagine a greater shame than for an intelligencia which proclaims a philosophy of free markets to plead ignorance when one of the primary exchanges- that between an employer and an employee- is so recklessly and violently defiled.
How is this situation possible? How is it allowed to continue? The answer lies, in part, in the nature of shame itself. Shame is the most social of all emotions. The first experiences of shame mark the transition from purely selfish being to a set of motivations tempered by rules and boundaries which- although they may not be fully understood- are nonetheless enforced and obeyed. For the very reason of its social utility, however, shame also displays a remarkable malleability, and tends to conform not only to the expressed values of society, but also to support the worst of society’s prejudices and iniquities.
An unjust system rightfully produces a feeling of shame in all those who participate in it. But ironically, the reflexive reaction to this shame is to minimize it, to hide it, to keep its secret, and thus, ultimately, to perpetuate the injustice. This urge to secrecy is felt by the victim as well as the victimizer- in fact, it is often stronger within the victim. The victimizer, after all, has already overcome their shame once- in the process of perpetrating the offence- and is therefore already rehearsed in explaining it away; while the victim has no primary experience of overcoming the shame of the injustice done to them.
This shame takes a multitude of forms and produces a variety of responses, but its most primary expression is silence. This urge to silence is borne out by the research: in the “Broken Laws” study, 4 out of 5 workers who were victims of wage theft did not raise their voices in complaint. In part, this is because of fear of retaliation- and indeed, 43% of the workers who complained did face retaliation- but I would argue that the greater part of this silence is accountable to shame and its corollaries.
The silence of the victims of wage theft is a fundamental abetment of the crime, and this is where an organizer can help. Shame must be experienced through someone else’s eyes- it must have a witness- and finding someone to stand witness against those who have power is difficult. Think of the story “The Emperor’s New Clothes”- it is fundamentally a parable about the perverse outcomes of shame’s functioning. Yet, the story also provides a cue for the organizer- when the powerful contort the common values of society too much, even a child can cause the system to collapse.
What We Know about Wage Theft Before we go further into the organizer’s role in cases of wage theft, we must get a clearer sense of what is known about wage theft- at least a preliminary sketch of what it is, how to identify it, its magnitude and where it is likely to occur. One of the great difficulties is that wage theft is literally a secret kept by our society, so forming a clear picture requires a great deal of detective work. An excellent, in-depth guide to the complexities of the issue is Kim Bobo’s book Wage Theft In America.
The category of “wage theft” includes all illegal deductions or non-payment of wages- from outright refusal to pay for a job done, to unlawful deductions from wages or piece-rates, minimum wage violations, overtime pay violations, illegal fines, tip stealing, etc. The list of petty schemes used to by bosses and management to reclaim workers’ wages is long, and while many of them are perfectly legal (e. g. making employees pay their employer for a provided lunch), many others are not (e. g. “cutting-in” managers into pooled tips).
There are 7 major categories of wage theft (some of which overlap): * Overtime violations- payment of “straight time” instead of “time-and-a-half” for hours worked over 40 during a single pay week. A conservative estimate places the total wages stolen annually in this category alone at $19 billion. Local laws may also apply, for instance, in NY State, time-and-a-half applies to hours worked over 10 in a single day. * Minimum wage violations- with few exceptions, all workers must be paid a total for all hours worked not falling below the state minimum wage.
