The Wage Theft Register

The problem

The largest category of theft in the United States is not tracked by the FBI, because it is committed by employers against their own workers and it is treated as a labour dispute. The Economic Policy Institute, working from the government's own survey data, estimates that workers lose more than $15 billion a year from minimum wage violations alone: being paid below the legal floor, working off the clock, having tips taken, being misclassified as contractors. In the ten most populous states, 2.4 million workers lose about $8 billion a year this way, an average of $3,300 each, nearly a quarter of their earnings. That figure counts only the minimum wage. Overtime theft, stolen tips and unpaid final paycheques come on top.

For scale, the FBI's estimate of all property stolen in robberies, burglaries, larcenies and motor vehicle thefts in a year is in the same range. Wage theft is at least as large as every street crime against property combined, and it is committed against the workers least able to afford a lawyer.

Recovery is a rounding error. Between 2021 and 2023 the Department of Labor recovered about $700 million in stolen wages, state labour departments and attorneys general about $200 million, and private lawsuits and local agencies the rest, for a total of about $1.5 billion over three years, less than 3 percent of what was taken. The federal Wage and Hour Division has fewer investigators than it had in 1948, for a workforce nearly three times the size. An employer who steals wages faces, if caught, repayment of what was stolen plus an equal amount in damages, which is a coin flip with a free roll: pay the wages when caught, keep them otherwise.

№ 013 argued that the country should legalise the way Americans already work. This proposal is its enforcement clause: the way Americans already work should at least be paid for.

The proposal

The Wage Theft Register: a public federal register of every employer found liable, by a court or agency, for wage theft, with the amount and the finding, searchable by name and address. Treble damages for wage theft under federal law. A worker's lien on the employer's property for unpaid wages, senior to other creditors. Debarment from federal contracts for three years after a willful finding. And a Wage and Hour Division funded from the penalties it collects, so that enforcement grows with the theft.

How it would work

1. The register. Every final finding of wage theft, by a federal or state agency or a court, is entered in a public federal register within 30 days: the employer, the address, the amount, the violation, and whether it was willful. The register is searchable by anyone, including a worker considering a job and a customer considering a restaurant. Health departments have published inspection results for decades on the theory that the public has a right to know who is unsafe to eat from. The public has the same right to know who is unsafe to work for.

1. Treble damages. The Fair Labor Standards Act's liquidated damages, equal to the wages stolen, become treble: the wages, plus twice again. Treble damages are the ordinary remedy in antitrust and racketeering law for exactly the reason they belong here: when most theft goes undetected, the penalty on detection has to exceed the gain, or theft is rational.

1. The lien. A worker owed wages has a lien on the employer's real and personal property for the amount, filed on a finding and senior to other unsecured creditors, as several states already provide. An employer who closes and reopens under a new name loses the building, not the workers.

1. Debarment. An employer with a willful finding may not hold a federal contract or receive a federal grant for three years. The government spends about $700 billion a year on contracts; it should not spend a dollar of it with a firm that steals from its staff.

1. Investigators paid by the penalty. The Wage and Hour Division receives, as a standing appropriation, a share of the civil penalties and treble damages it collects, so that its budget rises with the theft it finds rather than falling with each budget cycle. A division that recovers $15 billion a year will pay for itself many times over.

1. The lead firm answers. Where wages are stolen by a subcontractor, a franchisee or a staffing agency on a lead firm's premises or under its brand, the lead firm is jointly liable, as it is in several states and under long-standing federal law for some industries. The construction company that hires the drywall crew through three layers of contractors cannot be surprised that the crew was not paid.

1. Good faith, distinguished. A first, non-willful violation that the employer corrects within 30 days of notice is entered in the register with that fact stated and without treble damages. The register is not for the payroll error. It is for the business model.

The numbers

The theft. More than $15 billion a year from minimum wage violations; several billion more from overtime and tips. Against about $500 million a year recovered by all agencies and courts combined.

The workers. 2.4 million in the ten largest states, losing $3,300 each; several million more nationwide. Most are in restaurants, retail, construction, agriculture, home care and warehouses, and most earn under $30,000 a year.

The enforcement. The Wage and Hour Division employs on the order of 750 investigators for about 165 million workers, one for every 220,000. Funded from penalties at even a fifth of the theft it could find, it would employ several thousand.

The register's cost. Nearly nothing. The findings exist; the register publishes them.

The honest objections

"A public register will destroy small businesses over honest payroll mistakes." Item 7 separates the mistake from the model: a first, non-willful, corrected violation is entered as such and carries no treble damages. What the register will do to a business whose model is not paying overtime is end it, which is the intent, and the register lets its workers and customers do the ending rather than a court.

"Treble damages and liens will drive employers into bankruptcy." An employer who has stolen $50,000 in wages and faces $150,000 in damages may go bankrupt, and the lien means the workers are paid from the assets before other creditors. That is the correct order. The alternative, in which the workers are paid last if at all and the employer reopens next door, is the current one.

"Federal investigators cannot police 165 million workers." They cannot, and item 5 is not designed for them to. It is designed so that the register, the lien and the treble damages make private enforcement worthwhile, so that a worker's lawyer can afford the case, and so that the division's budget grows with the theft it finds instead of shrinking every year regardless.

"Joint liability makes every company responsible for every contractor's payroll." It makes a company responsible for the payroll of the people who do its work on its premises under its brand, which is a responsibility most companies already accept when it is their own employees and evade by inserting a contractor. The rule ends the evasion; it does not create the responsibility.

"This is a gift to plaintiffs' lawyers." It is a gift to plaintiffs, whose lawyers today cannot afford a $3,300 case and therefore do not bring it. A lawyer who brings a wage case under this proposal is doing what the Wage and Hour Division cannot, and being paid by the employer who made the case necessary.

Sources

• Economic Policy Institute, Employers steal billions from workers' paychecks each year (2017) and More than $1.5 billion in stolen wages recovered for workers between 2021 and 2023 (2024), epi.org
• National Employment Law Project, Workers Lose Billions in Unpaid Wages Every Year, nelp.org
• U.S. Department of Labor, Wage and Hour Division, enforcement statistics and investigator staffing, dol.gov/agencies/whd
• Federal Bureau of Investigation, Crime in the United States, estimated value of property stolen
• Fair Labor Standards Act, 29 U.S.C. § 216(b), on liquidated damages; state wage lien statutes (Wisconsin, Maryland, Washington)
• Proposals № 013 (The Portfolio Act); № 026 (The Landing); № 072 (The Entry Fee); № 083 (The Soldier's Rate)