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The Practical Employer

Wage Theft is a Misnamed, Overused Phrase

The term suggests that evil, thieving employers created this mess. That's not always the case.
Writing at Inc.com, Suzanne Lucas (aka Evil HR Lady) reports on a study published by the Economics Policy Institute, which says that employers short their employees $15 billion in wages per year.

According to Suzanne, “Wage theft isn’t always the case of a corrupt boss attempting to take advantage of employees.” She is 100 percent correct. In fact, most instances of an employer not paying an employee all he or she is owed under the law results from our overly complex and anachronistic wage and hour laws, not a malicious skinflint of a boss intentionally stealing from workers.

This is as good a time as any to revisit a topic I haven’t addressed in a few years — ”wage theft” (or, as I call it, a term coined by the plaintiffs’ bar and the media recast employers as the arch nemesis of the American wage earner).

Here is what I wrote on this issue three-plus years ago:

I have a huge problem with the term “wage theft.” It suggests an intentional 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.”

Do we need to draw attention to the problems posed the FLSA? Absolutely. It misleads, however, to suggest that evil, thieving employers created this mess. Instead, let’s fix the cause of the problem — a baffling maze of regulations called the FLSA.

As for my day? I’m off to draft an answer in an FLSA lawsuit filed against one of my clients.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.