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FEATURE | Summer 2014

The Purloined Paycheck

Time to stop companies from swindling low-wage workers


PRESIDENT OBAMA has all but given up on working with Congress when it comes to gender pay equity. But that’s good news because he’s taking direct action, using executive orders that bypass the legislative process.

He issued an executive order in February raising the minimum wage for new workers employed by federal government contractors from $7.25 to $10.10 per hour. This disproportionately benefits women because women are the majority of minimum- wage employees.

He issued another executive order and a presidential memorandum in April that addressed the gender pay gap. The order bars federal contractors from retaliating against employ- ees for discussing pay issues with coworkers, and the memorandum requires federal contractors to submit summary wage data to the Depart- ment of Labor (DOL), including breakdowns by race and gender. Secrecy about pay scales has long been a barrier to women trying to achieve equal pay.

But there’s another problem that needs attention: wage theft. It can take a variety of forms, including being paid below the minimum wage, being forced to work off the clock, not receiving overtime, and being forced to work through lunch and legally required rest breaks.

The largest recent settlements against corporations for wage theft involve low-wage workers—again predominantly female. Workers in a Walmart warehouse received a $4.7 million settlement in December 2013 for violations that ran the gamut from supervisors changing employee time cards to workers being denied breaks and being cheated on time out for meals.

Then in March of this year, the New York attorney general nailed seven McDonald’s franchises with a $500,000 wage-theft settlement that will benefit more than 1,600 current and former employees. McDonald’s failed to provide workers with the time and money they needed to clean their uniforms. The company also skipped out on the extra hour of minimum-wage pay employees are sup- posed to receive after working more than 10 consecutive hours. Both are requirements of New York law.

Mickey D’s employees in California and Michigan have also sued for these infractions and more, such as being required to report to their workplace but then ordered to wait without pay for an hour or two until enough customers show up. And in March, fast- food workers held a nationwide protest against wage theft—part of an ongoing campaign to raise wages [see “Fed Up” in Ms., Fall 2013].

Government contractors have also committed wage theft. A Senate committee report found that 32 percent of the largest DOL penalties for wage theft were against federal contractors. Other research from the National Employment Law Project showed that about a third of low-wage contract workers in the nation’s capital reported stolen wages, including those who worked at Union Station and at the Ronald Reagan Building.

In a letter to the secretary of labor this spring, the House Congressional Progressive Caucus stated that contracting officers do not have access to information about which contractors have broken the law, even though the DOL obviously has such data. The caucus urged better coordination, along with publishing a list of con- tractors who have been fined or otherwise disciplined.

Democrats are trying to address the problem. Sen. Bob Casey (D- Penn.) introduced the Payroll Fraud Prevention Act in 2013, which would protect workers from being misclassified as independent contractors—a status that doesn’t provide them with fair-labor standards, health and safe- ty protections, unemployment and workers’ compensation benefits. To date, the bill is stuck in committee with only six cosponsors, and there’s no companion legislation in the anti- worker House.

So, like the executive orders on equal pay and the minimum wage, relief from wage theft by federal contractors will have to come from the president. He doesn’t need legislation to instruct the DOL to step up enforcement and revamp data availability so that contractors who steal wages will be denied taxpayer dollars. With so many women in the low-wage workforce, such an order would be another way to help close a gender wage gap that hasn’t budged in a decade.

MARTHA BURK, the Ms. Money editor, is author of Your Voice, Your Vote: The Savvy Woman’s Guide to Power, Politics and the Change We Need.

Reprinted from the Summer issue of Ms. Photo via Shutterstock. To have this issue delivered straight to your door, Apple, or Android device, join the Ms. Community.

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