Thursday, May 1, 2014

The Growing Problem of Wage Theft

With the US Senate’s most recent blocking of the Paycheck Fairness Act, the pay disparity between male and female workers is again in the news.
Despite a heavy messaging push from top Democrats, the Senate failed to pass the Paycheck Fairness Act on Wednesday, aimed at cutting into the national gender wage gap -- falling six votes short.
Had it passed, the bill would have made it illegal for employers to retaliate against a worker who inquires about or discloses her or his wages or the wages of another employee in a complaint or investigation. It also would make employers liable to civil actions. And as part of this bill, the Equal Employment Opportunity Commission would be required to collect pay information from employers.
The one thing that jumps out at me, (and should to the reader, too) is the provision for ending retaliation against workers who share salary information with each other. For reasons that are unclear to me, how much we make is a very closely guarded secret with most people - even with others we work with. The only party that benefits from pay secrecy (other than those who are significantly overpaid compared to their peers) is the employer since it hides any inequities from those who are underpaid compared to their peers.
For example, if Employee A is getting say, $20/hour because it has been mutually agreed that this is a fair wage for this person, if Employee B is making $15/hour for doing the same work and performing equally, the second employee is clearly being taken advantage of for his or her ignorance of what others are making.
An unethical practice we are hearing more and more about is known as wage theft as Wikipedia defines it here.
Wage theft is the illegal withholding of wages or the denial of benefits that are rightfully owed to an employee. Wage theft, particularly from low wage legal or illegal immigrant workers, is common in the United States. Wage theft can be conducted through various means such as: failure to pay overtime, minimum wage violations, employee misclassification, illegal deductions in pay, working off the clock, or not being paid at all. These violated rights have been guaranteed to workers in the United States since 1938 by the Fair Labor Standards Act (FLSA). [The proponents of the proposed Fair Paycheck Act argue that this would simply provide better enforcement of the FLSA.]
Wikipedia in the article goes on the make this statement.
An issue not always recognized as a central topic in wage theft is the existent gender pay gap between men and women.
If one accepts that pay gaps between men and women performing the same work is wage theft, then why shouldn’t similar significant pay gaps between other workers that are not gender related also qualify as wage theft? I believe that this shouldn’t just be about fairness to women, but fairness to all of our workers.
The idea of openly sharing salary information among workers is not as crazy as some may believe. Unions routinely do this and in the case of sports players' unions, their members’ salary information has been made public. (Those who listen to sports talk shows know that much of the discussion is about whether certain athletes are worth what they are being paid.)
The Pittsburgh Post-Gazette article Steelers could see Maurkice Pouncey's price go way up illustrates the benefit to the athletes.
The price for the Steelers to sign [elite National Football League] center Maurkice Pouncey to a new contract just took another twist, thanks to Alex Mack. Mack signed a five-year, $42 million offer sheet with the Jacksonville Jaguars, and the Browns decided to match it rather than let him go and receive nothing in return.
That makes Mack the highest-paid center in the NFL. Maurkice Pouncey can justify saying he should be the highest paid.
Regrettably, it is likely the lowest paid workers who are most often the victims of wage theft. It appears to be especially prevalent in the fast food industry with McDonald's among others being the targets of a number of lawsuits. It’s bad enough when most of these workers are forced to accept a wage that is not enough to live on. But many be even be getting screwed out of some of that. This is outrageous!
But plenty of others are getting screwed too! Check out this recent NYT editorial Wage Theft Across the Board.
When labor advocates and law enforcement officials talk about wage theft, they are usually referring to situations in which low-wage service-sector employees are forced to work off the clock, paid subminimum wages, cheated out of overtime pay or denied their tips. It is a huge and underpoliced problem. It is also, it turns out, not confined to low-wage workers.
In the days ahead, a settlement is expected in the antitrust lawsuit pitting 64,613 software engineers against Google, Apple, Intel and Adobe. The engineers say they lost up to $3 billion in wages from 2005-9, when the companies colluded in a scheme not to solicit one another’s employees. The collusion, according to the engineers, kept their pay lower than it would have been had the companies actually competed for talent. [The lawsuit was indeed settled out of court for a payment of $324 million.]
The article goes on to say…
When wage theft against low-wage workers is combined with that against highly paid workers, a bad problem becomes much worse.
Data compiled by the Economic Policy Institute show that in 2012, the Department of Labor helped 308,000 workers recover $280 million in back pay for wage-theft violations — nearly double the amount stolen that year in robberies on the street, at banks, gas stations and convenience stores.
Moreover, the recovered wages are surely only a fraction of the wage theft nationwide because the Labor Department has only about 1,100 wage-and-hour investigators to monitor seven million employers and several states have ended or curtailed wage enforcement efforts.
I agree with Washington Post op-ed writer Catherine Rampell who believes that wage theft should be treated as a criminal offense.
Harsher penalties, including prison time, should be on the table more often when willful wrongdoing is proved. Thieves caught stealing thousands of dollars from someone’s home can go to jail; the same should be true for thieves caught stealing thousands of dollars from someone’s paycheck.

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