Dec. 6, 2023 – Each year, millions of American workers face a largely unseen yet widespread injustice: wage theft.
The Economic Policy Institute identifies
a wide range of employer practices that can be classified as wage theft, including:
paying below the federal minimum wage;
denying overtime to those working more than 40 hours weekly;
engaging in off-the-books payroll fraud; and
not compensating for work done outside of regular working hours.
This article aims to help legal professionals in Wisconsin understand the legal issues surrounding wage theft, and highlight the laws, organizations, and resources in place for addressing the problem.
According to the
Economic Policy Institute, from 2017 to 2020, over $1 billion in previously withheld wages was recovered for workers, most of whom were low-wage workers, and predominantly people of color, women, and immigrants.
In Wisconsin, the problem is acute, particularly in the construction sector. The
Midwest Economic Policy Institute found that in 2019, around 10% of Wisconsin construction workers were victims of payroll fraud. The severity of the issue led Gov. Tony Evers to establish in April 2019 a Task Force on Payroll Fraud1 and Worker Misclassification to look into the significant financial losses to workers, the state, and taxpayers.2
Addressing Wage Theft: Legislation, Administrative Regulations, and Advocacy
Efforts to combat wage theft involve a range of resources and strategies, from legislation to grassroots advocacy. There are four basic approaches:
Sunil Rao is the foreign and international law librarian at the U.W. Law School Library in Madison, where he provides access to information in the areas of foreign, comparative, and international law.
Federal legislation and regulatory enforcement. The
Fair Labor Standards Act (FLSA), enacted in 1938 and
amended over time, is the cornerstone of federal legislation on wage theft. Codified at 29 U.S.C. §§ 201-219,the FLSA sets minimum wage, overtime pay eligibility, and other significant protections for the private sector and in federal, state, and local governments.
The U.S. Department of Labor (DOL) enforces the FLSA. Employees can file wage theft claims with the DOL’s
Wage and Hour Division, which investigates potential FLSA violations.3
For legal practitioners, employers and employees, the DOL's
Wage and Hour Division website offers a wealth of resources, including a listing of wage-related laws and regulations, administrator interpretations, administrative opinions and ruling letters, and more.
While the FLSA sets a national standard, many states, as indicated below, have enacted laws offering additional protections against wage theft.
State and municipal laws & regulations. Each state, including Wisconsin, has its own set of laws and regulations pertaining to wage theft.
In many states, workers can file a wage theft complaint with either the state or the federal government under the FLSA, depending, in most cases, on which jurisdiction offers more robust wage and hour protections.
In Wisconsin, the process of filing wage claims is governed by statute and overseen by the
Department of Workforce Development (DWD). Under
Wis. Stat. section 109.09, an employee can
file a claim for owed wages with the DWD, which investigates and mediates between the employee and employer for claims that are filed no later than two years after the date the wages are due. If necessary, unresolved claims may be forwarded to the local district attorney for enforcement. Under
Wis. Stat. section 109.11, a court may then assess additional penalties, as well as attorney fees and related legal expenses.
In addition to Wis. Stat. chapter 109, other statutes that may be relevant to wage theft claims include
Wis. Stat. chapter 104, covering minimum wage laws; and
Wis. Stat. chapter 103, addressing overtime, hours of labor, and related provisions. Additionally, the
DWD provides a summary of statutory and regulatory law in Wisconsin governing wage payment and collection law.
A good source of further information on Wisconsin law is
Wisconsin Wages and Hours Handbook from State Bar of Wisconsin PINNACLE®, which includes discussions of compensable work hours, calculating overtime, exempt versus nonexempt status, and recourse for employees who are not paid properly or on time.
Wisconsin Employment Law from PINNACLE covers Wisconsin law for both employee and employer advocates, addressing wages and hours, employee benefits, occupational safety and health, worker’s compensation, unemployment insurance, and more.
Additionally, there is a CLE program from PINNACLE,
Evolving Independent Contractor Standards for Employers and Contracting Agencies 2023, that covers changes to employee classification.
For legislation in other states related to wage theft, see the legal databases section outlined later in this article.
