Thieving Employers


Wage Theft in America
By Kim Bobo
Paperback: 421 pages
Publisher: New Press (2009)
ISBN-10: 1595584455
ISBN-13: 978-1595584458

In her book, Wage Theft in America, labor activist Kim Bobo illuminates on a crisis, the immensity of which is probably largely unknown. The crisis is one of wage theft in the United States. Wage theft is the non-payment of money legally owed to workers. However, as Bobo posits, it is not only workers that suffer from wage theft; society as a whole suffers. Scrupulous employers who pay workers what they are legally entitled are competitively disadvantaged by derelict employers, and this has a knock-on effect in the employment world.

Many of the wage thieves are large, well-known corporations. Wal-Mart and McDonald’s are among them, but also federal, state, and local governments are implicated, as well as small businesses. Appendix A in Wage Theft in America lists numerous companies forced to settle with workers deprived of wages.

Wage theft includes workers are not being paid or only being paid partially, being denied overtime pay, being hit with illegal deductions. Bobo states that deductions may not bring a worker below minimum wage.

Although wage theft also affects middle-class workers, Bobo is most concerned with wage theft from poorly paid workers who are already struggling. The wage theft is widespread, and Bobo examines the plight of workers in construction, garment factories, nursing homes, farming, poultry, and restaurants. In particular, Bobo singles out day laborers who she describes as “among the poorest of the poor … routinely being cheated out of wages.”

Wage theft is either intentional by employers or happens through lack of a system to guard against wage theft. Bobo cites:

  • Paying for fewer hours than those worked
  • Paychecks that bounce
  • Not paying overtime
  • Paying by day or job
  • Making workers pay for a job
  • Paying below the prevailing wage
  • Illegal deductions from paychecks
  • Stealing tips from workers
  • Not paying workers at all
  • Not paying last paychecks
  • Misclassifying workers as “independent contractors.”

Bobo writes that millions of workers are not paid overtime who have earned it; one artifice in this fraud is misclassification of workers as “exempt” from receiving overtime pay. Bobo relates the case of cook Jose who worked 80 hours a week in two different restaurants owned by the same boss who paid him separately 40 hours twice to avoid overtime. Jose recovered $6701 in unpaid overtime with the help of Madison Worker Rights Center.

Bobo tells of a Chicago car wash that charged workers merely for the right to dry cars with rags and collect hoped-for tips.

Misclassifying workers leads to many problems, such as workplace safety, the owner skipping on paying payroll taxes, unemployment insurance, Worker’s compensation coverage, overtime pay, and the owner denying worker’s compensation.

Bobo cites a 2007 IRS report that estimated 15 percent of 3.4 million workers were misclassified as independent contractors. As Bobo makes plain, wage theft is widespread; it debilitates both workers and society.

Wage Theft in America does not only point out the crisis of wage theft, it seeks to answer why it occurs, why labor law does not prevent it, and how to stop it.

Bobo considers causes for wage theft as societal contexts (globalization, hidden unemployment, etc.) and challenges (greed, racism, and sexism), untoward business practices, and lack of pushback forces.

This reviewer finds that wage theft is symptomatic of an inherent malignancy in capitalism, something that Bobo does not address, concentrating instead on how wage theft can be stopped within the system.

Bobo finds that there is a “hodge-podge” of laws. They are difficult to understand, and when the needed legal protections for workers exist, there is often an unwillingness to enforce such laws; Bobo points to Florida’s non-enforcement of minimum wage laws as one example.

How to stomp out wage theft? Bobo keys on the importance of labor unions. She provides many facts and rationales to back this conclusion. She also compellingly deconstructs — what turn out to be feeble — objections to unions. Worker solidarity and the attempts to solidarize, according to Bobo, must be protected. “When unions represent most workers in an industry, wage theft is virtually eliminated.”

Bobo emphasizes the importance of solidarity not just among workers but also of workers with workers centers (which include societal- and faith-based centers).