Common violations include day-rates which fall short of the minimum and tipped jobs. Conservative estimates suggest that 3 million workers are paid less than the minimum wage. * Misclassification- exemptions from overtime and minimum wages (as well as payroll taxes) are available when workers a classified as self-employed contractors. The rules for who may be classified as a contractor are not clear-cut, but regular employees who have no independent control over their work, schedule, or tools may not be exempt. “Off-the-clock” violations, “shaving,” and “chiseling”- refers to employers who have employees work unpaid hours after punching out, “shave” hours from employee timesheets to avoid paying for the full number of hours worked (common techniques include deducting time for meal breaks even when breaks are not given, or paying de-facto day- or week-rates when claiming to pay hourly wages), or “chisel” on piece-rates by making arbitrary deductions or using faulty measuring devices (when weight or volume measures are used) * Tip Theft- including management withholding of “service” surcharges (or surcharges which may be “believed by a reasonable person” to be a service gratuity, e. g. banquet-hall surcharges), as well as inclusion of management in pooled tips. * Illegal charges, fines, bribes and extortion- this category is broad and includes paying to work or to receive better assignment, paying for tools, rides, drinks, etc. Unfortunately, some of these charges are legal (but on no account may reduce total pay below state minimums). More extreme cases involve extortion by means of threats, most often to “turn in” undocumented immigrants unless they pay. * Non-payment- particularly common for day laborers and contract workers.
Also common is non-payment of the last check or checks, which may be particularly pernicious in the case of contractors, who often only receive two or three payments from a given job. It should be easy to see from this list how quickly the issue of wage theft becomes difficult to assess, when there are so many different forms of wage theft. The landmark study “Broken Laws, Unprotected Workers” attempts to gauge the magnitude of wage theft by identifying 6 “high risk” industry/occupational groupings in the urban centers of New York, Los Angeles, and Chicago, and extrapolating from samples to create estimates of wage theft. The study’s key findings: “More than two-thirds (68 percent) of our sample experienced at least one pay-related violation in the previous work week. The average worker lost $51, out of average weekly earnings of $339. Assuming a full-time, full-year work schedule, we estimate that these workers lost an average of $2,634 annually due to workplace violations, out of total earnings of $17,616. That translates into wage theft of 15 percent of earnings. ” * “We estimate that in a given week, approximately 1,114,074 workers in the three cities combined have at least one pay-based violation. Extrapolating from this figure, front-line workers in low-wage industries in Chicago, Los Angeles and New York City lose more than $56. million per week as a result of employment and labor law violations. ” If we project similar rates to those found in the study onto the entire “low-wage” workforce in the U. S. , which amounts to approximately 30 million, we come up with an estimate of over $50 billion dollars in stolen wages per year. Still, $50 billion dollars can only be considered a partial estimate, because many non-low-wage employees are also subject to wage theft. Likewise, while the study focused on non-union industries and workplaces, where wage theft is far more common, it is not unheard of for employers to steal wages in unionized settings. Wage Theft- An Organizer’s Perspective
In the great inertia to stop the epidemic of wage theft we can see: 1) The limited resources of existing major institutions to protect workers from wage theft, including: * The Department of Labor- the governmental branch primarily charged with enforcing the laws around wage theft- which is ludicrously understaffed and underfunded for adequate enforcement. In Wage Theft in America, Kim Bobo estimates that each enforcement officer in the Wage and Hour Division is responsible for protecting 170,000 workers in 9000 workplaces. * Civil Courts- where the Department of Labor’s enforcement is inadequate, victims of wage theft also have recourse to regular civil trials. Class-action lawsuits have proven effective at winning large settlements, but of course navigating court procedure takes specialized knowledge. Labor unions- which are effective at protecting their members from wage theft- but which represent only a minority of the total workforce, and a tiny minority in the low-wage industries where wage theft is most prevalent. Still, a number of organizing campaigns have made good use of class-action suits or Department of Labor cases. 2) The relative strength of the forces of ignorance and denial, including: * Ignorance- in many cases willful- among media and opinion-makers as to the extent of wage theft. This is an essential correlate of shame- the desire to look away, the refusal to acknowledge the extent of the problem. * Denial by companies of their responsibility for the practices of subcontractors, and among politicians of their duty to enforce the law which governs wage theft. The most extreme form of this enial being the challenges currently raised by right-wing Republicans against the very constitutionality of minimum wage laws, and a corresponding “law of the jungle” or “seller beware” attitude towards the collection of wages. At the same time, there is a countervailing interest for politicians, because wages are taxable. Therefore, a company which steals from its employees is also stealing tax revenue from the government. Misclassification is a particularly egregious form of this theft. In fact, much misclassification is done primarily as a tax dodge, and only secondarily as a way of stealing from employees. 3) Last, but by no means least, the heaviness with which the burden of want weighs on those who must accept wage theft as “a part of life” and can raise only limited protest.
