Wage Theft: Officials say employers stealing millions of dollars from Michigan workers
(CBS DETROIT) - It can happen to anyone. You go to work, but your employer doesn't pay you all of the money you earned. It's called wage theft.
It's more common than you might think. Many people don't know they can do anything about it, but there are ways to fight wage theft and government organizations to help you.
It's estimated that employers fail to pay American workers about $50 billion in wages every year, essentially, stealing billions from their employees.
It happens right in Michigan. Employers commit wage theft by stealing workers' tips, unpaid overtime, misclassification of job functions and more.
It happened to Nicole Johnson.
Her employer docked a large chunk of her pay because of time they say she missed on the job while tending to her sick mother.
"My mother was dying of cancer. I literally was working while my mother was dying. Literally from diagnosis to death. It was six weeks. So whatever transpired over that time, it was a very short amount of time. My performance did not decrease," said Johnson.
But to her shock her paycheck did.
"You're gonna dock me $900 on my last checks," said Johnson referring to her employer.
As her mom's condition worsened, Johnson said she decided to resign from her position and use up the last of her pay time off to be with her. She said her request was granted by her job, but they still required her to keep working.
"At one point, I was sitting in the hospice with my mom, combining the PDF document of the union contract that I negotiated that the board had to vote on in order to ratify it," said Johnson.
Johnson said she still did the work because she wanted to be a team player, but she didn't know she wasn't getting paid for it.
"Like, literally one of the worst times in my life. You guys docked me $900 when I did the work," Johnson said, referring to her former employer.
She didn't know if it was a mistake at first, but she didn't want to take any chances.
"I inquired to say, well, I'll get a check on them. They said, no, your last day. That's your last check. That's how our payroll works. I said, oh, okay. And I was ready to be gone," said Johnson.
But after thinking about it, the situation didn't sit right with her.
"It's not like there were things undone. So all of the reasons where I could have justified the action and maybe felt like it wasn't wrong, I couldn't really give it that," she said.
She decided to file a complaint with the Michigan Department of Labor and Economic Opportunity (LEO). She said while filing a complaint regarding the $900, she said her employer owed her an easy decision, but then wage theft investigators revealed they owed her more.
"More than four times ended up being $4,000 that they owed me," said Johnson.
And for Johnson, that was worth fighting for.
"I needed it. I had two kids going to college in the fall. I mean, the good thing on my behalf is I work in human resources, and so I'm aware of resources like the Department of Labor, which I know most people have no idea that they even exist or what they do or how to use them," she said.
To fight back against wage theft, you can file a complaint with the State of Michigan or the U.S. Department of Labor. Many people find they have no choice but to do that because employers don't pay otherwise. There are laws that protect workers from retaliation from their employers when they do so.
According to LEO, the department recovered about $18.5 million in unpaid wages for workers in Michigan from 2015 to 2022. That's just from the state on the federal end. The U.S. Department of Labor's wage and Hour Divison, which handles its own wage theft investigations in Michigan, says it revealed $15 million in minimum wage and overtime back wages due to workers in Southeast Michigan says from 2017 to 2022.
"Some employers absolutely abuse the system, and they may find ways because an employee left and they're frustrated that they don't pay," said Sean Egan, deputy director of LEO.
Officials with the Michigan Department of Labor tell us there are many wage theft victims out there who don't even file complaints. They don't speak up because they don't want to rock the boat. And the penalties for employers who deliberately commit wave theft are not strong enough to deter them from doing it.
"Workers are fearful of retaliation, loss of employment, loss of income. So getting them over the hump to actually file a complaint is a big step. So we know that it's happening. We think it is bigger than what we see, and we are trying to find creative ways to manage that. But we will need some help from the legislature to change our laws," said Egan.
Some employers abuse the system, so he not only spends his days fighting wage theft, he's fighting to get tougher laws.
"The penalties that we have are so minor that many employers, as long as they come into compliance, are not going to receive a penalty. So even though that employee has gone without payment, the way our statutes are written currently, the employer is really not going to be penalized if they end up paying that bill. So it creates a challenge for us to really get employers into a space where they understand that these are obligations that they have to commit to," said Egan.
Egan said some employers do understand that they're committing wage theft, but they also know that the penalties for doing so in Michigan are minor.
"Even though they may have knowingly withheld that payment, as long as they make the payment when the complaint is filed, that's considered voluntary compliance. There will be no penalty issued, more than likely. And our civil penalties if we do issue those are limited to $1,000 or less," said Egan.
Egan said another problem is there's currently no law in Michigan that says an employer has to state in writing what an employee is going to be paid, so sometimes his office can't do much of anything if an employer switches up pay.
"We get calls several times a week from workers that have accepted employment somewhere, and we're told they'd be paid one rate and later discover that it's less than rarely more but less than what they were promised. And without a written wage notification, there's really nothing we can do to help," said Egan.
For now, wage investigators are working within the laws they have to try to get workers what they're owed. Johnson said when she thinks of her mom's death, she also thinks about her former employer.
"They're always connected. I think about sitting in hospice next to her bed, working on work, simultaneously and trying to do everything that I need to do at work while still being there for my mother and knowing that I did that only to have my check docked," said Johnson.
Wage theft not only stops people from getting their hard-earned money, it can affect their social security benefits and more. The bottom line is the system needs to change.
If you are someone you know is a victim of wage theft, you can contact CBS News Detroit's AJ Walker at AJ.Walker@CBS.com.
