The Daily Populous Saturday December 28th, 2024 night edition
Authored by epi.org and submitted by BlitzOrion

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, and child labor standards. The FLSA requires that workers receive compensation for all hours worked. However, each year, billions of dollars are stolen from workers’ paychecks in the form of wage theft. Wage theft occurs any time an employer fails to pay workers the wages they have earned with their labor. This can take many forms, including paying workers less than the minimum wage or not paying overtime pay to eligible workers who work more than 40 hours a week. While any worker can experience wage theft, workers in low-wage industries are more likely to have their wages stolen. Fortunately, workers have pathways to recoup their unpaid wages under federal and state wage and hour laws.

Our report shows that more than $1.5 billion in stolen wages were recovered for workers between 2021 and 2023. The report highlights wage theft recovery by the U.S. Department of Labor (DOL), state agencies, and class action litigation. Finally, the report recommends policy solutions to combat wage theft in the United States.

What is wage theft? Wage theft is the failure to pay workers the full wages to which they are legally entitled. Wage theft can take many forms, including but not limited to: Minimum wage violations: paying workers less than the legal minimum wage

paying workers less than the legal minimum wage Overtime violations: failing to pay nonexempt employees time and a half for hours worked in excess of 40 hours per week

failing to pay nonexempt employees time and a half for hours worked in excess of 40 hours per week Off-the-clock violations: asking employees to work off the clock before or after their shifts

asking employees to work off the clock before or after their shifts Meal break violations: denying workers their legal meal breaks

denying workers their legal meal breaks Illegal deductions: taking illegal deductions from wages

taking illegal deductions from wages Tipped minimum wage violations: confiscating tips from workers or failing to pay tipped workers the minimum wage when their tip earnings are insufficient

confiscating tips from workers or failing to pay tipped workers the minimum wage when their tip earnings are insufficient Worker misclassification violations: misclassifying workers as independent contractors instead of employees, to pay a wage lower than the legal minimum or avoid paying overtime

Wage theft is a costly and pervasive problem that affects millions of workers across the country. For example, Cooper and Kroeger (2017) investigated just one type of wage theft (minimum wage violations) and found that in the 10 most populous states in the country, 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Extrapolating from these 10 states, Cooper and Kroeger estimated that workers throughout the country lose $15 billion annually from minimum wage violations alone. To put that into perspective, the latest data from the Federal Bureau of Investigations showed that robberies accounted for $598 million in losses in 2018 and $482 million in losses in 2019, totaling only $1.8 billion in a two-year period (Ed and Workforce 2024).

The personal cost of wage theft to these workers is significant: Cooper and Kroeger found that on average, the workers suffering from minimum wage violations in these 10 states were cheated out of $64 a week—about $3,300 annually for year-round workers. These workers lost almost one-quarter of their earnings, receiving on average only $10,500 in annual wages instead of the $13,800 they should have received.

Additionally, only a small portion of stolen wages are ever recovered on behalf of workers. A 2021 EPI report found that only $3.24 billion in stolen wages was recovered for workers in a four-year period (2017–2020) by DOL, state departments of labor and attorneys general, and class action litigation (Mangundayao et al. 2021).

Wage theft occurs in all industries and impacts workers at all income levels, especially low-wage workers. According to DOL, low-wage workers in construction, food service, health care, and retail experience high rates of wage theft. Temporary work is also among the low-wage industries with high violations of wage theft (DOL 2024b). One report finds that almost a quarter (24%) of temporary workers report experiencing wage theft from their employer by being paid less than minimum wage, failing to receive overtime pay, or failing to receive pay for all hours worked (NELP et al. 2022).

In this report, we seek to contribute to the understanding of wage theft by collecting and aggregating available data on recovery of stolen wages in the United States. In order to get as comprehensive a picture as possible of wage recovery across the United States, we reviewed current U.S. Department of Labor wage enforcement data, surveyed state labor departments and attorneys general, and reviewed data on class action litigation.