Here, too, there is a prevailing attitude that “nobody cares. ” The fact of wage theft, where it is not normalized to the extent that it is not even recognized as a crime, is so obvious and self-evident to those who suffer from it that it is hard to believe that anyone could be unaware of it. This is particularly true in the “low-wage” sectors of the economy. Yet, in the face of this inertia there are three smaller institutions which have converged on the issue of wage theft: 1) Worker’s Centers 2) Workplace law policy and advocacy groups 3) Religious Leaders This convergence has been years in the making but only “exploded into the light” within the past two years.
It is notable that it is a religious leader who has become the most outspoken champion of victims of wage theft and is working to present the struggle against wage theft in the broadest terms- Kim Bobo, director of the organization Interfaith Worker Justice. Significantly, she has done this by forging common cause with workers’ centers (which themselves often incorporate at least one workplace law lawyer), the Department of Labor, and lawyers and policy groups interested in social justice. In a way, it is fitting that a religious leader should be the best equipped to tackle the problem head-on. Who, more than a cleric, is properly situated to understand the interplay of pride and shame, who has heard more people’s confessions, and who can better understand the forces that cause a person- or a society- to hold on to guilty secrets? For an rganizer, the topic of wage theft raises many difficulties, but also great possibilities. Returning, for a moment, to the metaphor contained in “The Emperor’s New Clothes,” the issue is at once so simple that even a child can understand it, but at the same time requires stripping away preconceptions to the degree that many “learned” people have trouble seeing the plain truth. As a practical matter, the first challenges are discovering wage theft where it occurs and in documenting it. Where wage theft is blatant, it is often difficult to document- for instance day laborers who are paid in cash may be promised one rate at the beginning of a day and given another, but it is difficult to prove.
On the other hand, in a corporate setting- where policies are systematically applied, and electronic records may even be kept, facilitating documentation- the challenge of discovering that wage theft is occurring at all is often greater. This is the crux of the “on the ground” challenge- motivating workers to come forward with wage theft claims, and giving them the support and protection necessary to prosecute claims successfully. The second, broader struggle, lies in moving towards legislative reforms by shifting public opinion from disbelief and apathy towards involvement. Both of these jobs, in my mind, are linked by the motif of shame, and require a good deal of careful “cultural work” by organizers- both within organizations primarily dedicated to cultural production (NPOs, academia), and within the culture of the labor movement.
Shame is not defeated by vanquishing it- it must be turned around on its perpetrators. What is required of organizers who wish to tackle the issue of wage theft is not only that they make people aware of the shame of wage theft where it is occurring, but also that they help people refuse to bear the burden of another’s shame. Fear may be vanquished by the step-by-step building of power, and produces solidarity among those whom it victimizes. Shame, however, isolates its victims and destroys solidarity- as such, it is a foe that every organizer who takes on wage theft must know, must understand, and must face down. Wage Theft- A Personal Account
The week I finished my probation period, my boss approached me as I stooped to put prepared food on a rolling cart. “Uh, it’s important that you know that we try to keep everyone to 40 hours a week,” he said as I awkwardly rose. He was speaking in a low voice, and standing too close to me, forcing me to take a half-step backwards, “You have a little extra work cleaning up, so I’ll give you an extra half-hour a day to do that. ” “Oh. OK,” I said. I knew that I had clocked over 43 ? hours every week for the past month- and as an experienced cook I was uncertain how I would be able to compress my work-time by an hour. But I figured we’d work out the details in the coming weeks.
