Combatting Wage Theft in California

Wage theft — when employers fail to pay workers what they are legally owed — is an all-too-common issue for low-wage workers. Wage theft can occur in a number of ways, such as when an employer pays an employee less than the minimum wage or fails to properly compensate for overtime. Wage theft is especially prevalent in low-wage industries, thus hitting a segment of the workforce that is already economically vulnerable.

A number of studies have exposed both the frequency of wage theft and how challenging it can be for workers to recover the wages they are owed.  Specifically, these studies show that:

  • Wage theft is a widespread and persistent problem. According to one survey from 2008, more than two-thirds of low-wage workers in Los Angeles, New York City, and Chicago experienced at least one pay-related violation in just the prior week. The authors calculated that this translated into an average $2,634 wage loss per year for a full-time, full-year worker. A 2010 report that builds off that survey, but focuses only on Los Angeles, provides additional detail on the types of wage theft that occurs: Nearly 30 percent of workers sampled from low-wage industries were paid less than the minimum wage (with a majority of them being underpaid by more than $1 an hour) and 16.9 percent of the workers surveyed were not paid the legally required overtime rate when it was due.
  • Workers face an uphill battle in recovering lost wages. A 2013 study by the UCLA Labor Center and the National Employment Law Project details just how difficult it can be for California workers to recover stolen wages. This study, relying on administrative data from the California Division of Labor Standards Enforcement (DLSE), found that between 2008 and 2011 only 42 percent of wages verified by DLSE as being owed were actually paid back to workers: Of the approximately $390 million owed to workers, only $165 million was recovered.

These numbers show the need for reform of how vulnerable workers can recover lost wages. Workers and state officials currently lack the tools or resources necessary to adequately enforce the law. Even among workers who speak up and pursue legal action, the prospects of recovering lost wages are grim. The current legal process is lengthy and complicated, and guilty employers can confuse the process by changing business licenses or by transferring assets after a claim is won.

This week, legislators will decide the fate of AB 2416, a bill that aims to level the playing field by expanding workers’ legal ability to recover stolen wages. This bill would expand to more workers the right to record and enforce a lien against an employer, thus giving them an additional tool to fight wage theft. It’s worth keeping an eye on this bill and other efforts to combat wage theft in California.

— Luke Reidenbach