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Testimony: The Importance of Combatting Wage Theft

Employment

Testimony: The Importance of Combatting Wage Theft

Date Posted: 
05/05/2015

The following testimony was delivered by CLS Employment Unit attorney Michael Hollander on May 5, 2015 at the Pennsylvania Senate Labor and Industry Committee Hearing on Raising the Minimum Wage.

I thank you for the opportunity to present this testimony on behalf of the hundreds of wage theft victims that come to CLS each year seeking help.

In this testimony, I will address wage theft, a problem that should be considered hand-in-hand with raising the minimum wage, and will discuss potential solutions that the legislature can take to combat wage theft.  To this end, CLS supports the important anti-wage theft measures taken in Senator Tartaglione’s bills: SB 195, 198, and 199.  We urge you to pass these bills as well as SB 196 and 197, which deal with other aspects of the minimum wage.

Wage theft—the failure to pay workers the wages owed to them—is a widespread problem in Pennsylvania.  Although most employers properly pay their employees, many do not.  Each week, upwards of two-thirds of low-wage workers experience wage theft.[1]  Raising the minimum wage alone is ineffectual if we do not also ensure that the minimum wage is paid to workers.

Wage theft directly harms workers by leaving them without pay, hurts businesses who are trying to comply with the law, but are undercut by competitors who unfairly cut costs by not paying workers, also robs taxpayers, as taxes to state and local governments go unpaid when workers go unpaid. 

There are a number of ways to that Pennsylvania can combat wage theft:

  • Increase the penalties for wage theft,  to make wage theft a bad business decision
  • Streamline the Department of Labor and Industry’s enforcement capabilities.  Currently the Department has to go to court in the jurisdiction where the wage theft occurred in order to get a judgment against an employer.  The Department should be able to adjudicate wage theft internally, as other Departments can with violations of the law.
  • Increase the Department’s funding to investigate and combat wage theft through increased penalties.  Penalties paid as part of the Department’s enforcement activities should come back to the Department to fund further enforcement. 
  • Make misclassification more difficult.  Many workers are misclassified as independent contractors and then are paid sub-minimum wages or are not paid overtime.  The law should be strengthened to presume a worker to be an employee unless certain strict factors are met showing that the individual runs a truly independent business.

Although these solutions will not end wage theft completely, they will go a long way towards combatting a problem that harms workers, taxpayers, and businesses. 


[1] Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities (New York: Center for Urban Economic Development at UIC, National Employment Law Project and UCLA Institute for Research on Labor and Employment, 2009), available at http://www.nelp.org/brokenlaws

 

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