Thursday, April 24, 2014

Revisiting the misnamed and misunderstood term "wage theft"

Yesterday, on his always excellent Connecticut Employment Law Blog, Dan Schwartz wrote a post entitled, “Wage Theft”: The Trendy Phrase That May Not Mean What You Think It Means. Dan wrote:
[T]he use of the phrase is being pushed to push various agendas — not as a result of any legal theory or real change in the law.… And it’s time to call it out; it’s a phrase that is both misleading and loaded.… Does that mean that the problem of employers failing to pay employees overtime should be ignored? Hardly. Employers who fail to follow the the myriad of wage and hour laws should be held accountable. And suffice to say that criminal activity by employers should continue to be enforced vigorously.… Quite simply: The use of a criminal term for a non-criminal act needs to stop.
Dan is 100 percent correct that the term “wage theft” is being misused and abused. The mainstream press and bloggers are using the term to cover any situation in which an employer is not paying required overtime, whether it’s an intentional withholding or an honest mistake. “Theft” connotes bad intent — yet most wage and hour mistakes are honest ones born out of a misunderstanding of the law, not a desire to cheat or steal from employees.

Dan was kind enough to cite to a post I wrote on the same topic almost a year ago, entitled, Taking issue with the term “wage theft”. Because Dan has shed new light on this important issue, I thought it makes sense to republish my earlier post.
Lately, I’ve read a lot of blogs that accuse employers of committing rampant wage theft (e.g., here, here, and here). 
I have a huge problem with the term “wage theft.” It suggests anintentional taking of wages by an employer. Are there employees are who paid less than the wage to which the law entitles them? Absolutely. Is this underpayment the result of some greedy robber baron twirling his handlebar mustache with one hand while lining his pockets with the sweat, tears, and dollars of his worker with the other? Absolutely not. 
Yes, we have a wage-and-hour problem in this country. Wage-and-hour non-compliance, however, is a sin of omission, not a sin of commission. Employer aren’t intentionally stealing; they just don’t know any better. 
And who can blame them? The law that governs the payment of minimum wage and overtime in the country, the Fair Labor Standards Act, is 70 years old. It shows every bit of its age. Over time it’s been amended again and again, with regulation upon regulation piled on. What we are left with is an anachronistic maze of rules and regulations in which one would need a Ph.D. in FLSA (if such a thing existed) just to make sense of it all. Since most employers are experts in running their businesses, but not necessarily experts in the ins and outs of the intricacies of the Fair Labor Standards Act, they are fighting a compliance battle they cannot hope to win. 
As a result, sometimes employees are underpaid. The solution, however, is not creating wage theft statutes that punish employers for unintentional wrongs they cannot hope to correct. Instead, legislators should focus their time and resources to finding a modern solution to a twisted, illogical, and outdated piece of legislation. 
In my most recent book, The Employer Bill of Rights: A Manager’s Guide to Workplace Law, I summarized this issue best: 
“Congress enacted the FLSA during the great depression to combat the sweatshops that had taken over our manufacturing sector. In the 70 plus years that have passed, it has evolved via a complex web of regulations and interpretations into an anachronistic maze of rules with which even the best-intentioned employer cannot hope to comply. I would bet any employer in this country a free wage-and-hour audit that i could find an FLSA violation in its pay practices. A regulatory scheme that is impossible to meet does not make sense to keep alive…. 
“I am all in favor of employees receiving a full day’s pay for a full day’s work. What employers and employees need, though, is a streamlined and modernized system to ensure that workers are paid a fair wage.”