I've Experienced Wage Theft - But I'm Glad No One Went to Jail
I'm happy Kim Bobo has written a full book about wage theft, because I've experienced the phenomenon myself, and I didn't much enjoy it. Years ago, before I went into journalism, I had an employer who would give us hourly workers more assignments than we could complete in eight hours. We knew we had to finish the work, but we also know that reporting overtime would get us fired, so we'd typically clock out and then stay on to finish the job.
I learned a few things from this.
One was that wage theft seriously erodes workplace morale, no matter how well compensated the employees are overall. I was earning well above minimum wage ($15 an hour, if I recall), but, boy, were my colleagues and I angered to be pressured into working off the clock. A company may superficially benefit from creating this sort of atmosphere (it keeps immediate costs down), but whether it's healthy over the long term is another matter. A lack of morale saps employees of energy. They also tend to look for ways to get even--by legal means (like class-action lawsuits, as was the case with my company) or illegal means (like pilfering, as is often the case in retail).
I also became aware of the crucial distinction between refusing a job and quitting a job. Once you've taken a job, even if it's not what was promised, you don't leave it easily. You don't have much time to look for a new employer. You don't want to jump ship after just a few months and risk giving potential new employers the impression that you're flighty. You don't want to jeopardize a nice string of references that you've accumulated. Instead, you usually choose to put up with it while looking for the first reasonably decorous opportunity to bail. That can take a while.
Finally, I came to understand how policies of wage theft can be set implicitly rather than explicitly. I can say to my worker, "Finish sewing forty shirts by tomorrow morning." And I can add, "Don't work any overtime between now and then or you're fired." I haven't requested off-clock work, but I still know I'll get 40 shirts by the next morning and a time card that says my employee worked 8 hours. Wage theft? Sure. Plausibly deniable? Quite possibly. Real-world example: I recall renting a car from Thrifty and arriving a minute or so before closing time. The clerk would now have to stay late to process my rental. I asked if he'd get overtime. The clerk shook his head: no overtime without company permission. But he also couldn't send away a customer. The solution, of course, was that he clocked out and then continued to check me in. Millions of Americans have gotten used to this sort of thing.
As outrageous as such practices are, however, I do feel we might be treating the term "theft" too literally in this TPM debate. Underpaying a worker by five dollars and taking five dollars out of his wallet may lead to the same monetary result, but our legal system for good reason views the offenses differently. (To update an old example, if Bernie Madoff breaks into my house to grab fifty cents from my kitchen table, I can kill him legally. If he swindles me out of a billion dollars, I cannot touch the man. Such is law.) Similarly, just because employers like to talk about "time theft," in which a worker clocks in and then proceeds to play pinball for most of the day, doesn't mean that the employee has really engaged in "theft" as the word is commonly understood. I think it's essential to put more teeth in labor law enforcement--getting busted should hurt a lot, both in reputation and in bank statements. But, unlike fellow debater Liza Featherstone, I don't think the slammer needs to be much in the picture. As a squishy liberal, I think fines and shaming will go a long way. That's already more than anyone at AIG has had to suffer.
There is a big difference between goofing off at work and intentionally failing to pay minimum wage/violating overtime laws. For the first, the punishment is being fired. But violating minimum wage and overtime laws is a crime, potentially punishable by jail. See here for statute text:
May 13, 2009 4:33 PM | Reply | Permalink
For once I have to agree with Newman.
I wouldn't expect every WalMart manager to go to jail, or car rental manager to go to jail for every employee clocked out for 5 minutes at closing. Managers are often succumbing to company policies expecting free overtime.
But, there absolutely needs to be a pushback from workers to put real legal consequences on abusive employers. Especially those which set policies that can only result in wage theft.
For example the car rental allowing returns right until closing, but discouraging overtime. That's deliberate. Such a company should have a policy of mandatory overtime if a car is returned at closing, or shortening return hours.
May 13, 2009 4:44 PM | Reply | Permalink
btw, it's also a false dichotomy to frame the issues as legal enforcement vs competitive advantage. They're complimentary. One must accompany the other. It's similar to the way in which regulation must accompany the market in order for it to function. Or the way in which law enforcement must prevent the sale of snake oil in order for a viable medicines to be competitive.
For example take Costco and WalMart, as I understand them.
Costco apparently treats employees relatively well and provides benefits which help a community by providing preventative care and increasing health. WalMart often doesn't, which externalizes costs onto local infrastructure, emergency rooms, etc, which the community ultimately pays a high price for.
Yet despite all of that, WalMart has managed to expand faster. Why? Because the real cost is hidden, and to give a better company like Costco the advantage, consumers have to be informed, which they often aren't.
Just as a snake oil salesman will outpace real medicine in a new market, given a lack of law enforcement.
May 13, 2009 5:45 PM | Reply | Permalink
Yet despite all of that, WalMart has managed to expand faster. Why? Because the real cost is hidden, and to give a better company like Costco the advantage, consumers have to be informed, which they often aren't.