Bobo describes a case emphasizing strength through solidarity. Francisco was fired from Outdoors Excapes, a landscaping firm, and was denied his overtime wages due. Francisco went to the Workers Interfaith Network (WIN) in the Twin Cities with his “carefully kept” records of work. WIN wrote the employer requesting pay within 24 hours or else default wages would start to accumulate. First the employer ignored the letter; a follow-up call also proved unfruitful. WIN next moved the problem from Francisco to the group level. Unsurprisingly, there were other employees missing pay who wished to collect. Upon hearing about this, the employer sent a check to Francisco but without default pay. The outstanding pay of the other workers was unmentioned. This was insufficient for Francisco. The group of workers began sending letters to the clients, and copies to the employer, informing of the workers’s non-payment.

The outcome was that the workers recouped over $40,000 in overtime wages, and most importantly, the owner now pays overtime to all workers.

If solidarity is the strength of workers, then unethical management/ownership would seek to divide and weaken workers. Bobo emphatically shows that “common self-interest” is to the benefit of all workers.

Bobo recognizes the role that the Department of Labor (DOL) can play for workers. She says that with community forces, it is “the best hope for many workers in low-wage jobs.” However, the DOL finds itself vastly understaffed and politically marginalized.

Bobo concludes, “Workers deserve strong leaders fighting on their behalf. Wage theft requires strong leadership. Leadership matters.”

I will not state that leadership does not matter; a good and strong leader could attain meaningful improvements in the workplace and worker remuneration. However, I will depart from the überemphasis Bobo seems to put on leadership. Overemphasizing the importance of leadership is dangerous. It ignores the old refrain cautioning people not to put all their eggs in one basket. It is easier for management to corrupt one leader than the bulk of the working masses. Relying on a bad or weak leader could sink the masses. Bobo has already pointed to the power of unions, worker solidarity, and solidarity with other societal groups. The emphasis should remain squarely focused on worker solidarity and not on leadership.

Bobo calls for a carrot-and-stick approach. She criticizes the lack of deterrence from weak penalties for wage-theft violations and the need to strengthen such penalties. She also calls for rewarding good employers publicly to set the standard.

To further empower workers, Bobo calls for more education and provision of information. For instance, Bobo writes of the DOL’s recalcitrance at posting information on unclaimed back wages, and the need to better promote such information.

Since everyone in society is impacted by wage theft, Bobo calls upon consumers to direct their purchases toward ethical companies, for workers to also inform themselves, and for people to be active and vigilant in fighting wage theft.

Wage Theft in America has a message that goes beyond workers and beyond America. Solidarity is the key for workers. Solidarity is also the key for a better society. It is only through solidarizing and forming mass movements that class society and all its entrenched unfairness, wars, and injustices will be toppled.

Kim Petersen is a scuba diver, independent writer, and former co-editor of the Dissident Voice newsletter. He can be emailed at: kimohp at gmail.com. Twitter: @kimpetersen. Read other articles by Kim.

13 comments on this article so far ...

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  1. Ramsefall said on January 12th, 2009 at 12:28pm #

    Kims,

    Wage theft — just another negative, domestic effect of free-market deregulation.

    Its international corollary — corporate outsourcing — in order to exploit through low wages and no benefits already desperate and poor workers, along with lenient or non-existent environmental regulations, all for a greater profit margin. Now that this approach is experiencing uncontrollable blowback in regions where it was once so prevalent — as we see particularly in Latin America — a higher occurrence of domestic wage theft can be expected. That seems to be the logical outcome.

    Best to you.

  2. mebosa ritchie said on January 12th, 2009 at 1:27pm #

    is this thieving????

    Hamas on Monday raided some 100 aid trucks that Israel had allowed into Gaza, stole their contents and sold them to the highest bidders.

  3. kalidas said on January 12th, 2009 at 3:27pm #

    “A society of cheaters and the cheated.”
    From top to bottom.

