Sec. 2. Findings
1,686 words·~8 min read·
/bill/117/s/4174/is/section-2A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Congress finds the following: Wage theft occurs when an employer does not pay an employee for work that the employee has performed, depriving the worker of wages and earnings to which the worker is legally entitled. This theft occurs in many forms, including by employers violating minimum wage requirements, failing to pay overtime compensation, requiring off-the-clock work, failing to provide final payments, misclassifying employees as being exempt from overtime compensation or as independent contractors rather than as employees, and improperly withholding tips.
Wage theft poses a serious and growing problem across industries for working individuals of the United States. Wage theft is widespread and is estimated to cost workers more than $15,000,000,000 per year. In certain industries, compliance with Federal wage and hour laws is less than 50 percent. Wage theft is closely associated with employment discrimination, with women, immigrants, and racial and ethnic minorities being disproportionately affected. Women are significantly more likely to experience minimum wage violations than men, foreign-born workers are nearly 2 times as likely to experience minimum wage violations as their counterparts born in the United States, and African Americans are 3 times more likely to experience minimum wage violations than their White counterparts.
Wage theft is closely associated with unsafe working conditions. Wage theft— depresses the wages of working families who are already struggling to make ends meet; strains social services funds; diminishes consumer spending power and hurts local economies; reduces vital State and Federal tax revenues; places law-abiding employers at a competitive disadvantage with noncompliant employers; burdens commerce and the free flow of goods; and lowers labor standards throughout labor markets.
Low-wage workers are at the greatest risk of suffering from wage theft. A survey of 4,387 low-wage workers in New York, Los Angeles, and Chicago found that 68 percent of the workers surveyed had experienced some form of wage theft in the workweek immediately before the survey was conducted. These workers experienced a range of wage and hour violations: 26 percent of such workers were not paid minimum wage; 76 percent of such workers who worked more than 40 hours in the workweek immediately before the survey was conducted were not paid at the overtime rate; and, in the year before the survey was conducted, 43 percent of the workers who attempted to address such issues by filing a complaint with their employer or who attempted to form a labor organization experienced retaliation by their employers, including by being fired, suspended, or receiving threats of reductions in their hours or pay.
In 2012, State and Federal authorities as well as private attorneys recovered at least $933,000,000 in wage theft enforcement actions, which was nearly 3 times the value of all bank robberies, residential robberies, convenience store and gas station robberies, and street robberies in the United States during that year. A Department of Labor study of wage theft in California and New York found that wage theft deprived workers of 37 percent to 49 percent of their income, pushing at least 15,000 families below the poverty line and driving another 50,000 to 100,000 families deeper into poverty.
A study analyzing wage theft claims in the State of Washington from 2009 to 2013 estimated that the total economic cost of wage theft to the State totaled more than $64,000,000 resulting from the lower economic activity and spending of low-wage workers due to their lost wages. A Department of Labor study of wage violations in California and New York found that wage theft deprived families of $5,600,000 in possible earned income tax credits and resulted in a $22,000,000 loss in State tax revenue, a $238,000,000 loss in payroll tax revenue, and a $113,000,000 loss in Federal income tax revenue.
Barriers to addressing wage theft continue to exist decades after the enactment of the Fair Labor Standards Act of 1938 ( 29 U.S.C. 201 et seq. ). These barriers have resulted, in significant part, because enforcement of such Act has not worked as Congress originally intended and because many of the provisions of such Act do not include sufficient penalties to discourage violations. Improvements to enforcement and amendments to such Act are necessary to ensure that such Act provides effective protection to individuals subject to wage theft.
The lack of a Federal right for employees to receive full compensation at the agreed upon wage rate for all work performed by the employee has resulted in workers being able to recover only the applicable minimum wage, or the overtime rate if applicable, when employers engage in wage theft. The lack of a Federal requirement to provide employees with paystubs indicating how their pay is calculated or to allow employees to inspect their employers’ payroll records significantly impedes efforts to identify and challenge wage theft.
