Wage underpayment involves shortchanging workers who are eligible to receive more money. This can happen in a number of ways. Employers may fail to raise employee pay to meet minimum wage requirements. Others may not receive paid lunch, maternity leave and other requirements that may change at the state level.
CBS News estimates that $2 billion was distributed to workers as recovered wages in 39 states in 2016 and 2015. However, advocates say that the actual cost of wage theft is about $50 billion for workers each year. Lower-income workers are especially susceptible to underpayment. Many do not know their rights. Those who do often prefer not to risk their jobs by asserting themselves.
CNN identifies the following ways that wage underpayment takes place in America:
- Taking deductions that cause employee wages to fall below minimum wage per hours worked
- Requiring workers to stay behind after their shift ends
- Not paying for overtime
Many of the workers who lose money are undocumented immigrants. These workers are especially unlikely to confront employers as they do not have a legal permit to work in the country.
Some employers deliberately steal money from their workers, which causes many advocates to refer to wage underpayment as wage theft. However, there are many instances where employers do not do this intentionally. Small businesses often do not have a separate HR department, which may cause them to make HR decisions that run afoul of the law.
In other instances, the person responsible for fulfilling HR duties may not correspond often enough with employees or managers. This could cause errors in the records and lead to shortchanging employees of their pay. Regardless of how these instances occur, employers tend to be held accountable.