Our analysis shows that $1.5 billion in stolen wages were recovered for workers from 2021 to 2023 by the U.S. Department of Labor, state agencies, and class action litigation. Crucially, however, this statistic is not representative of all wage theft in the United States because many workers will never file a claim to recover stolen wages. For example, Estlund (2018) estimates that 98% of low-wage, private-sector, nonunion workers subject to forced arbitration do not file a claim when their wages are stolen. Further, federal law does not require employers to provide workers with regular pay stubs, which means workers may not even know they are experiencing wage theft.

Wage recovery by the U.S. Department of Labor

According to Wage and Hour Division (WHD) enforcement data, DOL recovered $234.3 million for workers in fiscal year 2021, $213.1 million in fiscal 2022, and $212.3 million in fiscal 2023—for a total of $659.8 million across four years (Table 1). These wages were recovered on behalf of 510,534 workers, with an average of $1,292 in recovered wages per worker (WHD 2024).

Table 1 Back wages recovered by the U.S. Department of Labor, fiscal years 2021-2023 FY2021 FY2022 FY2023 Total Back Wages $234,362,486.00 $213,161,638.00 $212,325,391.00 $659,849,515.00 Employees Receiving Back Wages 193,796 152,970 163,768 510,534 Average Amount Recovered per Worker $1,209.33 $1,393.49 $1,296.50 $1,292.47 Source: EPI analysis of U.S. Department of Labor, Wage and Hour Division (WHD), “All Acts” (web page), accessed on December 3, 2024. Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Wage recovery by state departments of labor and attorneys general

During the summer of 2024, EPI contacted state departments of labor and attorneys general via phone and email to compile data on their wage recovery efforts. We collected data, summarized in Appendix Table 1, from 34 states and the District of Columbia. The remaining 16 states either did not respond to our request, did not track the requested data, or were unable to provide the requested data.

According to our analysis, state departments of labor and attorneys general in 34 states and the District of Columbia recovered $53.1 million in 2021, $63.5 million in 2022, and $53.8.6 million in 2023 —a total of $203.3 million recovered over those three years.

Wage recovery through class action settlements

Based on research conducted by Seyfarth Shaw LLP (2022), the value of the top 10 wage and hour class action settlements totaled $641.3 million in 2021, as shown in Figure A. The total value of these class action settlements in 2021 is comparable to the value of DOL wage recovery efforts during the full three-year period that we report above.

This class action data illustrates that workers are more effective in recovering stolen wages on a collective versus individual basis. However, many workers are barred from joining class action cases, because they are subject to forced arbitration agreements. According to Colvin (2018), 56.2% of private-sector, nonunion workers are subject to forced arbitration agreements, which are more costly to workers than class action lawsuits. For example, Stone and Colvin (2015) find the typical award per worker in forced arbitration ($36,500) is only 21% of the median award in a class action lawsuit in the federal courts ($176,426).

Below, we provide some examples of wage theft recovery to illustrate the breadth of the problem across states and industries, and the efforts of state-wide worker protection agencies to combat wage theft.

In January 2024, the U.S. Department of Labor recovered over $1.1 million in back wages and damages for 165 garment workers in Los Angeles. Four sewing contractors supplying goods to Beyond Yoga were found to have failed to pay overtime and falsified payroll records. Beyond Yoga agreed to pay the wages owed and entered into a compliance agreement to improve labor practices within its supply chain. The settlement was the largest for California garment workers to date (DOL 2024a).

Rhode Island: Department of Labor and Training

The Rhode Island Department of Labor and Training Adjunction Unit issued a Hearing Officer Decision to WL Builders LLC in December 2023. The decision confirmed that WL Builders LLC did not pay the required prevailing wage to 15 workers on three public works construction projects. The total wages and interest owed were $454,074.56 and the civil penalty was $ 414,074.56—for a total of $868,149.12 owed. In addition, WL Builders LLC misclassified 15 individuals working on the project (Turley 2024).

Illinois: Department of Labor and Attorney General

In July 2023, the Illinois Department of Labor and the Attorney General reached a settlement with a medical staffing agency that was illegally charging workers fees for missing work. The company had a practice of deducting “booking fees” when workers missed shifts. Under the settlement, GrapeTree Medical Staffing LLC agreed to pay approximately $950,000 in back wages and interest to around 3,000 current and former workers in Illinois (State of Illinois 2023).

