End-of-summer barbecues, final trips to the beach, and the hectic start of the school year are usually what come to mind with the arrival of Labor Day. But with an increasingly erratic economy, high unemployment rates, and attacks on unions making headlines, this year’s Labor Day is the perfect time to examine the many challenges currently facing the American workforce.
Labor Day was originally started by the labor community not only as a means to celebrate their union accomplishments, but also as a day for workers to air grievances and discuss strategies for securing better working conditions and salaries. Labor advocates certainly have their fair share of grievances to air this season as major corporations continue to rake in $100 billion profits while reducing employee health benefits and pensions; workers are being forced to go on strike to demand fair treatment; and employee class-action lawsuits are stacking up in courts.
One troubling labor issue that hasn’t received much attention is wage theft, in which an employer illegally underpays or fails to pay an employee at all. Wage theft affects all sectors of the workforce; both white and blue-collar workers in industries across the board are vulnerable to this particular type of violation.
Wage theft can occur in a variety of different ways, all of which illegally rob employees out of what’s rightfully theirs. Wage theft tactics include:
- Unpaid overtime
- Employee misclassification
- Minimum wage violations
- Forcing employees to working off the clock
- Making illegal deductions from pay
- Not paying employees at all
Employee misclassification is one of the most common forms of wage theft and has incredibly far-reaching consequences, victimizing everyone from workers to Uncle Sam. With employee misclassification, an employer illegally mislabels an employee as an ‘independent contractor’ instead of an ‘employee,’ in order to be exempt from paying payroll taxes, unemployment insurance, and workers compensation—resulting not only in diminished capital to federal and local governments but saddling employees with additional IRS taxes in the process.
A typical misclassification scenario works like this: a Plano cable TV installation company in Texas was paying its workers on a piece-work basis and offering a flat rate for every cable installation they completed. The Department of Labor’s Wage and Hour Division conducted an investigation and determined that installers should have been classified as nonexempt employees, entitled to time-and-a-half their regular rate of pay for overtime hours worked. DOL sued on the workers behalf and the company has been ordered to pay $270,696 in back overtime to the 114 workers it illegally classified as independent contractors.
While wage theft can occur in any industry, certain industries are notorious for paying their workers below the legally required minimum wage. Restaurants, hotels, and janitorial and construction companies have a high frequency of underpaying their workers for both minimum wage and overtime. Unfortunately, it’s still legal to pay someone below the minimum wage if they’re working in agriculture or are mentally disabled.
This Labor Day, let’s honor America’s workforce by demanding that all employers, regardless of industry or color of their workers’ “collars,” pay each and every worker the compensation they’ve rightfully earned.
To bring some much needed attention to this critical issue, NCL has launched a year-long Special Project on Wage Theft to raise awareness about the nature of wage theft in the United States and educate consumers, workers, businesses, and governments about wage theft issues. Stay up-to-date on the latest wage theft battles by following us on Twitter and Facebook.