Well, more precisely, it's not that the costs are hidden so much as that they are not borne by the customer at the checkout. For any given purchase, Wal*Mart is the cheaper store even if Wal*Mart externalizes its costs so that the overall cost of the products to the community is greater. Essentially, it's a tragedy of the commons issue.
I should point out here that the point you are making is also relevant to the illegal alien debate; most of the talk about how much illegal alien labor is necessary or prices will skyrocket ignores the fact that illegal alien labor has large costs that are simply externalized.
May 14, 2009 8:44 PM | Reply | Permalink
There is a big difference between goofing off at work and intentionally failing to pay minimum wage/violating overtime laws.
Theft is very much the word to be used and not to be confused with employer doubletalk about "time theft."
Why not? Why shouldn't an employee goofing off be considered stealing as much as an employer asking for unpaid overtime? The fact that the law makes a distinction is no excuse, you still need to explain to me why we shouldn't just change the law.
May 14, 2009 8:39 PM | Reply | Permalink
All of this discussion is certainly interesting.
One question I have though, is how wage theft applies to salaried employees? Salaried employees are, by definition, not hourly workers, but what about when companies begin to expect 60, 70 or more hours/week from their salaried employees. Is this not a form of wage theft?
May 13, 2009 5:24 PM | Reply | Permalink
I worked for a company with a policy of comp time off for over time. We regularly worked ten-eleven hour days and some saturdays. This was until the work got caught up. Of course the work never got caught up.
Those guys must owe me three months comp time. That was thirty years ago. What do you think my chances are of getting compensated?
May 13, 2009 5:41 PM | Reply | Permalink
With salaried employees (I’m not one of them) in my office, the unwritten rule is that you are expected to work 45 hours per week with no complaints. One of my co-workers, when he feels he has worked excessive hours, just takes some time off. And he doesn’t count it against his paid vacation time either. He lets people know he’ll be out, and he doesn’t come to work.
I’m sure it has affected his rate of advancement and salary increase, but that’s a value judgment on his part. He doesn’t feel his salary buys 50 hours of his time week in and week out, so he meets his obligations and gives our employer the value he thinks they have paid for. He has been with the company about 15 years now, so I guess an understanding has been reached since they haven’t fired him yet.
May 14, 2009 4:40 PM | Reply | Permalink
I'd argue that when a company lays off a good portion of its staff and then transfers the work to the remaining employees without offering them salary increases or promotion are engaging in wage theft as well.
What we need to do for salaried workers is limit an employer's ability to change the terms of a job without mutual consent.
May 13, 2009 6:20 PM | Reply | Permalink
From a legal perspective it depends on whether your job would be classified as exempt or non-exempt under the Fair Labor Standards Act. While exempt jobs are typically salaried and non-exempt jobs are typically paid hourly, legally it is the character of the work done that determines whether a job is exempt or non-exempt. How it is paid is irrelevant for its legal classification. If your job is a non-exempt job, your employer is required to pay you overtime. If it's exempt, your employer is not required to pay you overtime.
A simplified description of the types of jobs that are exempt or non-exempt can be found here:
http://www.dol.gov/esa/whd/regs/compliance/hrg.htm#2
I've copied the most significant text below.
______________________________________
From DOL website
Some employees are exempt from the overtime pay provisions or both the minimum wage and overtime pay provisions.
Because exemptions are generally narrowly defined under FLSA, an employer should carefully check the exact terms and conditions for each. Detailed information is available from local Wage-Hour offices.
Following are examples of exemptions which are illustrative, but not all-inclusive. These examples do not define the conditions for each exemption.
Exemptions from Both Minimum Wage and Overtime Pay
Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and employees in certain computer-related occupations (as defined in Department of Labor regulations);
Employees of certain seasonal amusement or recreational establishments, employees of certain small newspapers, seamen employed on foreign vessels, employees engaged in fishing operations, and employees engaged in newspaper delivery;
Farmworkers employed by anyone who used no more than 500 "man-days" of farm labor in any calendar quarter of the preceding calendar year;
Casual babysitters and persons employed as companions to the elderly or infirm.
Exemptions from Overtime Pay Only
Certain commissioned employees of retail or service establishments; auto, truck, trailer, farm implement, boat, or aircraft sales-workers; or parts-clerks and mechanics servicing autos, trucks, or farm implements, who are employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers;
Employees of railroads and air carriers, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;
Announcers, news editors, and chief engineers of certain non-metropolitan broadcasting stations;
Domestic service workers living in the employer's residence;
Employees of motion picture theaters; and
Farmworkers.
Partial Exemptions from Overtime Pay
Partial overtime pay exemptions apply to employees engaged in certain operations on agricultural commodities and to employees of certain bulk petroleum distributors.
Hospitals and residential care establishments may adopt, by agreement with their employees, a 14-day work period instead of the usual 7-day workweek if the employees are paid at least time and one-half their regular rates for hours worked over 8 in a day or 80 in a 14-day work period, whichever is the greater number of overtime hours.
Employees who lack a high school diploma, or who have not attained the educational level of the 8th grade, can be required to spend up to 10 hours in a workweek engaged in remedial reading or training in other basic skills without receiving time and one-half overtime pay for these hours. However, the employees must receive their normal wages for hours spent in such training and the training must not be job specific.
