House, Senate Democrats Move to Prevent Wage Theft

Hardworking men and women deserve full amount they’ve earned
Monday, October 30, 2017

LANSING — House and Senate Democrats announced their plan to Prevent Wage Theft today to make sure workers get what they’ve earned. A report from the Economic Policy Institute earlier this year found that Michigan workers across all demographic groups are losing $429 million every year as a result of wage theft. It’s been almost 40 years since Michigan updated many of the state’s laws to protect workers’ pay.

“When we’re talking about nearly half a billion dollars being taken from workers’ paychecks illegally, it’s clear the system is broken,” said state Senator Jim Ananich (D-Flint). “These folks are playing by the rules and trying to provide for themselves and their families. We need to do right by them and bring our laws into the 21st century.”

Data from the EPI report show that 17 percent of low-wage workers in Michigan have experienced wage theft, which includes paying less than minimum wage, failing to pay overtime, working off the clock, confiscating tips, misclassifying employees as independent contractors, or even failing to pay workers at all. Earlier this year, FOX 17 reported the story of 24 West Michigan carpenters who hadn’t been paid $35,000 that a construction company owed them. They had bank accounts frozen, couldn’t afford family medical expenses and even lost their cars.

“Workers are not asking for special treatment— they just want the compensation they’ve earned,” said Graham Kovich, of Restaurant Opportunities Center-Michigan. A worker in the service industry himself for nearly 20 years, he has also assisted other victims of wage theft. “I hope the legislature passes the bills to Prevent Wage Theft immediately, so that all wage earners can achieve financial independence and improve their quality of life.”

In addition to holding back Michigan’s workers and its economy by keeping hundreds of millions of dollars out of pocketbooks around the state, law-abiding businesses are at a disadvantage to the bad actors who increase their profits by stealing from their employees.

“When Michigan’s workers do better, our whole state benefits. Sadly, a handful of bad actors are holding us back to the tune of nearly half a billion dollars per year and our state isn’t doing enough to help,” said House Democratic Leader Sam Singh (D-East Lansing). “Democrats are stepping up to ensure that hardworking Michigan workers get what they earn and that everyone plays by the same rules.”

          The legislation to Prevent Wage Theft would:

  • Pay Workers Back Lost Wages and More. Companies that commit wage theft would be eligible for financial penalties to pay workers three times the amount owed, which would be an increase from the existing limit of two times the amount owed.
  • Make Enforcing the Law a Priority. The number of staff in the Department of Licensing and Regulatory Affairs responsible for pursuing wage theft violations would be doubled.
  • Increase Penalties on Bad Actors. The civil penalty for violators would increase from 10 percent annually on the wages and benefits to 100 percent annually. The criminal penalty would also increase from a misdemeanor to a felony, and fines would increase from up to $1,000 to up to $10,000, for repeat wage theft violators.

The plan to Prevent Wage Theft is the latest proposal from legislative Democrats, who are focused on standing up for Michigan families and working people who feel the system is stacked against them. Democrats released plans earlier this year to lower skyrocketing prescription drug costs, protect seniors and people with pre-existing conditions from health care cuts coming from Washington, and give Michigan-owned businesses and their workers a fairer shot at contracts with state and local governments.