Washington: Department of Labor and Industries

The Washington State Department of Labor and Industries (L&I) investigated a claim regarding workers who were performing aircraft maintenance overseas at the Boeing Company in 2022. This claim led to a larger investigation of the travel pay and benefits for workers in Washington state. L&I found that Boeing was not complying with Washington state wage and hour laws regarding overtime and paid sick leave related to out-of-town travel. In May 2024, L&I collected $11.5 million in back wages for 495 workers of Boeing Company as result of the investigation (Washington L&I 2024).

Policymakers should increase the funding for DOL’s Wage and Hour Division. The WHD has not seen a significant increase in funding in over a decade (Rowland, Poydock, and Zhang 2024). In 2022, the average wage and hour investigator was responsible for safeguarding the earnings of almost triple the number of workers of their 1973 counterpart (Costa and Martin 2023). Additional funding and investigators will help the WHD effectively enforce the Fair Labor Standards Act and efficiently recover stolen wages. Further, the WHD should implement strategic enforcement strategies—focusing on industries with a history of high rates of wage theft violations and conducting proactive investigations and compliance sweeps in those industries. Strategic enforcement is effective in combatting wage theft by recovering wages for workers on a larger scale, while also deterring employers in those industries from stealing wages from workers (Weil 2010).

In addition to increased enforcement capacity, there is also a great need to inform workers of their rights under the law. The Wage Theft Prevention and Wage Recovery Act would help combat wage theft and empower workers to receive all the pay they are entitled to. The bill would increase transparency for workers by requiring employers to provide workers terms of their employment and regular paystubs. The bill also authorizes DOL to issue meaningful penalties for employers who commit wage theft. The bill would also allow DOL to issue grants to organizations and partners to help create outreach and education campaigns to inform workers of their rights under the law (Ed and Workforce 2023).

Finally, federal policymakers should pass legislation strengthening key labor standards to combat wage theft. Policymakers should eliminate the tipped minimum wage and create one federal minimum wage to raise wages for workers and facilitate the enforcement of minimum wage violations (Allegretto and Cooper 2014). Policymakers should also ensure all workers have the right to join in union and bargain collectively. Unionized workers are far less likely to experience wage theft, because their bargaining power provides them means of redress for and protections from wage theft. The Protecting Right to Organize Act would strengthen the right for private-sector workers to form unions and collectively bargain. The Public Service Freedom to Negotiation Act would establish a federal standard of collective bargaining rights for public-sector workers.

As we illustrate in this report, state agencies and attorney generals are key enforcers in combatting wage theft on the state and local levels. The examples above highlighted efforts made by state and local governments to deter wage theft and efficiently recover stolen wages for workers.

While federal legislation to combat wage theft has stalled, many states have enacted laws to prevent wage theft by providing workers with greater transparency on their terms and conditions of employment. For example, 41 states have enacted laws that require employers to provide their workers with regular pay stubs (Paystub.org 2023).

Many states have strengthened penalties for wage theft violations, enforcing them as criminal statutes. For example, Minnesota and South Dakota classify violations of wage theft laws as misdemeanors, while California, Hawaii, New Jersey, New York, and Rhode Island classify such violations as felonies. California and New York designate willful violations as grand theft or larceny, and in New Jersey, the state has the power to impose jail time to employers who violate wage and hours laws (Hacker et al. 2023). Enforcing wage and hour laws as criminal statutes imposes more expensive fines and longer potential prison sentences on employers who violate wage and hour laws, which can serve as a powerful deterrent for other employers.

Some states have established laws allowing victims of wage theft to obtain a lien on employer property to ensure payment of back pay. This is designed largely to stop the practice of employers selling or dissolving a business after committing wage theft only to reconstitute as a new business entity shortly thereafter and never pay the wages owed (NELP 2011). Maryland and Washington are examples of states that have enacted such laws (Bushaw 2021).