Apart from state level laws and regulations, several cities, including Cincinnati, Chicago, Los Angeles, and Denver, have taken steps to combat wage theft through ordinances and other measures. Keep in mind that in Wisconsin,
2017 Act 327, designed to create uniform state wage and hour regulations,
may limit municipalities’ ability to adopt wage theft provisions.
To find resources for municipal law provisions on wage theft, see “Legal Research 101: Municipal Law” by Deborah Darin, in the Nov. 1, 2023, issue of
InsideTrack.
These include the Wisconsin State Law Library’s
Wisconsin Ordinances and Codes, and the
American Legal Publishing Code Library and
Municode.com Library for other states.
Litigating wage theft claims. When wage claims remain unresolved, employees can sue their employer in federal or state court, based on whether the claim pertains to federal or state law violations. Plaintiffs can seek not only unpaid wages but also additional damages, attorney fees, and court costs as permitted by relevant statutes.4 The FLSA further protects employees from being fired or discriminated against for asserting their rights under the law.5
Class action lawsuits are a common avenue for redress in situations where multiple employees suffer wage theft by the same employer. However, a review of the publications put out by the
Economic Policy Institute reveals significant hurdles for low-wage workers pursuing legal action in court, such as fear of retaliation (despite the FLSA protections), difficulty in securing legal representation, statutes of limitations, and the prolonged nature of litigation.
For relevant case law, see the legal databases section outlined later in this article.
Litigating wage theft claims. When wage claims remain unresolved, employees can sue their employer in federal or state court, based on whether the claim pertains to federal or state law violations. Plaintiffs can seek not only unpaid wages but also additional damages, attorney fees, and court costs as permitted by relevant statutes.4 The FLSA further protects employees from being fired or discriminated against for asserting their rights under the law.5
Class action lawsuits are a common avenue for redress in situations where multiple employees suffer wage theft by the same employer. However, a review of the publications put out by the
Economic Policy Institute reveals significant hurdles for low-wage workers pursuing legal action in court, such as fear of retaliation (despite the FLSA protections), difficulty in securing legal representation, statutes of limitations, and the prolonged nature of litigation.
For relevant case law, see the legal databases section outlined later in this article.
Criminalization of wage theft. Historically, wage theft was rarely subject to criminal prosecution. But recently
several states, such as Colorado, Minnesota, and Texas, have seen their attorneys general and district attorneys initiate criminal prosecutions against employers.
Some states have formed specialized units to proactively investigate wage theft cases, which, as the
Economic Policy Institute points out, allows lawyers to gain appropriate expertise in the intersection of labor and criminal law.
While Wisconsin has not specifically criminalized wage theft, states like Minnesota and Illinois in the Midwest have set up specialized units for such prosecutions. For instance, in Minnesota, the Hennepin County Attorney’s office
successfully prosecuted a drywall company for insurance fraud and theft by swindle, involving misrepresentation of workforce size and misclassification of workers.
Additional examples of wage theft and fraud cases can be found under “Sample Payroll Fraud Cases” in this
2021 Economic Policy Institute Report, or by searching on “wage theft” on the
publications page of the National Employment Law Project.
The trend of criminalizing wage theft may signal a shift toward a more proactive stance by states. If so, it bodes well for increased public awareness of the issue. In this context, the role of alternative labor groups like Worker Centers, which advocate for and support affected workers, may become increasingly vital.
Worker Centers. The risk of employer retaliation and the potential for legal costs to surpass recovered wages often deter employees from reporting wage theft. Additionally, the low unionization rate among low-wage private sector workers –
only 3% as of 2019 – reflects significant barriers to organized labor representation.
In the past two decades, alternative labor groups such as
Worker Centers have risen to fill this gap. Worker Centers focus on educating, supporting, and organizing non-unionized workers, offering resources like legal aid, wage law expertise, and direct assistance with claims or confronting employers directly.
A local example is
Worker Justice Wisconsin (WJW) in Madison. WJW merges labor advocacy with religious faith, with the aim of empowering workers to seek fair wages and just workplaces. Collaborating with community and faith groups, WJW provides workshops and training to educate workers on their rights, along with support for wage theft and other labor issues.
