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New Economy Fallout—’Wage Theft’ From Paychecks

McClatchy Newspapers (06/04/12) Tony Pugh

Workers’ rights advocates assert that “wage theft,” the practice of underpaying or not paying workers for their labor, is a growing trend in today’s economic climate. More companies are trying to cut labor costs to stay afloat in a weak business climate, and budget-cutting state and federal governments do not enforce wage laws as aggressively as they once did.

The enforcement vacuum has caused state lawmakers to weigh in. Last year, Texas lawmakers closed a loophole that let employers escape prosecution if they pay workers only a portion of the wages they are owed. In January, California’s Wage Theft Prevention Act took effect, requiring that new hires get written notice of pay rates and how their pay is determined. The new law also increased penalties for nonpayment.

Business groups acknowledge that some violators do so intentionally, but they say most violate wage laws by accident. In Massachusetts, for example, the law requires general contractors to treat subcontractors as direct employees, even though they may only need their services for a short time. Confusion over the legal definition of subcontractors causes unintentional violations, says Jack Mozloom, northeast spokesman for the National Federation of Independent Business. “We want to work with the regulators and policy makers in all the states to make sure we have something in place that protects workers, but which doesn’t discourage opportunities and employment for both contractors and subcontractors,” says Mozloom.