Some localities have established funds specifically to help workers who are victims of wage theft. For example, San Diego County leaders in California reported progress in combating wage theft, highlighting the success of the Workplace Justice Fund and the Office of Labor Standards and Enforcement. The fund provides financial aid to workers awaiting back pay and supports broader collaboration to hold employers accountable (DeFore 2024). In New York City, Manhattan District Attorney Alvin Bragg announced the creation of the Worker Protection Unit to combat wage theft and unsafe work conditions (Manhattan DA 2023). This unit will prosecute individuals and corporations exploiting workers and includes the establishment of a Stolen Wage Fund to aid victims.

Wage theft is a costly and pervasive problem that impacts millions of workers across the country. More than $1.5 billion in stolen wages were recovered for workers by U.S. Department of Labor, state agencies, and class action lawsuits between 2021–2023. Federal, state, and local lawmakers should pursue policies that prevent and combat wage theft to ensure workers receive all wages they are owed.

The authors thank the Notre Dame Student Policy Network (SPN) for their contributions in the background research of this report. The authors would like to thank Alex Young and Annie Chen for leading the SPN team, which includes Tess Barrett, Billy Bonnist, Max Feist, Hannah Huston, Emi Kartsonas, Ashleigh Lobo, and Darren Tanubrata.

Appendix Table 1 Wage recovery by state departments of labor and attorneys general, 2021–2023 State 2021 2022 2023 Total 2024 employment level Alabama NW NW NW – 2,213,500 Alaska $478,742.06 $202,795.61 $210,153.95 $891,692 339,500 Arizona $602,929.79 $842,653.86 $906,678.31 $2,352,262 3,276,500 Arkansas NA NA NA – 1,376,100 California NA NA NA – 18,090,200 Colorado $1,368,516.00 $995,560.00 $1,826,321.00 $ 4,190,397 3,019,800 Connecticut NA NA NA – 1,709,000 Delaware NA NA NA – 488,000 District of Columbia $148,714.00 $2,940,275.12 $4,111,256.81 $7,200,246 772,600 Florida NW NW NW – 9,946,000 Georgia NW NW NW – 4,985,500 Hawaii $414,668.00 $177,865.00 $342,276.00 $934,809 638,900 Idaho* NA NA NA $1,657,621.55 881,500 Illinois $3,246,900.00 $3,043,100.00 $3,111,600.00 $9,401,600 6,142,400 Indiana NW NW NW – 3,305,300 Iowa $252,246.03 $247,896.36 $189,312.16 $689,455 1,600,200 Kansas $604,025.00 $1,026,574.00 $321,788.00 $1,952,387 1,467,100 Kentucky* NA NA NA $3,316,035 2,043,900 Louisiana NW NW NW – 1,965,500 Maine $471,731.62 $236,135.00 $860,118.95 $1,567,986 657,700 Maryland $1,218,386.00 $1,056,672.00 $1,373,254.00 $3,648,312 2,765,000 Massachusetts $6,461,489.44 $5,622,498.79 $5,558,625.33 $17,642,614 3,744,300 Michigan $2,623,858.00 $2,664,540.00 NA $5,288,398 4,493,500 Minnesota NA NA NA – 3,031,800 Mississippi NW NW NW – 1,198,500 Missouri $75,796.01 $118,797.89 $92,243.70 $286,838 3,070,900 Montana $656,856.06 $429,191.36 $348,353.02 $1,434,400 535,800 Nebraska $580,780.63 $672,202.01 $862,501.23 $2,115,484 1,078,100 Nevada $1,525,329.66 $2,303,268.20 $4,680,503.97 $8,509,102 1,577,700 New Hampshire $1,120,574.00 $475,584.00 $1,234,246.00 $2,830,404 714,100 New Jersey* NA NA NA $27,897,663 4,387,000 New Mexico $275,032.28 $622,105.50 $607,244.08 $1,504,382 888,200 New York $16,961,006.65 $19,620,269.00 $18,136,571.84 $54,717,847 9,871,100 North Carolina $1,189,497.04 $1,654,655.07 $1,692,574.18 $4,536,726 5,024,800 North Dakota $244,164.31 $236,622.49 NA $480,787 447,300 Ohio NA NA NA – 5,682,000 Oklahoma $432,415.24 $683,093.29 $1,005,689.07 $2,121,198 1,790,100 Oregon NA NA NA – 1,991,300 Pennsylvania $3,678,494.26 $8,607,917.29 $1,005,689.07 $13,292,101 6,204,700 Rhode Island $294,977.90 $941,960.48 $1,137,914.13 $2,374,853 513,400 South Carolina NW NW NW – 2,390,400 South Dakota $50,419.00 $49,865.00 $32,809.00 $133,093.00 469,700 Tennessee NA NA NA – 3,341,000 Texas $2,066,728.54 $3,328,946.14 $2,616,206.21 $8,011,880.89 14,276,300 Utah $659,295.00 $757.61 $600.65 $660,653 1,771,100 Vermont $71,796.44 $94,346.82 $118,570.13 $284,713 316,600 Virginia NA NA NA – 4,250,300 Washington $2,573,348.00 $2,930,642.00 NA $5,503,990 3,632,600 West Virginia $1,117,138.92 $488,300.11 $189,192.19 $1,794,631 717,600 Wisconsin $1,403,137.98 $1,008,765.68 $895,674.09 $3,307,578 3,043,800 Wyoming $247,957.91 $166,726.66 $327,055.04 $741,740 295,900 TOTAL $53,116,951.77 $63,490,582.34 $53,795,022.11 $203,273,876 158,434,100 Notes: The seven states that do not recover wages for employees are marked as "NW" in the corresponding table. In addition, "NA" signifies that data was either unavailable or not recorded. *These data signify some FY 2024 data is included in the total amounts. Sources: EPI survey of state labor departments and attorneys general; employment data are from the Bureau of Labor Statistics, Local Area Unemployment Statistics, December 19, 2024. Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Note that 2023 totals include some data from 2024, as some states tracked wage recovery efforts by fiscal year instead of calendar year.

