top of page

Close to Home: Tracking the Cost of Wage Theft

Martin J. Bennett

Sep 3, 2023

What is wage theft, and how pervasive is the problem?

Former employees recently accused two high-profile North Bay employers of stealing their wages. In March, three Petaluma high school students complained that a Subway franchise owner failed to pay wages owed, withheld promised bonuses, and refused to give workers tips from electronic transactions. In June, three former valets at the Bohemian Club's summer camp in Monte Rio, whose clientele includes ultra-wealthy and prominent national elected officials, filed a lawsuit alleging that they were not paid the state minimum wage nor overtime and were denied mandatory rest breaks.

In July, one of the County’s largest vineyard management companies, Lodi-based Vino Farms, settled a lawsuit covering 537 employees in San Joaquin and Sonoma counties for $1.4 million. These workers alleged that between 2017-2022 Vino Farms did not pay for all hours worked and denied workers mandatory meals and rest breaks.

What is wage theft, and how pervasive is the problem?

Wage theft occurs when an employer does not pay or underpays a worker the wages and benefits they are due. It can take many forms, including paying less than the minimum, contractual or overtime wage; failing to pay for all hours worked; withholding benefits like paid sick leave or health insurance; asking employees to work ‘off-the-clock’ before or after their shift; denying workers required meal and rest breaks; and withholding gratuities.

In 2014 the Economic Policy Institute reported that an “epidemic of wage theft” costs workers $50 billion yearly—higher than all burglaries, robberies, and car theft combined. Wage theft is most prevalent in low-wage industries such as hospitality, restaurants, fast food, agriculture, residential construction, retail, home care, and domestic work­–sectors where immigrants, workers of color, youth, and women comprise the majority of the workforce.

National Employment Law Project researchers in 2009 interviewed 4,387 low-wage workers in Los Angeles, Chicago, and New York. They utilized an innovative methodology to contact unauthorized immigrants and people working for cash often missed by conventional surveys. The study found that two-thirds of those surveyed experienced wage theft in the previous week; more than one-quarter were paid less than the minimum wage; 69% were denied meal or rest breaks; 70% were not paid for off-the-clock work; 76% who worked overtime did not receive the required time and a half-hourly pay. If workers complained or attempted to organize a union, 43% experienced illegal retaliation such as discharge or hours cut. On average, low-wage workers surveyed lost $2,634 due to wage theft out of total annual earnings of $17,616.

Consequently, workers who are victims of wage theft are three times more likely to live in poverty than those who do not, and 30% receive public assistance such as Medi-Cal or food stamps. In addition, wage theft reduces tax revenue, creates unfair competition for responsible employers who must compete with unscrupulous businesses committing wage theft, and means workers have less money to spend locally.

What can be done?

State and federal agencies tasked with enforcement of wage-and-hour laws are understaffed. The U.S. Department of Labor has just 1000 wage-and-hour investigators, roughly the number it had 70 years ago when the workforce was seven times smaller. Due to understaffing and a 30% job vacancy rate, workers who file a wage theft claim with the California Labor Commissioner’s Office wait more than two years for a hearing.

In some California counties, district attorneys are successfully investigating and prosecuting wage theft. Sonoma County District Attorney Carla Rodriguez established a wage theft hotline (833-889-2437) and is investigating several cases, including the above Subway incident. Also, many large cities and counties in California, such as San Francisco, Oakland, San Jose, Los Angeles, and San Diego, have established departments of labor standards enforcement. Local government can then collaborate with state and federal agencies to enforce minimum wage, living wage, and prevailing wage laws.

Finally, low-wage workers who are the least likely to experience wage theft are union members. Unions provide collective bargaining power to negotiate guaranteed wages and a grievance procedure to remedy wage violations. Union contracts also establish just cause standards for disciplinary action and empower workers to report violations without fear of retaliation.

Martin J. Bennett is Instructor Emeritus of History at Santa Rosa Junior College and a consultant for UNITE HERE Local 2. 

bottom of page