Millions of American workers are cheated out of wages by employers

Wage theft, the practice of employers failing to pay workers the full wages to which they are legally entitled, is a widespread and deep-rooted problem that directly harms millions of U.S. workers each year. 

While these crimes occur in several different ways, millions of workers in the United States are cheated out of overtime pay by employers who manipulate the accounting of their work hours.

Another common scheme for avoiding fair wage payments is classifying an worker as an independent contractor to escape the employer’s responsibility under the Fair Labor Standards Act (FLSA), which establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees.

The concept of overtime pay, just like the minimum wage, didn’t exist in federal law until President Franklin D. Roosevelt pushed for New Deal labor protections in the wake of the Great Depression.

Congress enacted the FLSA in 1938 to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers,”  but the heart of the New Deal was cut out of America when the nation adopted a set of policies known as ‘Reaganomics” beginning in 1981.

A full-time employee today is four times less likely to earn time-and-a-half income than in the 1970s because there has been a 40-year effort by big business and elected officials to deny Americans fair pay for their labor.

It is difficult to calculate the precise losses to workers exploited by such unscrupulous employers, but a 2017 Economic Policy Institute study of wage theft estimated that employees living in the nation’s 10 most populous states have been shortchanged by more than $8 billion a year.

“Extrapolating these numbers across all 50 states, the total wages stolen from workers each year exceeds $15 billion in the United States,” said Anthony Damelio’s November article in the Fordham Urban Law Journal. That rivals the $16.4 billion value of all property crime nationwide in 2018.

But in 2019, the Labor Department cited only 8,500 employers for stealing about $287 million from workers, according to a Center for Public Integrity analysis.

Amid surging inflation, tens of millions of American workers face rapidly declining buying power today, but full-time employees in many professions have been losing economic ground since the 1970s, when corporate lobbyists began to succeed in their anti-overtime efforts.

The result: Over the last 47 years, there have been sharp reductions in the percentage of workers eligible for time-and-a-half pay.

In 1975, more than 60 in every 100 salaried workers could earn overtime pay. By 2020, just 15 percent of workers did were eligible. Politicians of both parties failed to increase the maximum salary eligible for overtime enough to keep up with rising living costs over those decades.

As part of his scheme for reducing the influence of government, President Ronald Reagan scrapped plans for overtime expansion that were delayed by his predecessor and then he slashed funding for Department of Labor investigators who inspect workplaces for wage violations.

President George H.W. Bush not only failed to increase the salary threshold used to determine if workers qualify for overtime, which remained at $8,600 per year, but he also reduced the number of Americans who earn overtime by adding exemptions for small businesses and many computer programmers.

President Bill Clinton focused on raising the minimum wage and securing overtime for home health care workers that had previously been excluded, but he failed to increase the salary threshold.

After more than a quarter-century of a salary threshold frozen in place, even major industry groups acknowledged that it was time for an upgrade. The administration of George W. Bush, Jr. increased it to $23,000, but the administration almost immediately undercut those gains by revising labor law in a way that eliminated overtime pay for millions of Americans.

In his second term, President Barack Obama’s Department of Labor proposed doubling the salary threshold to $47,000, tying future changes to the cost of living, but a federal judge in the Eastern District of Texas overruled the administration.

Instead of appealing the Texas court’s ruling, President Donald Trump’s Labor Secretary, Alexander Acosta, created a watered-down version lifting the salary limit from $23,000 to $35,000 and scrapping the cost-of-living increases; that means about 2.8 million of the 4 million workers who expected to get overtime benefits won’t get them.

Despite exclusions that harm many employees and exception that enable employers to virtually get away with murder, there are still offenses reported among big businesses.

Krispy Kreme Doughnut Corp. agreed to pay nearly $1.2 million in back wages and liquidated damages to 516 workers who were cheated by overtime violations in multiple locations.

Bank of New York Mellon Corp. agreed to pay $1.9 million in back wages to workers at a Jersey City location, where the U.S. Department of Labor found that the federal contractor engaged in systematic discrimination against female, Black and Hispanic employees.

The U.S. District Court ordered a northern New Jersey staffing agency to pay $65,000 in damages to an employee who was fired after raising concerns about not getting paid for all of their hours worked.

The U.S. Department of Labor said it found violations in 80 percent of its 1,600 investigations of residential care, nursing facilities, home health services and other care-focused industry employers.

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