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When Are Companies More Likely to Commit Wage Theft?

Guha Law Jan. 6, 2022

Wage theft is the practice of denying pay or benefits to an employee who rightfully has a claim to them, and it is a big problem. Wage theft affects as many as 2 million American workers each year, amounting to billions of dollars in stolen earnings. In California, this practice often affects the most vulnerable, already underpaid workers. Learn below when companies are more likely to commit wage theft and how you can pursue justice if you become a victim.

What Forms Does Wage Theft Take?

Many people assume that the most obvious form of wage theft – the nonpayment of wages or salaries on time – is the only way that employers skirt their obligations to their employees. However, wage theft can take other forms, such as not paying overtime as required by labor law, forcing employees to skip breaks, stealing their tips or paying sub-minimum wages.

Companies Are More Likely to Commit Wage Theft when Revenue Is Lagging

Research published in the Review of Accounting Studies, a journal that often examines wage and hour laws, found that companies are significantly likelier to engage in wage theft when they are struggling to meet financial goals. This is especially common in publicly traded companies that must present reports on their financial health to their stockholders and investors, usually in quarterly earnings reports. In 2021, California instituted harsher penalties for wage theft along with a commitment to more stringent enforcement.

If you or a loved one has experienced wage theft in California, it’s imperative that you know your rights. By pursuing justice in a timely manner, you may be able to recover the lost earnings that you are entitled to under state and federal law.