Employers Stealing Workers’ Wages
Minimum wage and overtime laws are the two of the most important legal protections workers have at both the state and federal levels. But these laws are violated by employers every day.
What Does Wage Theft Look Like?
Every year in this country, workers lose more money to wage theft than is lost to all forms of property crime (robberies, burglaries, larceny and motor vehicle theft) combined. Each year, well over $15 billion is stolen from workers by their employers; each year, less than 3% of that total is recovered for those same workers.
Employers steal their workers’ wages in a variety of ways:
- Paying less than the minimum wage
- Not paying overtime or misclassifying workers as “exempt” from overtime pay
- Not paying workers for all hours worked
- Taking illegal deductions from workers’ paychecks
- Not paying the prevailing wage in government contracting
- Automatically deducting for breaks that workers don’t get
- Stealing workers’ tips
- Not paying workers’ last paychecks
(Bobo 2011)
Fundamentally, the problem is one of incentives: penalties and resources for enforcement are too low, meaning that any legal actions employers face for violations can be treated as the cost of doing business.
Approaches to the Crisis: The Underlying Law
States can combat this crisis by comprehensively reforming wage-and-hour law, as described in the National Employment Law Project’s report, Winning Wage Justice. The federal Fair Labor Standards Act is a floor, not a ceiling. States can give workers quadruple damages and attorneys’ fees in wage theft cases, as Washington, DC has done, and make wage theft laws’ statutes of limitations more worker-friendly. They can do more to ensure workers are paid for each hour worked by improving their paid meal and rest break laws, as well as requiring written notice of pay rates and regular wage statements.
Other important ways of combatting wage theft are profiled in the clearinghouse’s Access to Justice section, like enacting qui tam schemes such as New York’s proposed EmPIRE Act that would free more wage claims from forced arbitration; clarifying the law around independent contracting and employer liability; and providing workers with strong protections against retaliation.
What States Can Do
Make Wage-and-Hour Protections Easier to Enforce and More Costly to Violate
Increased Damages and Attorneys’ Fees: Damages need to be higher to disincentivize employer law-breaking. Quadruple damages for violations of wage-and-hour law, as in Washington DC, are a good place to start. State wage payment laws must also provide victorious plaintiffs with attorneys’ fees.
Code of the District of Columbia § 32-1308
Equitable Tolling of Statutes of Limitations: State law can specify that the statute of limitations on a wage theft claim should not begin to run until the end of any state investigations into wage theft, as it does in Washington state.
Washington Reviseed Code § 49.48.083
Avoid Corporate Shell Games: New York’s Wage Theft Attachment Act, in providing that employees of non-publicly traded companies can hold shareholders personally liable for wage theft, gives workers a useful tool with which to seek restitution for stolen wages.
New York Senate Bill S7539
Protect State Wage-and-Hour Law from Change at the Federal Level: States should incorporate clear language into their wage-and-hour legislation distinguishing it from the federal Fair Labor Standards Act. New York state’s approach to such distinction in the antidiscrimination context holds promise: the law stipulates that its provisions “shall be construed liberally for the accomplishment of the remedial purposes thereof, regardless of whether federal civil rights laws, including those laws with provisions worded comparably to the provisions of this article, have been so construed.”
New York State Executive Law Article 15 Human Rights Law
Increase Eligibility for Overtime Pay
Give Workers a Raise By Increasing Overtime Thresholds: The Fair Labor Standards Act exempts certain categories of employees, like “white collar” employees, from the requirement for overtime pay, as do many analogous state laws. And the FLSA and its state analogues define that exempt category in part with reference to income: if you make less than a certain amount annually, then your employer has to pay you overtime, regardless of job duties. As of 2025, the current federal level is $35,568, but some states have raised that, giving additional workers a raise through overtime pay. In Washington state, for example, workers making less than $69,305 a year are eligible for overtime, and in Maine the threshold is $43,951.
Approaches to the Crisis: Strengthening Enforcement
Changes to state wage-and-hour law need to be coupled with expanded and vigorous enforcement.
Stronger State and Local Enforcement
In 2022, Denver’s City Council passed the Civil Wage Theft Ordinance, which expanded investigatory authority, increased penalties for violations, and significantly expanded staffing. In the first year following, Denver’s municipal labor department collected almost $1 million more in stolen wages for 1,500 more workers than it had the year prior.
Denver Civil Wage Theft Ordinance
Criminal Enforcement
State and local prosecutors are increasingly bringing charges against employers for violations of criminal laws regarding misclassification of workers, payroll fraud, labor trafficking, workplace safety and health, sexual assault, and other matters. Prosecutions for wage theft have been prominent among such efforts (EPI 2021).
Help Build the Clearinghouse
If you have proposals for pro-worker policies—whether already implemented in a particular state or ones you’d like to see established—we encourage you to share your suggestions. We welcome additions to our clearinghouse that align with one of our five key policy areas. Please send such submissions to .
