Wage Theft in Oregon Is “Extensive”


Wage Theft in Oregon Is “Extensive”

1,664 Claims Totaling $5 Million Are "Tip of the Iceberg"

Wage Theft in Oregon Is “Extensive”

News Release

With Oregon Senators expected to vote as early as this week on legislation intended to protect workers against wage theft, the Oregon Center for Public Policy said that its analysis of data of wage claims filed with state authorities indicates that the problem is extensive.

The Oregon Bureau of Labor and Industries (BOLI) received 1,664 wage complaints totaling nearly $5 million during the year spanning July 1, 2009 to June 30, 2010, according to OCPP’s analysis of bureau data.

Of the claims investigated over the course of the last fiscal year, BOLI found that workers were owed a total of more than $2.5 million, OCPP’s analysis showed.

Wage theft can take different forms. It occurs when employers pay workers less than the minimum wage, don’t pay time-and-a-half for overtime hours, cheat on the number of hours worked, steal tips or don’t pay workers at all.

“Lawmakers’ vote on wage theft legislation comes down to a very simple choice,” said OCPP policy analyst Janet Bauer. “Are you going to coddle those who steal millions in wages or are you going to stand up for Oregon workers and honest businesses?”

She stressed that the claims filed with BOLI “are just the tip of the iceberg,” explaining that the numbers only reflect instances where workers knew of BOLI’s enforcement authority and actually filed a claim.

“Workers whose wages have been stolen may not know they have recourse or may fear reprisal from their employer,” said Bauer.

Because BOLI is constrained from pursuing some types of complaints, it is likely that the level of wage theft they find understates the extent of the problem, Bauer said. For instance, BOLI closes cases where they cannot locate the employer or the claimant was paid on commission and received at least minimum wage.

The construction industry is of particular concern for those seeking to eliminate wage theft. Builders increasingly have come to rely on loosely regulated construction labor brokers to supply workers, according to Michael Dale, executive director of the Northwest Workers’ Justice Project, one of the groups seeking better wage theft protections for workers.

Labor intermediaries frequently use verbal hiring agreements and cheat workers of wages, Dale said. And because the brokers are often undercapitalized, workers find it difficult to recover stolen wages even when they pursue claims.

OCPP’s analysis showed that 20 percent of the wage claims filed with BOLI stemmed from the construction industry. Only the retail trade and services industries gave rise to more claims. In dollars terms, construction had the second highest level of claims, behind services and ahead of retail trade. Of the $2.5 million in total claims BOLI found had been illegally withheld, over $700,000 — 28 percent — was from the construction industry.

The Oregon Senate is expected to vote soon on legislation that would hold construction labor brokers to the same standards as other labor contractors. Senate Bill (SB) 612 — which the General Government, Consumer and Small Business Protection committee has sent to the floor — would require construction labor brokers to be licensed with BOLI, post a bond to ensure payment of wages and provide written disclosure of wages and working conditions. It would also require construction labor brokers to comply with new regulations for “labor contractors,” a new class of employers that groups construction labor contractors with farm labor contractors.

The legislation specifically targets construction labor brokers. The bill does not apply to traditional construction contractors who supply materials or heavy equipment, file building permits with the city or county or have a direct relationship with the property owner.

Wage theft as a pervasive national problem came to light in a 2009 National Employment Law Project (NELP) survey of workers in low-wage industries in Chicago, Los Angeles and New York City. NELP found that more than two-thirds of those surveyed had been victim of some form of wage theft in the previous week. The study estimated that the affected workers lost an average of $2,634 annually due to the theft, out of total average earnings of $17,616.

“Wage theft harms some of the most vulnerable workers and the economy,” said Dale. “Wage theft forces honest employers into unfair competition with those who cheat, drives down wages and labor standards and diverts dollars away from poor communities. And as a result of wage theft, the income taxes that would have been paid on the stolen wages never materialize.”

Some states have begun to crack down. New York, for example, recently quadrupled the penalties for employers who steal workers’ pay.

Oregon would join the trend by enacting SB 612, Bauer said.

The Oregon Center for Public Policy is a non-partisan research institute that does in-depth research and analysis on budget, tax and economic issues. The Center’s goal is to improve decision making and generate more opportunities for all Oregonians.

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Written by staff at the Oregon Center for Public Policy.

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