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The War of the Wages

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Before Labor Day recedes too far into the horizon, let’s spend a few minutes discussing the illustrious and inventive ways that employers defraud their employees out of their earned wages, and legal remedies to counteract the practice.

In last week’s companion blog Article 3, I mentioned a Subway franchise owner with the unlikely name of Parvin Feroz, who allegedly avoided paying overtime wages to his workers by bequeathing them additional aliases, under which he would divvy up the workers’ wages and avoid paying the overtime they’d earned. And while I gave him “credit” for originality (at least I hope it isn’t a widespread practice), there seems to be an endless supply of questionable and downright dishonest practices, as well as accounting tricks, to cheat workers out of their just do. Hence, “wage theft,” as it’s commonly known, is a burgeoning area of interest to small businesses and lawyers alike.

The New York Times recently declared wage theft an epidemic, but noted that workers are increasingly fighting back via class action lawsuits. Some of the deplorable practices employers employed include: making workers sign blank time sheets and then filling in fewer hours than the employee worked, erasing hours from time clocks, the ol’ tried-and-true “working off the clock,” and illegally classifying employees as independent contractors, thereby making them exempt from overtime and other regulations.

In addition to skirting paying overtime, companies are also finding ways to avoid complying with minimum wage laws and–this is low–absconding with employees’ tips.

When faced with evidence of wrong-doing, many companies plead “Who, Me?” ignorance, foisting off any malevolent motives onto their sub-contractors, who in turn are just as likely pass the buck onto their sub-sub-contractor.

Established and trusted corporations that you would think are above engaging in these un-American practices, including FedEx, McDonald’s, and Wal-Mart, have or currently are the recipients of lawsuits claiming they systematically and illegally shortchanged their beloved workforce, the same workforce regularly portrayed by actors in commercials extolling the virtues of said companies.

Even beloved high-tech behemoths with healthy cash flows like Apple and Google are guilty. Last month, U.S. District Judge Lucy Koh struck down a $324 million class-action settlement that included the above defendants, along with Intel and Adobe, as being “insufficient,” citing “ample evidence of an overarching conspiracy between the seven Defendants…” The other three, Intuit, Pixar, and LucasFilm, settled separately last year.

Julie Su, the California state labor commissioner, is quoted by the Times’ saying, “My agency has found more wages being stolen from workers in California than any time in history,” noting that abuses infect multiple industries, and that while a disproportionate number of victims are immigrants, wage theft affects middle-class workers as well as the poor.

The New York attorney general, Eric T. Schneiderman, is quoted as being amazed at how petty and abusive some of these practices are. Companies often justify the cuts in ideological, “libertarian” terms, he said, although it’s just “theft.”

California and New York are two of the most aggressive states going after these abuses. It’s pretty much a given that more conservative states, including the 24 that are classified as “right-to-work” states, are less vigilant and enthusiastic about going to bat for workers, leaving lawyers, and the class-action lawsuit, along with some support from the federal government, as the first and maybe only lines of defense to corral and counteract the offenders.

Fighting the likes of Google, Apple, FedEx, and Wal-Mart may be the very definition of a David v. Goliath legal battle, but increasingly, David’s slingshots seem to be making an impact.

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