Stealing wages is illegal theft

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. This report was the first of its kind in 10 years and found a 50 percent 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 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. 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 received a zero-interest loan from their workers for a year or more.

Private attorneys like myself bring lawsuits as 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 whack-a-mole. The financial risks for bad employers are insufficient. That is why the annual costs to Iowa workers have increased from $600 million 10 years ago to $900 million now.

Rather than waiting for a Republican Legislature to strengthen our wage payment laws or Kim Reynolds to devote more staff to 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 of greater than $1500, that is a Class D felony punishable by up to five years in jail. If the theft is of greater than $10,000, that is a Class C felony punishable by up to 10 years in jail.

We have laws in place to deter wage theft, but we simply need to recognize stealing money from workers is stealing. Enforcement need not come just from bureaucrats or plaintiffs’ lawyers, but it must also come from police officers and prosecutors. 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 is an attorney representing Iowa workers and a former State Representative from Mt. Vernon. His column was first published in The Prairie Progressive.

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