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Opinion: Criminalizing wage theft is only one step in the right direction

The Southwest Regional Council of Carpenters in north Denver hears from one or two construction workers nearly every day complaining of wage theft. The union helps workers file claims with the Colorado Department of Labor and Employment and is part of a coalition asking the state for stronger laws to crack down on wage theft and labor trafficking. (Jennifer Brown, Colorado Sun)

“A day worked is a day paid,” a day laborer in Lakewood, Colorado stated

. But according to the Colorado Fiscal Institute (CFI), this is not the case for many Colorado workers. Each year, half a million Coloradans suffer from wage theft, amounting to $750 million a year, in addition to the associated $25 million to $47 million in lost state tax revenue and potential public services.

Wage theft refers to the denial of earned wages and benefits protected under state and federal labor laws. The CFI numbers are likely vast under-estimates due to underreporting and pervasive worker misclassification.

New legislation, like Colorado House Bill 1267, would recognize wage theft for the insidious, and often intentional, crime it is. This legislation would treat wage theft as “theft” so that the intentional withholding of wages over $2,000 would be considered a felony.

Rebecca Galemba

When employers get away with cheating their workers, it not only harms Colorado’s most vulnerable people, but also undermines wages and working conditions for all workers and creates unfair business advantages for unscrupulous employers. When penalties are low or not applied, committing wage theft is relatively low-risk, profitable, and normal.

Recognizing the crime of wage theft is a step forward in mitigating this unfair business practice. House Bill 1267 can pave the way for more proactive policies to target routine violators, ramp up public enforcement, enhance retaliation protections, monitor industries with pervasive violations and create partnerships to assist workers who may lack the ability to come forward in a claims-driven enforcement environment.

In Colorado, the construction sector accounts for the largest share of violations of the Fair Labor Standards Act; it is estimated that a third of workers in construction may be misclassified, leading employers to avoid obligations to their workers as well as payroll taxes. In my research survey of over 400 day laborers, we found that 62% of workers surveyed had experienced wage theft, but that only half ever pursued their unpaid wages.

Fewer than 40% asked for assistance even though an amendment to the Colorado Wage Claims Act, which went into effect in 2015, authorized the Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics to adjudicate wage claims and levy fines and penalties to deter bad behavior regardless of a worker’s legal status.

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Data from the labor department confirms low participation in the claims system from Spanish-speaking workers even though a NELP study found that foreign-born Latinos suffer wage theft at a rate six times higher than native born workers. Studies find that informal workers working in precarious labor conditions are the least likely to report labor violations.

Claims closed by the Division due to workers’ “failure to pursue” hover around 40%, demonstrating the challenges associated with the process. 

The threshold of intentional withholding of wages is critical to the felony statute, but can also risk obscuring some of the more subtle ways that employers perpetrate wage theft. Research revealed the intentional ways that employers cheat workers out of their earned wages, such as by gradually undercutting their pay, promising to pay them at the end of the week only to disappear, or paying with bad checks. Employers string workers along who lack the time and resources to spend a day pursuing unpaid wages that could be spent working. Many insidious forms of labor exploitation also fail to meet criminal thresholds, but contribute to the ongoing abuse of workers and the degradation of labor rights, wages, and working conditions.

Increased criminal penalties, like those proposed in House Bill 1267, rightly recognize wage theft for the crime it is. Yet new regulations must also be accompanied by increasing public awareness, employer accountability and public enforcement. Cities like New York and Los Angeles have partnered with community-based organizations to monitor known industry violators and to assist with outreach and channeling workers’ claims.

Proposals for a wage bond can also provide assurance that workers in prone industries receive their wages regardless if an employer’s company is delinquent, bankrupt, or flees the state.

Outreach to workers also is important, but limited when rights are not enforced and payment cannot be guaranteed. As one worker remarked, “I know my rights, but I still don’t have my money.”

Rebecca Galemba is an assistant professor in the Josef Korbel School of International Studies at the University of Denver. Her research includes a survey of day laborers’ work conditions in Denver and Aurora, a project being pursued in close coordination with community partners including the Colorado Wage Theft Task Force.

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