Prairie Dog

From the January 2023 issue of  The Prairie Progressive, Iowa’s oldest progressive newsletter. The PP is  funded entirely by reader subscription,  available only in hard copy for $15/yr.  Send check to PP, Box 1945, Iowa City 52244. Click here for archived issues.

by Nate Willems

The recent report by Common Good Iowa finding that Iowa workers are robbed of $900 million annually by their employers should be a wake-up call for all of us. This report was the first of its kind in ten years and found a 50% increase in stolen wages in Iowa over a decade.

Most of the $900 million in stolen wages are a result of overtime violations—failure to pay time and a half after 40 hours’ work in a week to eligible employees. There are variety of ways people are cheated of overtime wages: improperly classifying employees as FLSA-exempt (often called “salaried” workers); improperly classifying employees as independent contractors; illegal deductions from workers’ checks; time clock shaving; etc.

Common Good Iowa also found an additional $240 million in minimum wage violations. These stem from some of the same tactics as in overtime violations but also include tip pool violations. For example, wait staff at a restaurant can be paid a low minimum wage and can be required to pool tips, but it becomes illegal when management also allows non-tipped employees and managers to share in the tips given to wait staff. Food service represents the sector of the economy with the highest rate of violations according to the report.

Enforcement by the State of Iowa is almost laughable. In a state with 3.2 million people, you can count the number of Iowa Workforce Development employees fighting wage theft with your fingers. Furthermore, even when IWD does enforce the law it only seeks to recoup wages and not the liquidated—or penalty—damages the law allows. In other words, without liquidated damages the worst-case scenario for the employer is they receive a zero-interest loan from their workers for a year or more.

Private attorneys like myself bring lawsuits and hopefully this also plays some deterrent to bad employers. One victory was achieved in 2022 when an Iowa federal judge ruled that an employer cannot skirt liquidated damages liability by simply paying the wages illegally late.

However, as the report indicates, we are all just playing whacka-mole. The financial risks of breaking the law, the liability on bad employers who steal wages, are insufficient. That is why the annual costs to Iowa workers have increased from $600 million ten years ago to $900 million now.

Rather than waiting for a Republican legislature to strengthen our wage payment laws or for Gov. Reynolds to devote more staff to tackling the problem, there is a more immediate solution: criminal prosecution. Iowa Code defines “theft” at § 714.1. It states, “a person commits theft when the person… obtains the labor or services of another… by deception.” If the theft is greater than $1500, that is a Class D felony punishable by up to five years in jail. If the theft is greater than $10,000, that is a Class C felony punishable by up to ten
years in jail.

We have laws in place to deter wage theft, but we simply need to recognize that stealing money from workers is stealing. Enforcement need not come just from bureaucrats or plaintiffs’ lawyers but must also come from police officers and prosecutors. Public protests, small actions, administrative complaints are all fine, but when an employer steals
wages we must start to file police reports. Law enforcement can learn to treat wage theft like any other type of theft, but that shift in mentality must also be first embraced by workers and activists.

—Nate Willems