Research Reveals Wage Theft is Rising in California: What Workers Need to Know

Wage theft is on the rise in California, with billions of dollars lost each year due to minimum wage violations, a study has found. Additionally, many cases of unpaid wages go unreported or unaddressed. Wage theft can take various forms, but it generally refers to the illegal underpayment or withholding of wages from employees.

The findings were reported by the Workplace Justice Lab at Rutgers School of Management and Labor Relations. Researchers found that low-wage workers in California were cheated out of billions of dollars in wages between 2014 and 2023, and the problem is only getting worse. Minimum wage violations almost doubled during that period, affecting workers in San Francisco and major metropolitan areas like San Jose, San Diego, and Los Angeles.

The study revealed Los Angeles has seen the highest rate of wage theft, with workers in the area losing an estimated $1.6 billion to $2.5 billion each year. Workers paid below minimum wage lost around 20 percent of their total paycheck on average, amounting to $4,000 a year if working full-time. Across the four metro areas, the total loss for workers ranged from $2.3 billion to $4.6 billion annually.

The study also examined wage theft in different industries. Workers in the fast food industry, restaurants, personal services, laundry services, and private households were more likely to experience minimum wage violations. Affected workers include servers, bartenders, cooks, fast food employees, nail technicians, hairstylists, and dry-cleaning workers, among others.

In the Bay Area, private household employment reflected the worst violation rate of any industry. According to the study, 57 percent of domestic workers, such as nannies, housecleaners, and home health aides, suffered wage theft during the 10-year period.

Another May 2024 study reinforced the wage theft findings from the Rutgers report. Researchers at Harvard Kennedy School and the University of California-San Francisco surveyed nearly a thousand hourly workers in California. They found that 46 percent had suffered at least one serious employment violation over the past year. Wage and hour violations included unpaid overtime, off-the-clock work, being paid less than minimum wage, and unpaid tips or bonuses.

California has some of the most robust worker protections in the country. For example, workers are eligible for paid sick leave and employers must pay overtime to employees who work more than eight hours in a workday, calculated at 1.5 times their regular pay rate. Despite such labor laws, some employers still commit wage and hour violations.

According to the study, labor law violations often go unreported or unaddressed. Only 23 percent of surveyed workers reported employment violations, and most complaints were to their employers rather than authorities. Fear of retaliation is a significant reason many workers do not speak up. Over half of the survey respondents said they faced retaliation for reporting violations, including being assigned undesirable schedules, reduced shifts, and even unsafe tasks.

The majority of workers who did not report violations, 39 percent, thought doing so would make no difference. Around 20 percent claimed they did not know how to report violations, while 13 percent said they did not even realize they had been subjected to something unlawful.

For workers facing wage theft, it is important to know that you are not alone. If you suspect you have been a victim of wage theft, legal resources are available to help you recover your hard-earned pay. An experienced San Francisco employment lawyer can ensure you understand your rights and take the necessary steps to hold your employer accountable.

At McCormack Law Firm, we realize it takes courage to speak up about unpaid wages. Our attorneys are dedicated to helping workers fight back against wage theft and retaliation. If your employer has withheld pay, denied you overtime or violated wage and hour laws in other ways, you may have grounds for a wage claim. Contact us today for a free consultation.