  4. HR said on January 12th, 2009 at 5:34pm #

    Glad to see the article pointed out that it aint just Wal-Mart that cheats workers. It was a little weak on making the point that our much-worshiped small businesses are just as bad, and have been for as long as they have existed. For example, expecting employees to arrive early to open up and stay late to close, uncompensated, have been the norm for decades. Time to SPECIFICALLY, and directly, include the antics of these crooks in the conversation when discussing the subject of employers cheating employees. Small business has been mollycoddled and placed on an undeserved pedestal for too long. They deserve neither … irrespective of Chamber of Commerce lies.

  5. Don Hawkins said on January 13th, 2009 at 7:51am #

    Investopedia Says:
    In such a system, individuals and firms have the right to own and use wealth to earn income and to sell and purchase labor for wages with little or no government control. The function of regulating the economy is then achieved mainly through the operation of market forces where prices and profit dictate where and how resources are used and allocated. The U.S. is a capitalistic system.

    socialism
    Economic system which is based on cooperation rather than competition and which utilizes centralized planning and distribution.

    The key word here is cooperation. Can we put that word in the capitalistic system because we need that word and soon. I read lately many people like American Thinker that climate change is over and a hoax it’s cold and snowing, what. This summer again record ice loss and it’s already to late to stop that. Crops will grow better in a warmer climate, no it doesn’t work like that. All you have to remember is putting 10 thousand times the natural rate of CO 2 into the atmosphere and that is measured not in just the time human’s have been on Earth measured in millions is not going to work out well. Cooperation better known as working together is Exxon working together with other companies?

    That centralized planning I guess will make many think Marx the philosopher, social scientist, historian and revolutionary. Hello the last year the fed the treasury was that just a little centralized planning and distribution? The distribution part just where did all that funny money go? To a few who experience themselves, there thoughts and feelings as something separate from the rest. A kind of optical delusion of consciousness. I heard one man the other day say well we already got the money we need when talking about banks and other unconscious separate from the rest people so now I guess the rest of you can have some, what. We need some revolutionary ideas and bold moves not to keep a system going for just a few but for about 6 billion plus. If we don’t see the signs Indian talk I don’t think it will work out well. Is this new administration going to go for it? We will known soon and it will be Yes or oh well.

  6. Shabnam said on January 13th, 2009 at 10:21am #

    Mr. Kim Petersen:

    You have to tell me what is going on, but instead my comments have disappeared. All my comments 3 of them after 9:10am have been wiped off the page.
    I am waiting!!??

  7. Shabnam said on January 13th, 2009 at 10:22am #

    Bozh:

    Have you seen my post to you? Please answer.

  8. The Angry Peasant said on January 13th, 2009 at 11:07am #

    I’ve worked in restaurants and experienced at least four of the things on Bobo’s list up there. Let me tell you that here in New York state (and by the sound of it most other places), wage theft and wage denial are common occurrences. As an employee in the decadent state of New York, you have almost no rights. I’m not exaggerating that; you are at the mercy of that employer. And in New York, if you quit, get fired or even sometimes just get laid off, the employer decides whether or not you’ll get any unemployment benefits. Usually, of course, you do not. I worked for a guy for years who made it a policy not to pay anyone overtime. This was in the tourist town of Lake Placid where restaurant workers bust their asses a lot harder than most others in the business do. This guy went on for years saving himself probably in the tens of thousands through his crooked practices, of which eliminating overtime was only one. Finally, a couple guys who were fired went to the department of labor, and the owner was forced to pay back overtime to all his employees. Suitable, but not enough. He should have been prosecuted, and been forced to pay all his employees’ unemployment after the closing of his restaurant. Instead, he continues to be a crooked S.O.B., just doesn’t hold back overtime pay any longer. He finally got nabbed, but keep in mind that this went on for a good twenty years before he did.

    Stories like this are far too common in America. You always hear politicians spew their horseshit about “small business owners; we have to protect small business owners.” I’ll tell you truthfully that, as someone who has spent much of his life working for small business owners, they are very often every bit as crooked and heartless as a Wal-Mart is. In some ways, more so. If the government wants to do anything for small businesses, they should start with holding the owners thereof accountable and whip their ambitious little asses into shape.

