Introduction
Wage theft occurs when an employer fails to pay workers the full wages that they are legally owed. Often this failure is intentional, but sometimes it is due to accounting errors. Importantly, even if an unintentional legal violation results in lost wages, an employer still owes its workers proper compensation for the time they spent at work. Examples of wage theft discussed in more detail below include (1) failing to pay overtime, (2) requiring off-the-clock work, and (3) paying less than the minimum wage.
Other forms of wage theft may include:
- taking illegal deductions from wages;
- taking tips from workers, or failing to pay tipped workers the difference between their tips and the legal minimum wage;
- employee misclassification – which means labeling a worker as an independent contractor instead of an employee entitled to overtime and paid breaks,
- denying workers their legal meal or other breaks; and
- work schedules that violate wage and hour laws.
Consequences of Wage Theft
While wage theft can occur in any job and any income level, such theft often hits hardest among workers in low-wage industries, particularly among immigrants, migrant workers, people of color, women, and less-educated workers – the very workers who can least afford to lose earnings. Unpaid work adds up, costing workers thousands of dollars a year and the loss of significant income that would otherwise go to paying necessities such as utilities, groceries, and rent.
Wage theft among workers has been seen frequently in California’s Central Valley, perhaps most notably in its billion-dollar agricultural industry. According to a 2019 report from the Brookings Institution (see Map 1 on page 35 of the report and the discussion beginning a page 33) the concentration of low-wage workers in the Central Valley is significantly higher than the nationwide average. (See also this article from The Business Journal – Report: Central Valley the Land of low-wage workers.) Moreover, the Public Policy Institute of California reported last year that, since the pandemic, job growth increased in low-wage sectors significantly faster than in high-wage sectors.
Because wage theft predominantly impacts the most marginalized workers, it causes many workers and their families to fall below the poverty line. In turn, it increases these workers’ reliance on public assistance, which costs taxpayers money. Moreover, these losses can hurt local economies and tax revenues. Wage theft can also hurt other workers in affected industries by driving overall wages downward. It also places employers who comply with the law at a competitive disadvantage with those who do not.
Financial and Emotional Impact on Employees
Stolen wages cause significant personal harm to workers, who are left to struggle with cascading economic harms, along with a personal sense of injustice, especially among those who are aware that an employer is violating their rights. Aside from the immediate loss of income, workers already living paycheck-to-paycheck suffer a parade of economic harm. They are forced to devise strategies to navigate hard choices, such as which bills to pay first and which to put on hold, and whether and how they can borrow money. The stress of having to deny basic needs and make hard choices can also lead to severe emotional and psychological strain, including feelings of anger, frustration, and depression.
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Types of Wage Theft: Unpaid Overtime, Minimum Wage Violations, and Off-the-Clock Work
- Unpaid Overtime
In California, non-exempt employees must be paid 1.5 times their regular pay rate when they work more than 8 hours in a workday (“time and a half”). If the employee works more than 12 hours in any workday, they must be paid at least 2 times their regular pay rate (“double time”). Furthermore, on the seventh consecutive day of work in a workweek, non-exempt employees must earn 1.5 times their regular pay rate for the first 8 hours worked. Any additional hours worked must be paid at least 2 times the regular pay rate. Failure to meet these requirements constitutes unpaid overtime. Certain non-exempt jobs may have different overtime standards, but for the vast majority of hourly workers, the rules above will apply.
Of particular importance to the Central Valley are new legal requirements for agriculture workers’ overtime pay. Starting January 1, 2023, employers with 25 or fewer employees must pay agriculture workers overtime after 9 hours per day or 50 hours per week. Large employers with 26 or more employees since January 1, 2022, must pay agriculture workers overtime after 8 hours in a day or 40 hours in a week.
As discussed in the introductory section of this blog, agriculture is a major player in the Central Valley’s economy, with low-wage workers and otherwise marginalized workers constituting the majority of its workforce. (See the Brooking Institution report on page 38). Accordingly, unpaid overtime and other wage theft issues deeply impact workers in the Central Valley.
2. Minimum Wage Violations
Effective January 1, 2023, the minimum wage in California is $15.50 per hour for all employers. However, some cities and counties require a higher minimum wage than the state does. An employer must also follow the stricter applicable standard, i.e., the higher of the wage standards applicable to their location. For example, while the current federal minimum wage is $7.25 per hour, employers in California must pay at least the state’s minimum wage rate, and if their city or county requires an even higher rate, they must pay that.
