Time to crack down on wage theft

Families and communities suffer when workers don't get their due

THE PUSH TO raise the minimum wage in the United States has grown in prominence, gaining widespread national attention in this year’s presidential primaries. But, you may not have heard of “wage theft,” when businesses do not pay employees fairly for the work that they’ve done. It’s estimated that wage theft costs Americans billions of dollars in lost earnings each year.

Wage theft can take many forms – paying below the minimum or average rate, failing to pay overtime, or by misclassifying workers as independent contractors. Even when workers are promised a specific wage, in many cases there are few legal protections to ensure that businesses actually pay employees accordingly.

The problem is especially rampant for the growing number of people working in low-wage jobs or contract positions, for many of whom lost wages could mean not having enough money to pay for food or housing.

That’s why the Good Jobs, Strong Communities coalition, led by Community Labor United, has been campaigning for statewide reforms, including legislation (S.2207), to crack down on businesses that fail to pay workers in accordance with the law.

New regulations in Boston, Cambridge and, most recently, Chelsea, ensure that businesses that have been subject to criminal or civil actions for wage theft violations are sidelined from bidding for city contracts.

In Massachusetts and across the country, employers are subcontracting and outsourcing their work and distancing themselves from their responsibilities to their employees. In 2014, an employer survey by the Center for Health Information and Analysis found that 59 percent of Massachusetts employers do not offer health insurance, because their employees are part-time, temporary and/or contract employees.

While sometimes these practices reflect more efficient ways of producing goods and services, they are too often the result of employer strategies to evade labor laws and erode worker protections.

And these strategies hit home quite literally. Chelsea resident Mirna Aguilar said the entire family was impacted when her husband was a victim of wage theft. “We fell behind with the rent and had no money to buy food,” she said. “Like so many other immigrant workers, my husband did not want to fight this injustice because he did not think he would win and be able to recover the money he was owed.”

The new ordinance in Chelsea, passed in a recent vote by the City Council, will sideline contractors that have faced punitive actions for wage theft violations for at least three years unless they obtain a wage bond and adhere to additional mandatory reporting requirements. It will also apply to the city’s food and liquor license holders.

Alexandra Early, a worker center organizer for the Chelsea Collaborative, says that the ordinance will be a very important tool to fight these kind of violations “Right now, hundreds of companies through the region are committing wage theft and underpaying and abusing their workers, especially their immigrant workers, and even when complaints are filed against them they continue with business as usual.”

Advocates say that the penalties and regulations on the books in most cities and in the state are too weak to prevent employers from misclassifying and stealing from employees, particularly lower-wage employees.

In Massachusetts alone, employers’ misclassification of full-time employees as independent contractors to avoid paying taxes and benefits costs the state as much as $259 million in payroll taxes and $87 million in unemployment insurance taxes annually, according to data cited in a report released by Community Labor United.

That’s why we need to take steps to ensure employer accountability across Massachusetts. State lawmakers should support the proposed legislation and public officials around the state should take note of the example set by Boston, Cambridge, and Chelsea and enact similar regulations to let employers know that there are consequences for failing to pay employees what they are owed.

Meet the Author

Everyone deserves to be paid fairly for the work that they do. Wage theft drags down our economy by stealing tax revenue and withholding earnings from people who could put money back into local economies. More importantly, it puts communities and families’ livelihoods at risk. Time and effort invested in supporting yourself and your loved ones should not go unrewarded.  And employers should not be allowed to go unchecked.

Darlene Lombos is executive director of Community Labor United.