Employers short Iowa workers $900 million annually, report says

DES MOINES — Iowa workers are not paid an estimated $900 million owed to them annually, affecting one in seven workers in the state, and state oversight agencies are doing little to enforce violations, according to a report from a liberal-leaning issue advocacy group.

The report is from Common Good Iowa, which describes itself as a nonpartisan, not-for-profit organization. The group is staffed by policy advocates and researchers, and advocates for “people-centered policy solutions for our state’s most pressing issues.”

According to the report, 250,000 Iowa workers are not paid $900 million owed to them annually:

The report was written for Common Good Iowa by Sean Finn, whose focus for the group is on labor standards and practices.

Finn analyzed data from the federal Bureau of Labor Statistics and Iowa Workforce Development, and U.S. Department of Labor enforcement records.

“This insidious and growing problem costs Iowans 10 times more than all other forms of theft combined,” Finn said in a news release.

According to the report, in addition to those unpaid wages, state and federal government agencies are doing little to punish businesses for any violations. For every $1,000 in wage theft, only $2 is recovered by government agencies — less than 1 percent — the report says.

“These long-ignored problems are a public policy failure. Lawmakers and state agencies have been aware of this issue for at least a decade, but have been unwilling to take action,” Finn wrote in the report.

“Wage theft not only cheats workers and taxpayers, but also responsible employers who have to compete with the bad actors who unlawfully undercut them.”

When they had a majority in the Iowa Senate, Democratic state lawmakers passed legislation designed to curtail wage theft.

A 2015 bill would have required employers to keep records of terms of employment and protect co-workers who testify against employers from retaliation.

The proposal was never approved in the Republican-majority House.

In its report, Common Good Iowa recommends policy changes that would provide stronger protections for workers, and stronger enforcement of those laws.

The group recommends more government investigators and tougher penalties on offending businesses, among other policies.

“Thousands of Iowa workers go to work each day thinking they are protected, that laws require their employers to pay them the right amount on time,” Paul Iversen, a labor educator at the University of Iowa Labor Center who has worked on wage theft cases, said for the report.

“Sadly, for many Iowans that just isn’t true. The laws exist, but they are ignored, and a law is only as good its enforcement.”

‘Newly expanded efforts’

A spokesman for the Iowa Workforce Development department noted many larger wage theft claims are pursued through the courts, not government enforcement, and said the agency works hard to ensure Iowa workers are paid fairly and that any complaints are given a fair hearing.

“Iowa Workforce Development agrees that unpaid wages are an important issue for Iowa workers, and we are working diligently on multiple fronts to ensure that workers receive all the money they are properly due,” agency spokesman Jesse Dougherty said in an email.

“This includes our newly expanded efforts, backed by part of a recently announced $2.9 million grant, to boost efforts at identifying those Iowa workers who are misclassified under the law.”

According to state Division of Labor data sent by Dougherty, the agency received 538 wage complaints in Iowa in 2018, 549 in 2019, and 550 in 2020. He said the average claim settled by the division over the past three years has been roughly $323.

The state labor division first attempts to resolve complaints by working with the employer; if a claim cannot be resolved, it goes to small claims court, Dougherty said.

Dougherty said any Iowa workers who believe they have not received wages they are owed should file a claim at the Iowa Division of Labor website, at iowadivisionoflabor.gov/idol/wage-hour.

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