  9. Michael Hureaux said on January 13th, 2009 at 12:46pm #

    A colleague of mine raised an interesting point along these lines at the union meeting last night. School districts all over this country collect interest on money that teachers agree to leave in payroll accounts over the course of the school year due to deferred compensation. On the one hand, it ‘s great to defer part of our pay during the year so we can take the summers off and get paid. I’ve long thought that months of time down should be part of a standard labor contract in industry as well.

    But: where does that interest on deferred compensation funds for say, 5000 teachers in the Seattle area go? If it’s our money, it’s our interest, na? It would be great to see the NEA and the AFT start carrying that one forward, but that will happen when hens have teeth.

  10. Don Hawkins said on January 14th, 2009 at 5:56am #

    The get-away

    As the light just breaks in the Eastern sky or is it the Western sky a helicopter just reaches building 133 in New York City. It stay’s over Bernie’s penthouse just long enough for another helicopter a news copter to get in place. A rope ladder is dropped from the fist copter and a man runs to the ladder and begins to climb as the helicopter heads South along with the WTVV copter. Talk about good TV. As this is all happening 200 police cars reach building 133 and storm the building. When they reach the penthouse no Bernie just a camera man and a women reporter. The camera man has on a coat that reads camera crew on the back and the reporter has a note pad and pen. The camera man has on a hat and dark glasses and is backing down the hall way to the elevator. As most people are watching the helicopter fly South the camera man and the reporter reach the ground floor and back out to a van that of course say’s WTVV on the side. That van then heads North with Bernie and his wife. Like Bernie that camera is not real but made of Styrofoam and a good paint job kind of like his house in Palm Beach. Just outside the city Bernie and wife change to a Prius hybrid and head for Boston the port. The helicopter lands in little over an hour in New Baltimore and no Bernie because he and his wife are about to get on a freighter headed for Africa. As the ship leaves port on the back you can just make out the name, eye of the serpent. What happens after that heck I don’t know maybe they reach Africa and find drought, famine, bugs and unrest

  11. Brian Koontz said on January 14th, 2009 at 9:22pm #

    “Suitable, but not enough.”

    That’s exactly right. Not paying agreed upon wages is a crime, and should result in jail time. It’s ridiculous that the only “penalty” is having to pay the wages an employer should have paid in the first place.

    Do individuals receive such treatment? If I fail to pay a shopkeeper for something, when I’m caught do I simply have to then give the item back, or do I go to jail for shoplifting? People recognize the former as absurd, but most do not draw the obvious parallel to businesses.

    There are two sets of rules in America – one for businesses and one for individuals. Businesses are often run by criminals since those criminals when caught do not go to jail – they keep running the business.

    Crime pays.

  12. OnTheBlock said on January 16th, 2009 at 12:39pm #

    A recent court decision that affected my industry was this: The large corporation for whom some 10,000 of us work in the USA, was forced to settle a class action suit for wage cheating (we are paid by production, and predictably, they found ways to shortchange us by their counting methods). While allowed to settle with a no-wrongdoing judgment, the company requested — and the judge allowed –that the large settlement not be paid to those workers who were robbed, but to a 3rd-party professional organization to whom this company has been contributing large sums of money for years. Not surprisingly, this professional organization, while pretending to represent the worker’s rights, has consistently promoted the selling of our work offshore and even changed common English in order to accomodate the corporation’s desire to pay us less (we produce written documents and are commonly paid per keystroke).

    It sounds complicated, but in short, the workers who were DUE the money were denied it, instead having to suffer the indignity of seeing their unpaid wages go to the very entity responsible for promoting the offshoring of their American jobs. This, by court order, and a judge supposedly looking after the interests of American workers.

    How can anything change, when our legal system, and therefore our right to redress, is as thoroughly corrupt and anti-labor as the large corporations themselves?

  13. Hilary Smith said on February 6th, 2009 at 12:09pm #

    Volunteer with your local unions. Organize your own shops. So many of us have nothing left to lose.