Potential Solutions and Further Learning
The
Economic Policy Institute suggests several measures to combat wage theft, including increased funding and strategic enforcement by federal and state agencies, alongside higher penalties for employers who commit offenses. It also highlights the potential impact of legislative actions, such as the proposed
Protecting the Right to Organize (PRO) Act (2023), which aims to strengthen workers' rights to unionize and bargain collectively. This act, while not directly addressing wage theft, would provide workers with more tools and collective power to confront it.
Worker Centers are also expected to play an increasingly vital role in this battle by raising awareness of workers' rights, advising communities on deterring employer violations, and organizing collective actions against unfair labor practices.
To learn more about wage theft, including legal guidance, strategies for combating it, solutions and challenges, see the following resources:
Legal Databases: Caselaw, Legislation, and Other Relevant Information
Some of the major online commercial databases provide access to special collections in labor and employment law, ideal for researching wage theft cases, legislation, and related materials:
Labor and Employment Law Resources (Lexis) includes federal and state cases, legislation, administrative materials, and secondary resources such as treatises, practical guidance, forms, and legal news.
Practical Guidance – Wage and Hour (Lexis) provides checklists, practice notes, templates, analytical tools, and other practical guidance.
Employment (Westlaw) covers federal and state cases, legislation, administrative decisions, and secondary resources including treatises, practitioner materials, forms, and trial-related materials.
Practical Law – Wage and Hour (Westlaw) includes practice notes, standard documents, clauses, toolkits, and other practical guidance.
Labor and Employment Practice Center (Bloomberg Law) – see especially the Wages, Hours and Leave Practice Area for handbooks, forms, letters, checklists, toolkits, and other practical guidance.
Labor and Employment: The American Worker (HeinOnline) features historical to present-day content on minimum wage, the 40-hour work week, workplace safety, and more.
Resources for Reports, Publications, and Data
Economic Policy Institute: A
search on “wage theft” on the institute’s webpage yields numerous relevant results.
National Employment Law Project Publications: In the publications page, run a search on “wage theft.”
The
U.S. Bureau of Labor Statistics publishes reports and statistics that data on wages, employment, and labor issues. See in particular its section on
Pay and Benefits.
Individual Reports, Papers, and Practical Guides
FSLA and Nationwide
A Handy Reference Guide to the Fair Labor Standards Act, Dept. of Labor Wage and Hour Division
Overtime Pay Requirements Under the FLSA (Revised 2019), Dept. of Labor Wage and Hour Division
State Minimum Wages: An Overview (2022), a Congressional Research Service Report
Wage Theft in the United States: A Critical Review (2020), Center for Women and Work, Rutgers University
Wisconsin: Guides from the Department of Workforce Development
Guide to Worker Misclassification
How to File a Wage Claim
Wage Payment and Collection Law
Books
Treatises and Guides on Labor and Employment Law
Employment Law in a Nutshell (2022)
Fair Labor Standards Act (2022)
Labor and Employment Law Handbook (2022)
Wage and Hour Collective and Class Litigation (2023)
Wage and Hour Compliance Handbook (2020)
Wage and Hour Laws: A State-by- State Survey (2016)
Recent Books on Wage and Hour Law, and Wage Theft
Laboring for Justice: The Fight Against Wage Theft in an American City (2023)
Wage and Hour Law: Guide to Methods and Analysis (2018)
Need Help? Have a Question?
Ask a librarian for help! We are trained to assist patrons with finding and using the best resources for them and their unique legal research topics. Law librarians are available at these Wisconsin libraries:
Endnotes
1 Payroll fraud is a type of wage theft in which employers wrongly categorize employees as independent contractors or compensate them in cash payments that are off-the-books. See the
Midwest Economic Policy Institutes’ report on wage theft and payroll fraud for more information.
2 For more information about the Joint Enforcement Task Force on Payroll Fraud and Worker Misclassification, including recent reports, see this
guide from the Wisconsin Department of Workforce Development.
3 In addition to the FLSA, the WHD may also investigate wage theft claims under other relevant federal labor laws. See the U.S. Department of Labor’s
Wage and Hour Division Factsheet 44: Visits to Employers for more information.
4 1
Employment in Wisconsin § 4-3 (2023).
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