Pennsylvania has a wage theft problem

Wage theft is a particular problem in Pennsylvania. Weak laws and a lack of follow up allow dishonest employers to dodge investigation through legal loopholes for years.

Frank (not his real name) had worked at a club in downtown Philadelphia for almost a year when he realized his paychecks were coming up short.

“There weren’t any time sheets or anywhere to clock in and out, so I kept track of my hours on my own. After a few weeks, I noticed I was losing about ten hours a week in my paycheck. So I started asking about that.”

When he brought it up to his employers, the environment at his job changed. Soon he was being cut from the schedule and receiving harsh feedback from his employer.

“They told me I should be glad to have any job at all,” Frank said. “They’d also remind me I got free food at work, like that made up for the money.”

An environment ripe for wage theft

Unfortunately, Frank’s story is not unusual for Pennsylvania workers. Wage theft is a particular problem in Pennsylvania. Weak laws and a lack of follow up allow dishonest employers to dodge investigation through legal loopholes for years. A study released last summer from the Sheller Center for Social Justice found that “on any given work week” Pennsylvania workers lose $19 million to $32 million dollars to employer wage theft. The study, called “Shortchanged,” also estimated that Pennsylvania families lose an average of 15 percent of their income each year to wage theft. Pennsylvania’s fines for wage theft are so low that they don’t deter employers, compared to the amounts saved through theft.

“Wage theft” is a broad term that covers several ways employers avoid paying non-exempt employees their full wages. It comes in a variety of forms: taking illegal deductions out of paychecks, taking employee tips, paying less than the minimum wage, and not being paid for hours worked. Often employers fire or demote workers who talk about how much they get paid. People working in health care, child care, and food service are reported as being most vulnerable to wage theft.

Progressive Business Publications has made the news since 2013 for their refusal to pay back wages following violations of labor law. The Malvern-based direct marketing company required their customer service representatives to clock out for any time away from their stations — including bathroom breaks — leaving employees to choose between using the restroom or getting paid. A judge has ordered the firm to pay a settlement of as much as $1.75 million to 6,000 employees.

Federal law is clear: If a person works, they have to be paid for that time. However, thousands of workers in Pennsylvania don’t know their rights. “Shortchanged” reported that 61.5 percent of food service workers surveyed didn’t know or were wrong about the minimum wage. Others may know their rights, but fear speaking out. For vulnerable workers, wage theft is tantamount to business as usual.

It helps to pay attention

Frank was fired by text message two hours before one of his shifts. They told him not to expect his last paycheck.

“I thought they could do that, because it was their money, you know?” he said.

Despite few resources and little legal backing, the Department of Labor and Industry (DLI) closes out approximately 5,000 cases each year, most notably the $8.5 million dollar Chickie & Pete’s settlement in 2014, when the iconic sports bar was found guilty of taking employee tips by making employees pay the so-called “Pete tax.” Over 1,000 former and current Chickie & Pete’s employees received payment, and the restaurant chain is obligated to inform training employees of their wage rights.

Standing up to employers can result in better treatment. Frank did some research online while he was trying to figure out his options when he realized that his previous employer’s practice of withholding payment was illegal. Because he had kept track of his schedule and payments all those months, he was able to file a claim with DLI. His former employer paid him the final paycheck and all back pay without a legal battle. He’s also heard through friends that the club has since revamped their business practices.

In late 2015, Philadelphia City Council unanimously passed a bill (possibly as a reaction to the damning Sheller Center report) that will allow the city to revoke or deny business licenses if an employer is found guilty of wage theft. The city will also appoint a Wage Theft Coordinator in a ‘watchdog’ role. Although these are moves in the right direction, this bill will only affect those working in the city.

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If you or someone you know is losing wages to improper business practices, contact the Department of Wage and Labor at 866-4US-WAGE (487-9243) or get in touch with Community Legal Services.

Beth Boyle is a writer from Philadelphia. Contact her at @bethanneboyle.