One recent instance of an employer allegedly denying Central Valley workers the minimum wage is a class action lawsuit asserting that a for-profit prison company that owns and operates an immigrant detention center violated minimum wage laws by forcing immigrant detainees to perform labor for only $1 a day.
Workers need to understand their rights as employees. Understanding and standing up for your rights as an employee will not only serve to stop employers from engaging in wage theft, but it also allows impacted employees to get back their stolen wages and perhaps even civil penalties.
3. Off-the-Clock Work
“Off-the-clock” work means employment tasks and duties that employees perform outside of their working hours for which their employer does not compensate them. It can be any type of activity that benefits the employer and otherwise counts as a part of the job, such as:
- work activities done outside official shifts (before or after official working hours), without any compensation. Examples included putting on and taking off work equipment, worksite preparation, cleaning up a workspace or equipment, and checking materials and tools in or out;
- administrative work, such as paperwork, meeting attendance, taking calls, responding to emails and other messaging,
- redoing work to fix errors or for some other reason;
- waiting for the next job assignment; and
- working during lunch breaks or other legally required break periods.
In addition to the initial missed pay, this type of labor should also count toward the calculation of an employee’s overtime pay, vacation pay, and other benefits.
Steps to Take When Experiencing Wage Theft
1. Document Everything
Recordkeeping is vital to proving wage theft; it is necessary to support your claim and determine how much you’re owed. Examples of important records include time sheets/cards, paychecks/stubs, work schedules, emails or text messages, and any other documents that show your work hours and earnings. Other important records may include employment contracts or agreements and notices from the employer regarding your employment information such as rate of pay, overtime rate, and whether you’re paid by the hour, shift, day, or piece.
To help employees keep track of their work hours, the U.S. Department of Labor’s Wage and Hour Division (“USDOL WHD”) offers Recordkeeper and Work Hours Calendar documents. The agency also offers The DOL-Timesheet App.
California-specific work hour-tracking apps include Clockify, Buddy Punch, Apploye, Toggl Track, Jibble, and Paymo.
2. Speak Up
In the event you discover that your employer is not paying you correctly, bring it to the attention of management or human resources. The situation could be a result of an unintended mistake and may be easily corrected. Express your concerns in writing as a way to document them.
But if your employer won’t correct the issue, you can file a complaint with the California Labor Commissioner or with the USDOL WHD, which has regional offices throughout California. Both the California Labor Commissioner and the USDOL WHD enforce the law without regard to a worker’s immigration status. That means neither agency will ask about immigration or citizenship status when you file a complaint.
Also, talk to your coworkers to see if they are experiencing the same issue(s). Addressing such issues together allows workers to pool resources and increase their bargaining power. One way to connect with other workers is through your choice of California’s worker centers. A recent example of how the state works with these groups to combat wage theft is here.
3. Consult with a Legal Professional or Workers’ Union
A good way to find a workers’ rights lawyer in Central Valley is to consult with state and local bar associations for a recommendation. The State Bar of California has a resource webpage on Finding the Right Lawyer. Workers’ rights groups in Central Valley may also be helpful. They include the Central Valley Workers’ Rights Project, the Center for Workers Rights (Sacramento), and Central Valley Empowerment Alliance, Inc..
Unionized workers are less likely to experience wage theft because unions provide them with the necessary collective bargaining power to negotiate pay, overtime, and other terms and benefits of employment. These agreements also establish mechanisms to combat and remedy stolen wages. Union members may also get assistance from their unions in recovering unpaid wages such as legal support. Moreover, unionized workers set industry standards for wages and benefits that ultimately benefit all workers, including the nonunionized. This, however, does not mean that Union members cannot experience wage theft. Wage theft can still be present in unionized work and it is important to address.
4. Stay Updated on Your Rights
As a generally progressive state, California labor laws, both state and local, are updated and changed frequently to address citizen needs and concerns. California often leads the way in reforms that are eventually adopted by other states and the federal government.
The California Department of Industrial Relations (“DIR”) has a webpage with a summary of recent new state laws. For information on current federal law requirements go to the USDOL WHD webpage for workers.
Conclusion
Wage theft continues to be a widespread problem. A 2017 Economic Policy Institute (“EPI”) report found that employers steal billions from workers’ paychecks each year. An EPI follow-up report discussed how more than $3 billion in stolen wages was recovered for workers between 2017 and 2020.
You deserve to receive the full amount of pay you are owed. Therefore, workers need to stay vigilant and informed regarding their legal rights. Doing so is especially important for employees in Central Valley where there exists a prevalence of low-wage and otherwise marginalized workforce vulnerable to wage theft.
Further Resources
Other worker resources not discussed above include: