Guest Commentary: We Need to Talk About Wage Theft
By Melissa Wells
What if I told you that Maryland could create a nearly $1 billion annual stimulus package that puts thousands of dollars each year directly into the paychecks of over a half-million workers? What if Maryland could create that stimulus without raising taxes or cutting any portion of its budget?
Now think of that nearly $1 billion and over a half-million workers a bit differently. What if Maryland suffered a crime wave that saw over a half-million residents robbed each year, with each theft averaging thousands of dollars lost?
One last hypothetical: think about how voters would respond if Maryland’s leaders chose to ignore such an outsized spike in the state’s crime rate, or if those same leaders chose to leave nearly $1 billion in additional wages out of our workers’ paychecks. We do both every year, by refusing to adequately address wage theft in Maryland.
Wage theft occurs when a worker performs a job for an agreed-upon wage, and after completing the job, does not receive the full wage they are entitled to. The Center for Popular Democracy estimates that 580,000 Maryland workers suffer from wage theft each year, for a total of $875 million in gross wages lost annually. These numbers may underestimate the scope of wage theft in Maryland, as our Department of Labor, Licensing and Regulation has found that “employees often do not file a claim for a wage payment and collection law violation because they fear retaliation,” leaving us with an incomplete picture of wage theft’s prevalence. Low-wage workers are the most vulnerable to wage theft, particularly in industries like construction, food service and landscaping.
Workers are right to fear retaliation from their employers because Maryland law does not protect them from “discharge, demotion, discipline, or any other action that would reasonably deter an employee from engaging in protected activity under the state’s wage payment and protection law.” This means that though Maryland workers have a right to bring wage theft claims, they do not have a right against repercussions from their employer for bringing the claims.
Maryland could address this problem by passing the updated Maryland Wage Payment and Collection Law that was proposed in the 2017 General Assembly, and the Maryland Paystub Transparency Act that was proposed in the 2016 General Assembly.
The 2017 collection law protects workers against the retaliation outlined above, allowing every Maryland worker who has been stolen from to confidently bring their claim in court. We can further strengthen the 2017 collection law, by restructuring how wage theft verdicts are rewarded. Under current law, “the court may award the employee up to three times the amount of wages owed, counsel fees, and other costs.” By stipulating that the court award successful claims with a baseline of all counsel fees, any associated costs of the lawsuit, and at least the amount of wages owed, the law will begin to force behavior change on the part of employers, by removing the possibility that even a losing lawsuit can be cheaper for the business than implementing proper payment practices.
The 2016 transparency act would strengthen Maryland’s paystub requirements, which are among the weakest in the nation. Under current law, Maryland employers are not required to provide their legal name, physical address or working phone number, making it difficult for workers to bring claims even if they are aware they have been undercompensated. Just as troubling, employers are not required to break down the employee’s pay rate by hourly wage, salary, commission, pay period or hours worked, making it more difficult for employees to determine whether they are wage theft victims.
The transparency act provides employees with other important protections. For instance, it requires that employers provide an explanation of pay to the employee upon written request, which the employee is not entitled to now. The act also allows employees to recover from employers who provide “incomplete or misleading” pay records or pay stubs to the employee.
Stamping out wage theft in Maryland would create a massive financial stimulus for our state’s working class. $875 million in wages stolen annually for a population of 580,000 workers means an average of $1,509 more in earnings-per-year for each worker impacted. For the sake of context, $1,509 is equal to over 2-and-a-half weeks of pay for a full-time worker earning $15 per hour. That means by simply ensuring these workers are not stolen from by their employers, a worker earning $15 per hour would receive an average pay increase of more than 5 percent, without creating a financial burden for the state budget or raising taxes on any Marylander.
The traditional argument against cracking down on wage theft is that it would create an economic burden for Maryland businesses to require protections like more transparent paystubs. Such arguments are almost laughable, but they leave out another important aspect of wage theft: it allows dishonest businesses to gain a competitive advantage over upstanding employers who compensate their employees fairly because it lowers the cost of operation for dishonest businesses.
That means far from being a burden to Maryland’s business community, wage theft reform would be a boon for industry, by leveling the economic playing field. I’m running for the House of Delegates to champion common-sense reforms like wage theft, because I believe it is an issue that nearly all Marylanders can agree on.
Melissa Wells is a Democratic candidate for the Maryland House of Delegates in District 40.