I didn’t understand the significance of what he’d said until two weeks later, when I got my first paycheck as a non-probationary employee. There on the pay line was “40 regular 2. 5 OT”- 8 hours a day “plus” half an hour a day. I knew for a fact that during the past two weeks I had worked more than 42. 5 hours. First of all, I had been given more tasks- “Come here Sam- you didn’t clean out the toaster. Oh, didn’t Yvette tell you that that’s part of your job? “- and held to a higher standard, meaning that I had seldom worked less than 9 hours a day. My check should have read at least about 45 hours. “Oh they do that to all of us! ” said my co-worker when I asked him about it, “My check says ’40’ every week- even though you see how I stay late every day cleaning up my station. He seemed even to take an odd kind of pride in the fact that he didn’t let the fact that he wasn’t getting paid for it make him change his pace or cut corners in his job as a cook. I started writing down what time I came in, what time I clocked out for lunch, when I clocked back in, and when I left for the day. Over the next weeks- as I tried to master my routine and speed up my work- I asked around and discovered that all of the cafeteria employees were being stolen from. I discovered, too, how each of my co-workers who was being stolen from had his or her own way of dealing with it. This one cut corners by putting out spoiled food instead of taking the time to make a fresh batch.
That one scurried around like an anxious mouse to try to complete everything in time (and rarely did). Another mixed new and old ingredients and then surreptitiously threw away copious quantities of food when spoilage befouled the whole mix. Some just blundered through and figured they really didn’t deserve any more than they were paid. Everybody cut corners on the sanitation procedures the company promised the client were in place. For my part, I tried to design a system in which I could use my strength and expertise to increase my output while decreasing the time my job took me. I came in early to gather pointers from Yvette- the person I had taken the station over from. Nothing worked to keep my hours under 42. 5. Yvette told e that for the first year she had worked the station, she had come home and cried almost every day from the strain and difficulty. “Then I figured out how to do it,” she said. It still sometimes took her longer to do the job than she was paid for. I began to notice another thing about the kitchen. For every trick used by the employees, or blind eye turned to quality and waste, there was a corresponding slackness on the part of management towards improving productivity. I recalled the chef saying the first week I was in the kitchen: “We’ve got a good bunch here, but, uh…they’ve got problems. ” When I asked him what he meant, he said “Well, they don’t really work efficiently. Not having to pay for extra hours meant that there was really no incentive to increase productivity. When you came down to it, not a lot of effort was wasted- we were just understaffed. What wasted effort there was was rarely due to worker stupidity or slackness- it was due to inappropriate, insufficient, and poorly-maintained equipment, and management ineptness. When I first signed on as a non-probationary employee, the manager had told me that after 6 months he would raise my wage from $12. 50/hr to $13. 50. In my seventh month, I reminded him of his promise. “Oh, did I? ” he said. The next week he raised my rate to $13. 50, but dropped the hours he paid me for to 40. – meaning that my “raise” amounted to less than $5/week. After working in the kitchen for nearly a year, I discovered that we were on the short list of “best practices” kitchens in the NYC area (which had over 100 accounts), lauded for the profitability of our cafeteria production (where the majority of the wage theft occurred). Another “star account,” praised for its catering operation, was notorious for forcing catering employees to punch out for lunch even though they were required to keep working. A labor union brought me in to a meeting with the head of the State Department of Labor’s Wage & Hour Division, as part of a larger investigation into the practices of the company.
She told us: “We take a different attitude from the previous Wage and Hour team [who had been appointed by Republican Governor]- they believed their job was to help companies comply with the law. We see our job as protecting workers. ” The Department staged a raid on multiple workplaces. “We’ll pretend we don’t know you,” the investigators had told me beforehand, “so your boss won’t retaliate. It’s illegal for them to do it, but there’s not a lot we can do if you get fired. ” Still, I could see that the investigation was getting bogged down in the difficulties of documenting cases- although the company had many across-the-board practices which were illegal (such as the policy of having workers punch in and out “in uniform,” a clear violation of the requirement to pay for “donning and doffing” periods).
