States See Uptick in "Wage Theft" Lawsuits

After working more than eight hours a day as a cashier at a McDonalds in Oakland, California, Guadalupe Salazar said overtime pay never showed up in her paycheck. Salazar has now joined one of seven lawsuits against McDonalds and its franchise owners, arguing workers had hours erased from their time cards.

The lawsuits against McDonalds are one example in a string of recent “wage theft” claims brought against companies as reported by the New York Times earlier this week.

Employees of Schneider, a national trucking company that distributes goods to Walmart, also contended they were never paid time and a half for overtime hours they worked, which led to a recent $21-million settlement with the company.

David Weil, director of the federal Labor Department’s wage and hour division, blamed the surge in wage theft claims on a dramatic shift in the nation’s business structure. Weil said the increased use of franchise operators, subcontractors and temp agencies has allowed companies at the top to deny any knowledge of wage violations.

The federal Labor Department’s wage and hour bureau uncovered nearly $1 billion in illegally unpaid wages dating back to 2010, according to the New York Times.

However, business advocates have framed the recent spate of suits as “opportunistic,” arguing that companies are more cautious about following wage laws in the face of ramped-up government scrutiny. Some business advocates have even accused government officials of placing more emphasis on wage enforcement actions to score points with union allies.

Last week, a federal appeals court in California ruled that FedEx effectively committed wage theft by classifying drivers as independent contractors, rather than employees, and ordering them to work 10 hours per day. FedEx said it plans to appeal the ruling.

In an opinion piece for U.S. News & World Report, Stephanie Slade argues there should be a more clear distinction between obviously fraudulent practices, like erasing hours and making workers sign blank time cards, and more legally defendable policies, such as classifying employees as contractors to avoid paying overtime.

Slade compared using the term “wage theft” to describe all of these nuanced employment practices to other semantics-based political strategies, like the Republican party’s rebranding of the estate levy as the “death tax.”

“Lying about the hours your employees have worked is obviously indefensible,” Slade wrote in her opinion piece. “But choosing to hire contractors rather than full-time employees is not just something that can be defended, it is a business model that countless other companies have openly adopted and that FedEx itself has repeatedly defended in courts of law and public opinion alike.”

Still, Labor Department officials say they are starting to crack down more on companies that retaliate against workers for filing complaints over wage theft. The department is now suing a Texas company that fired a janitor for refusing to a sign a statement falsely claiming he had already received back wages owed to him.

“My agency has found more wages being stolen from workers in California than any time in history,” California Labor Commissioner Julie Su told the New York Times. “This has spread to multiple industries across many sectors. It’s affected not just minimum-wage workers, but also middle-class workers.”