Wage Theft is Crime, Deserves Jail Time

A Papa John’s franchise owner in New York City was sentenced last week to 60 days in jail for wage theft, a potentially precedent-setting punishment that could have wide-reaching consequences for the enforcement of labor law.

Abdul Jamil Khokhar pled guilty in July to cheating workers out of $230,000, denying them earned overtime pay and falsifying records to keep this information from tax authorities. Last week, he faced additional penalties: $280,000 in damages and what may be the first ever jail sentence for wage theft.

In the past, Khokhar’s illegal business practices would have likely yielded only a civil suit and the payment of a relatively small fine. However, New York Attorney General Eric Schneiderman, who earlier this year called fast food wage theft a “crime wave,” has been pushing for stronger sentences, joining other attorneys general across the country in making wage theft a top priority.

Schneiderman is right to treat Khokhar’s actions as a crime. Employers steal billions of dollars every year from workers, and, just like car theft, home invasion and mugging, wage theft has real victims.

“This is not an administrative problem or a bureaucratic problem or an accounting slip-up. This is a crime,” said New York Councilman Mark Levine, whose district encompasses some of the restaurants Schneiderman has been targeting. The only difference between this and a bank robbery, he said, is that “the victims are not powerful financial institutions. They are regular men and women—mostly men, mostly immigrants—who don’t have high-priced lawyers or security teams.”

Wage theft can take many forms, but one of the most common is, as in Khokhar’s case, refusing to pay workers for overtime. Employers also sometimes steal wages by not paying workers for all the hours they worked, not paying the minimum wage and in some extreme cases, not paying workers at all.

This type of theft can affect any kind of worker in any industry, but because they often desperately need jobs, low wage workers are especially vulnerable.

A 2009 study of 4,387 low wage workers conducted by researchers at the University of Illinois Chicago, the National Employment Law Project and UCLA found that in any given week, two-thirds experienced at least one pay-related violation. The average loss per worker amounted to roughly 15 percent of their total pay, money taken directly from people who were already struggling with poverty and economic insecurity.

Investigation of wage law violations is the responsibility of the Wage and Hour Division of the U.S. Department of Labor, which, even with recent budget increases, remains badly understaffed. This has allowed many perpetrators of wage theft to operate with impunity.

Khokhar’s sentence therefore represents a sea change, as attorneys general start working with the Department of Labor to systematically address these cases.

“There is an effort by thousands of businesses, unfortunately, to underpay workers what they are legally owed,” said Schneiderman in March. “If this money was just being stolen, by some organized gang of crooks, you bet everyone would know about it and be on it. This is something we treat just as seriously.”

Protecting workers from wage theft requires doing just what Schneiderman proposes: treating it like the crime it is and making sure unscrupulous employers face real consequences.

People who steal should go to jail, especially rich people who steal from their workers.

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Union Matters

3.4 Million American Jobs Wiped Out by U.S.-China Trade

Scott Paul and Robert E. Scott join Leslie Marshall to discuss a new EPI report entitled, "The China toll deepens: Growth in the bilateral trade deficit between 2001 and 2017 cost 3.4 million U.S. jobs, with losses in every state and congressional district."

Scott Paul is President of the Alliance for American Manufacturing (AAM), a partnership established by some of America’s leading manufacturers and the United Steelworkers union.

Robert E. Scott is Senior Economist and Director of Trade and Manufacturing Policy Research at the Economic Policy Institute (EPI).
EPI is a nonprofit, nonpartisan think tank created in 1986 to include the needs of low- and middle-income workers in economic policy discussions.

 

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