The union lost interest in investing the time and resources that would have been required to see the case through, but since I had made such a careful documentation of the theft I was subject to- and since the company allowed an electronic record to be made of our actual hours worked- the Department of Labor agreed to see the case through at my worksite. I found out, too, over the course of several meetings, that the Department would only go back 2 years in collecting back wages- even though we had the right to collect up to 6 years of wages. They could never really explain why- something about using it as an incentive to get the company to cooperate- but it was difficult for me to object because I had been working at that jobsite for less than 2 years anyway. After the raid, the company changed the location of the time clock from inside the kitchen to downstairs near the locker rooms.
We were invited to a “special meeting” where the management hemmed and hawed and didn’t say anything we could understand except that we had not been punching in and out properly and that we had to make sure to do it every day or there would be problems, and that we had to take exactly 1/2 hour for lunch. We were required to sign all of our time sheets in order to get our paychecks from then on. They stopped stealing hours from me, but they continued to reduce the number of hours on a number of my co-workers time sheets. During the raid, the DoL subpoenaed the company’s records, and we saw our manager escort in special off-site personnel. She set up for 2 days with a computer and piles of papers. I worried she was altering the records. About 2 months after the raids, I went to visit the DoL with three of my co-workers (I had been going back every month or two to make sure the case was still going forward). The company came back with their offer,” the head of the Wages and Hours Division told me, “they said that some of the records were off- that some workers didn’t use the time-clock correctly- and that they would give each of you $100! ” “I couldn’t believe it! It made me mad! ” she said, “we know that you guys are owed a lot more than that! ” I felt relieved. Still, I noticed that it was the Department’s decision- not mine or my co-workers’- whether or not to go forward with the case. One of the investigators did the calculations from the time-clock records. She compared it to the calculation I had made of my stolen hours. Hers was close, but a little smaller. We puzzled over them for a little while before we realized that she had been using 1/2 hour as a fixed calculation for lunch breaks. Oh, our break isn’t always a half-hour. Sometimes we work through lunch. Sometimes we only get 15 minutes. ” Finally, the Department of Labor came up with a settlement number. They were very guarded about telling me what it was. One day a number showed up in the “Xtra pay” line of our checks. For me it was a little over $2,500 dollars. I heard that for some people it was closer to $1,500. All in all, I guess we got about $30,000 out of them. Everyone was very excited to be getting checks. One of the porters paid his superintendant $20 to tell him as soon as any mail came for him. Another cook went to his ex-wife’s house every week (where his mail from work was still sent).
After 4 weeks, people were getting angry. “Blame the Department of Labor,” said our boss. Then, one day, we got the checks. By that time I had quit the job. Still, some of my co-workers- who knew that I had been going to the DoL- called to thank me. ——————————————– [ 1 ]. Most notably, Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, a survey of 4,387 low-wage workers in Chicago, Los Angeles and New York City published jointly by the Center for Urban Economic Development, the National Employment Law Project and the U. C. L. A. Institute for Research on Labor and Employment. [ 2 ].
United States Government Accountability Office, Report to the Committee on Education and Labor, House of Representatives, Department of Labor: Wage and Hour Division Needs Improved Investigative Processes and Ability to Suspend Statute of Limitations to Better Protect Workers Against Wage Theft GAO-09-629 [ 3 ]. Kim Bobo, Wage Theft in America (New Press 2009). This $19 billion number has been repeatedly mis-quoted as the total for all forms of wage theft, when it is only one piece. [ 4 ]. There is an “alternative” minimum hourly rate for tipped job positions, but total “take-home” pay still must not fall below the state hourly minimums. [ 5 ]. Bobo, Wage Theft in America [ 6 ]. Ibid. There are 7 different standards which have been used in case law to determine who may be considered a contractor. [ 7 ]. Annette Bernhardt et al Broken Laws, Unprotected Workers (2009) [ 8 ]. Ibid.