The lack of a Federal requirement to pay employees their final payments in a timely manner upon termination of the employment relationship between the employer and employee has led to unreasonable, and sometimes indefinite, delays in compensation after an employment relationship ends. While the Fair Labor Standards Act of 1938, and regulations promulgated by the Secretary of Labor, as in effect on the day before the date of enactment of this Act, require employers to compensate employees at the minimum wage rate and to provide overtime compensation when appropriate, the lack of civil penalties for most violations of these requirements has dampened their effectiveness.
While the Fair Labor Standards Act of 1938 and regulations promulgated by the Secretary of Labor, as in effect on the day before the date of enactment of this Act, provide employees who are subject to wage theft with the right to unpaid minimum wages or unpaid overtime compensation plus an additional equal amount as liquidated damages, this low level of damages has proved insufficient to deter employers from stealing the wages of their employees. While the Fair Labor Standards Act of 1938 and regulations promulgated by the Secretary of Labor, as in effect on the day before the date of enactment of this Act, require employers to keep records of employees’ pay, the lack of remedies beyond injunctive relief for this requirement diminishes the effectiveness of the requirement.
While the Fair Labor Standards Act of 1938 and regulations promulgated by the Secretary of Labor, as in effect on the day before the date of enactment of this Act, provide for limited criminal penalties when employers violate the provisions of such Act, the Secretary of Labor rarely resorts to these penalties, causing them to serve as a hollow threat. The statute of limitations under section 6 of the Portal-to-Portal Act of 1947 ( 29 U.S.C. 255 ), as in effect on the day before the date of enactment of this Act, precludes employees from commencing a claim for wage theft more than 2 years after the cause of action accrued, or more than 3 years after the cause of action accrued if the claim is with respect to a willful violation by the employer.
Additionally, the statute of limitations is not automatically suspended while the Secretary of Labor investigates a complaint. These strict confines of the statute of limitations sometimes result in employees being deprived of their ability to institute a private lawsuit against their employer in order to recover their stolen wages. Section 16(b) of the Fair Labor Standards Act of 1938 ( 29 U.S.C. 216(b) ), as in effect on the day before the date of enactment of this Act, requires employees to affirmatively opt-in in order to be a party plaintiff in a collective action brought by another aggrieved employee seeking to recover stolen wages in court.
This provision limits the ability of employees to unite and pursue private lawsuits against employers. Under the penalty structure of the Fair Labor Standards Act of 1938, as in effect on the day before the date of enactment of this Act, many employers who are caught violating such Act continue to violate the Act. A Department of Labor investigation found that one-third of employers who had previously engaged in wage theft continued to do so. The Government Accountability Office and the Department of Labor have recognized that when employers are assessed civil penalties, they are more likely to comply with the law in the future and other employers in the same region—regardless of industry—are also more likely to comply with the law.
States that have enacted legislation to address wage theft by increasing the damages to which employees are entitled following violations of wage and hour laws have positively impacted the workers in such States. However, many States have not enacted such legislation and, worse still, some States do not have any laws protecting workers from wage theft or even agencies to enforce workers’ rights to compensation for work. This discrepancy in State laws has resulted in a fragmentation of workers’ rights across the United States, with some workers having a measure of protection from wage theft and other workers being left extremely vulnerable to wage theft.
Effective enforcement of wage and hour laws is critical to increasing compliance. Given the limited resources available for enforcement, enhanced strategic enforcement of Federal wage and hour laws is crucial. For enhanced strategic enforcement to be effective, government regulators must work with community stakeholders who have direct knowledge of ongoing violations of Federal wage and hour requirements and who are in a position to prevent such violations. Partnerships between regulators, workers, nonprofit organizations, and businesses can increase compliance by educating workers about their rights, collecting evidence, reporting violations, identifying noncompliant employers, and modeling good practices.
Partnerships between regulators, workers, nonprofit organizations, and businesses have been successful in combating wage theft. In 2006, the Division of Labor Standards Enforcement of the State of California created a janitorial enforcement team to work closely with a local janitorial watchdog organization. As of 2015, the partnership had resulted in countless administrative, civil, and criminal actions against employers and in the collection of more than $68,000,000 in back pay for janitorial workers.
The Comptroller General of the United States has recommended that the Department of Labor identify ways to leverage its resources to better combat wage theft by improving services provided through partnerships.
Connectionstraces to 3
Traces to 3 documents
Citation graph
cites case law
Cites 3Cited by 0 across 0 sources