Is wage theft costing Iowans $900M per year?

Hospitality workers are most at risk for wage theft in Iowa

It made statewide news, and politicians, including former Congresswoman Cindy Axne, spread the story: wage theft in Iowa is a problem. It may be costing Iowa workers $900 million a year to overtime payment violations, minimum wage law violations, and other forms. That’s a big number, but how accurate is it? Sean Finn, a policy analyst with Common Good Iowa, who was originally cited in the Des Moines Register article, sat down for a deep dive interview. He also shares what you can do if you believe your employer has withheld pay.

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How was data on Iowa wage theft conducted?

Finn used US Census Bureau data, Federal survey data, and Bureau of Labor Statistics data for Iowans. Common Good Iowa combined that data with Iowa Workforce Development data. Finn says they believe 1 in 7 Iowans have been a victim of wage theft. $900M is a significant number considering there are only 3,193,079 Iowans.

In Iowa Workforce Development’s annual report, investigators received 366 wage theft claims and settled 341 claims, collecting $253,000. So, where’s the discrepancy? Finn says many Iowans don’t know they’re missing part of their paycheck; therefore, there’s never a report generated for Iowa Workforce Development.

If a worker doesn’t know, how does Finn know, and how do we have any data on this? The Federal enforcement agency, The Depart of Labor Wage and Hour Division recovers closer to two million dollars per year for Iowa workers, so this data also factors into their 900M number.

Finn says they looked at national trends and self-reported survey data Finn conducted to validate their findings. They asked questions like “Has your employer every asked you to stay late for work?” For these reasons, it’s important to point out the $900M number is an educated guess.

The bottom line is this: surveys share only x% of people report, Common Good Iowa took the actual reported number and applied the number of people who don’t report. This is how they arrive at the 900M number on wage theft in Iowa, give or take a few million.

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Why are Iowa employers not paying employees?

Are there this many nefarious bosses withholding? Finn says most Iowa bosses are paying what they owe and conducting businesses fairly, but a small percentage aren’t. These employers know what they’re doing and intentionally rob their employees of pay. He cited a few examples. In one case, a restaurant worker’s employer split work hours between different properties to avoid overtime pay.

In another case, a roofing worker was told of an exception to Iowa overtime laws in the roofing industry. It’s important to point out this is illegal. Your employer can’t withhold your pay; if they have, you may have a case against them.

Wage theft in Iowa

Finn advocated for more aggressive enforcement. In his opinion, Iowa Workforce Development should be able to do more preemptive investigations. Currently, Iowa Workforce Development has to wait for a report.

Finn also believes staffing should be increased at Iowa Workforce Development, but it’s important to point out they claim current staffing levels are sufficient and that they have responded to every complaint.

Iowa Workforce Development also caps the amount of a claim to $6500. If an Iowa worker is owed an amount over that cap, they would have to consult an attorney. This is obviously a barrier that makes collecting wages difficult.

The reason for this is $6500 is the upper limit for small claims court, Finn says. “It sounds like they do that because they don’t have the capacity to take on bigger cases.” It’s one unfortunate aspect of the US legal process. At the end of the day, it’s a Civil Case, not a Criminal Case.

What fines are owed when an employer withholds pay?

“The structure for fines is much more complicated than you might imagine,” Finn said. “The law allows up to a $500 fine per pay period during which there was a violation.” Iowa Workforce Development will often lower than fine or not fine businesses, especially for first-time violations.

Finn says he doesn’t have data on how many fines were issued because that data isn’t available, but he may be filing an open records request to see how much this is being enforced.

It’s important to note Iowa workers can still sue employers in Civil Court for higher amounts.

What to do if I’m a victim of wage theft in Iowa?

Get documentation. That’s the first step. Also, understand there are different processes for different violations. Overtime violations, for example, must be federally filed. The next step is to go to your employer with an innocent question, asking if there was an error in your paycheck. You will probably be asked if you did this step.

If you do feel your employer is wrongfully withholding your paycheck, there are resources to help guide you through the process.

Finn says the University of Iowa Labor Center is a great start, and the Center for worker justice. You will also need to file a claim with Iowa Workforce Development.

If you believe you need legal help, Iowa Legal Aid is a great resource. You can also approach Iowa law firms that take on worker’s rights cases. In many cases, law firms will take on a set amount of pro-bono work per year.

Sean Finn, Policy Analyst at Common Good Iowa

Sean Finn, Common Good Iowa

Sean Finn is a policy analyst at Common Good Iowa. You can find more about Finn and see his full report on wage theft in Iowa and methodology at Sean left his email address at the end of the episode, but for spam reasons we won’t be posting on the website.

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