Public agency fire departments and police departments may establish a work period ranging from 7 to 28 days in which overtime need only be paid after a specified number of hours in each work period.
May 14, 2009 7:42 AM | Reply | Permalink
Not all employers engage in these practices. If you can't get a better job or have no skills you may well be absused but if you have other options don't enable the bad apples. Often a bad branch manager will engage in these practices against the policy of the corporate office. I know that was the case where I once worked because I worked at the corporate office and knew how they cracked down on offending branches. Don't assume you have to take it. If you have any resources at all stand up for your rights. If you don't you lose them and you contribute to everyone else losing them.
May 13, 2009 6:13 PM | Reply | Permalink
Agreed.
However, I believe this is where unions come into play. White collar workers are notoriously anti-union, and I believe this is one reason they (we) get screwed. Its one thing to stand up to corporate by yourself, its quite another to stand up with a union behind you.
May 13, 2009 7:23 PM | Reply | Permalink
I agree there but we also need stronger laws and stronger enforcement of labor and other work related laws.
Mainly we need a political party that takes all of this seriously. We no longer have any party representing the working middleclass.
But until people stand up either at the ballot box or in the public square nothing will change. If people feel like serfs I don't know how you motivate them to act like free people.
Sheesh, think of the Polish labor movement that helped bring down the USSR. Do we have anything remotely like that here? Americans are totally brainwashed by corporatespeak. They really don't believe they have any rights so they don't even try to exercise them.
May 13, 2009 8:07 PM | Reply | Permalink
I think we did have something like the Polish labor movement until Reagan set a precedent by firing the air traffic controllers.
Better representation from the political parties will not occur until we have a collective voice that can drown out the other special interests that are focusing the mind of our politicians. What the special interest have is $$$; what we have is numbers. So until we can channel those numbers more effectivly, $$$ wins.
May 14, 2009 12:05 PM | Reply | Permalink
I don't think white collar workers are anti-union, it's just not a model that works for us.
If you're assembling widgets on an assembly line, you can clock 8 hours a day and consistently make n widgets same as everyone else. That applies for most labor. All truckers drives n miles/hr. All cargo loaders do n a day.
It's really difficult to impossible to quantify white collar professional work that way. First off, recruiting is exponentially more difficult.
Wages are difficult to standardize becasue skill varies enormously. If there's a dispute a union can't really help you, becasue it's subjective.
The only thing unions could do is help define hours and overtime/bonus pay.
May 14, 2009 6:16 PM | Reply | Permalink
It's not difficut to quantify white collar work if it were you wouldn't have accountants, attorneys, etc. billing by the hour. Every IT consultant individual or consultant better know how to quantity their work or they'll go out of business.
May 14, 2009 6:50 PM | Reply | Permalink
Suggesting that public shaming of offending corporations would be an effective way of curtailing wage theft is not a reality-based opinion. If you were to base your opinion on the business climate of the past 10 years, is there much evidence that business interests are very susceptible to social opprobrium...especially when it comes to labor rights?
Take everyone’s favorite corporate whipping boy, Wal-Mart. They have a very poor public image, which is richly deserved, yet the only things that ever brought them to heel were massive class action suits and heavy regulatory enforcement. Meanwhile, they profitably go along their merry way.
The thing is, shame is rarely any more effective with small businesses either. It usually takes some pretty egregious misbehavior to dislodge these pillars of the community from their good standing with the Chamber of Commerce or make their Little League sponsorships unwelcome. As long as they don’t cross the threshold of making the news, unscrupulous business owners who stiff their employees don’t suffer any damage to their reputations. Unflattering rumors about their business practices typically get written off as slanders by disgruntled employees with axes to grind.
May 14, 2009 4:24 PM | Reply | Permalink
Uh, T.A. - in my state, MA, if I kill someone breaking into my house to steal a dollar, I am in almost as much trouble as I would be if I took a couple of shots at Bernie Madoff from up the street, for bilking me out of a billion dollars.
Not sure where you are, but where I am, homicide is homicide.(or attempted homicide.)
May 14, 2009 4:29 PM | Reply | Permalink
If it's not going to be jail, what is it going to be? Any purely monetary fine, short of 100x damages or so, is just going to be weighed according to the likelihood of being convicted versus the profits of stealing employees' money. In addition, since the fine comes out of the company's general coffers, it's in the short-term interests of every manager to steal.
How about a Sarbanes-Oxley approach? the CEO simply has to sign, under penalty of perjury, a statement that all wages have been properly paid.
May 15, 2009 3:27 PM | Reply | Permalink
Re: Work Theft- Would you say this is Work Theft with regard to the exempt/salaried employees who supported the company through thick and thin. What about a company that does away with all bonuses from the exempt/salaried employees, and then takes a % of your salary back but still requiring the same 24-7 work, company support (grin and bear it), knowing full well, people are afraid to leave due to the joblessness of the country. What do you say out there? I say this is corporate hard ball but effects many families. Thank you.
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