Total recovery amounts include three states (Idaho, Kentucky, and New Jersey) who provided data on total recovery efforts, but not recovery by year. See Appendix Table 1 for full data.

Labor and Employment, S.D. Codified Laws §§ 60-11-15 (South Dakota Legislative Research Council 2008).; Wage Theft, Minn. Stat. §§ 3-6 (Department of Labor and Industry 2018); Wage and Hour Law, Haw. Rev. Stat. §§ 387-12; Payment of Wages, R.I. Gen. Laws §§ 28-14-17.; Wage and Hour Act, N.J. Stat. Ann. §§ 34:11-58.6.

Offenses Involving Theft, N.Y. Penal Law §§ 155-05; Of Crimes against Property, Cal. Penal Code §§ 5-487.

Allegretto, Sylvia, and David Cooper. 2014. Twenty-Three Years and Still Waiting for Change: Why It’s Time to Give Tipped Workers the Regular Minimum Wage. Economic Policy Institute, July 2014.

Bureau of Labor Statistics (BLS). 2024. “Table 3. Employees on Nonfarm Payrolls by State and Selected Industry Sector, Seasonally Adjusted.” Local Area Unemployment Statistics (LAUS). Last modified November 19, 2024.

Bushaw, Emily A. 2021. “New Washington Law Creates Statutory Wage Lien for Claims on Unpaid Wages.” Perkins Coie, June 24, 2021.

Colvin, Alexander J. S. 2018. The Growing Use of Mandatory Arbitration: Access to the Courts Is Now Barred for More Than 60 Million American Workers. Economic Policy Institute, April 2018.

Cooper, David, and Teresa Kroeger. 2017. Employers Steal Billions from Workers’ Paychecks Each Year. Economic Policy Institute, May 2017.

Committee on Education and the Workforce, Democrats (Ed and Workforce). 2023. “Wage Theft Prevention and Wage Recovery Act” (fact sheet). September 2023.

Committee on Education and the Workforce, Democrats (Ed and Workforce). 2024. A Slap on the Wrist: How It Pays for Unscrupulous Employers to Take Advantage of Workers. April 2024.

Costa, Daniel, and Philip Martin. 2023. Record-Low Number of Federal Wage and Hour Investigations of Farms in 2022: Congress Must Increase Funding for Labor Standards Enforcement to Protect Farmworkers. Economic Policy Institute, August 2023.

DeFore, Tracy. 2024. “County Leaders Report Progress Fighting Wage Theft.” County News Center, March 19, 2024.

Department of Labor (DOL). 2024a. “Department of Labor Recovers $1.1M for 165 Garment Workers After Sewing Contractors Withheld Overtime Wages, Falsified Records” (press release). January 3, 2024.

Department of Labor (DOL). 2024b. “Low Wage, High Violation Industries” (web page). Accessed December 3, 2024.

Department of Labor, Wage and Hour Division (WHD). 2024. “All Acts” (web page). Accessed December 3, 2024.

Estlund, Cynthia. 2018. “The Black Hole of Mandatory Arbitration.” North Carolina Law Review 96, no. 3: 679–710.

Hacker, Chris, Ash-har Quraishi, Amy Corral, and Ryan Beard. 2023. “Wage Theft Often Goes Unpunished Despite State Systems Meant to Combat It.” CBS News, June 30, 2023.

Mangundayao, Ihna, Celine McNicholas, Margaret Poydock, and Ali Sait. 2021. More Than $3 Billion in Stolen Wages Recovered for Workers Between 2017 and 2020. Economic Policy Institute, December 2021.

Manhattan District Attorney’s Office (Manhattan DA). 2023. “D.A. Bragg Announces Creation of Office’s First ‘Worker Protection Unit’ to Combat Wage Theft, Protect New Yorkers from Unsafe Work Conditions” (press release). February 16, 2023.

National Employment Law Project (NELP). 2011. Winning Wage Justice: An Advocate’s Guide to State and City Policies to Fight Wage Theft. January 2011.

National Employment Law Project (NELP), Warehouse Workers for Justice, North Carolina Justice Center, New Labor, Mississippi Workers’ Center for Human Rights, Chicago Workers Collaborative, and Temp Worker Justice. 2022. Temp Workers Demand Good Jobs. February 2022.

Paystub.org. 2023. “The Complete Guide to Pay Stub Requirements by State” (web page). Published June 30, 2023.

Rowland, Catherine, Margaret Poydock, and Jiayi (Sonia) Zhang. 2024. “Proposed Cuts to Worker Protection Agencies and What They Mean” (fact sheet). Congressional Progressional Caucus Center and Economic Policy Institute, July 15, 2024.

Seyfarth Shaw LLP. 2022. 18th Annual Workplace Class Action Litigation Report. January 2022.

State of Illinois. 2023. “Attorney General Raoul Reaches Settlement with Medical Staffing Agency Charging Employees Fees for Missing Work” (press release). July 6, 2023.

Stone, Katherine V. W., and Alexander J. S. Colvin. 2015. The Arbitration Epidemic: Mandatory Arbitration Deprives Workers and Consumers of Their Rights. Economic Policy Institute, December 2015.

Turley, Elizabeth. 2024. “Construction Company Owes $869K in RI Wage Theft Case.” WPRI, March 4, 2024.

Washington State Department of Labor & Industries (Washington L&I). 2024. “Boeing Pays Millions in Wages After L&I Starts Investigation.” May 3, 2024.

Weil, David. 2010. Improving Workplace Conditions Through Strategic Enforcement: A Report to the Wage and Hour Division. Boston University, May 2010.

I_Stabbed_Jon_Snow on December 27th, 2024 at 15:46 UTC »

The news isn’t uplifting until there’s actual consequences for these criminal actions. Imagine robbing a bank and simply being forced to repay the stolen amount as a penalty, no criminal charges or jail time involved. That’s what the executive leadership of corporations does every single day.

OregonTripleBeam on December 27th, 2024 at 14:38 UTC »

I hope the greedy jerks got additionally penalized beyond just having to pay what was owed to affected employees.

Windyandbreezy on December 27th, 2024 at 14:36 UTC »

So the CEOs were fired and charged with wage theft felonies right? Cause when an employee does it they are usually arrested and charged. Heck Wal Mart will fire you and consider charges if more than a few bucks is missing from the register.