Minimum Wage Theft Rises Sharply in California
Tuesday, May 14, 2024

Affected workers lose an average of $4,000 per year, totaling $2.3 to $4.6 billion annually in the Los Angeles, San Francisco, San Diego, and San Jose metro areas

PISCATAWAY, N.J. – Some California employers are illegally paying their workers below the minimum wage, resulting in lost income for those who can least afford it.

The Workplace Justice Lab@Rutgers University, a research center focused on strengthening labor standards enforcement in the U.S., analyzed federal data to estimate minimum wage violations in four of the state’s largest metropolitan areas for the years 2014 through 2023.

Their study, announced today, finds that violations more than doubled as the minimum wage climbed from $8 to $16 statewide and higher in some localities. The biggest year-over-year rise came between 2022 and 2023, a 56% increase in violations, affecting an estimated 960,000 to 1.5 million workers in the Los Angeles, San Francisco, San Diego, and San Jose metro areas.

On average, affected workers lost 20% of their paycheck, or about $4,000 annually if they were working full-time, each year between 2014 and 2023. Workers in the four metro areas lost a combined $2.3 to $4.6 billion in wages each year during the study period.

The findings come as Californians prepare to vote on a statewide ballot initiative that would dramatically limit the power of the Labor Commissioner’s Office and make it harder for workers to recoup lost wages.

“This is the time to be strengthening—not weakening—labor enforcement,” said Professor Janice Fine, Director of the Workplace Justice Lab@Rutgers University. “California is leading the way nationally in terms of strong state and local minimum wage laws, but our study shows that too many low-wage workers are not receiving the pay they are entitled to.”

Black and Latinx workers, women, noncitizens, young people (ages 16-24), seniors (65+), workers without a college degree, and part-time and hourly workers are more likely to experience minimum wage theft, suggesting discrimination as a central explanation.

“Private households” have the worst violation rate of any industry, affecting childcare workers, nannies, home health aides, and housecleaners—who are predominantly women, people of color, and immigrants. This industry is hit hardest in the Bay Area, where 57% of domestic workers experienced minimum wage violations over the 10-year study period.

“Domestic workers had extremely high estimated violation rates in every area we studied, but government enforcement agencies typically receive very few complains from them,” said Daniel Galvin, a Senior Scholar in the Workplace Justice Lab@Rutgers University and Professor at Northwestern University. “Without strong strategic enforcement practices like those afforded by the Private Attorneys General Act, these workers will be left to suffer silently.”

The “food services and drinking places” and “personal and laundry services” industries also have consistently high violation rates, affecting large numbers of fast food workers, servers, cooks, bartenders, hairstylists, manicurists, pedicurists, dry cleaning workers, and others.

Seven of the industries with the highest violation rates are projected to account for more than 1.2 million new jobs between 2020 and 2030, highlighting the urgency of addressing wage theft and protecting pathways for affected workers to recoup lost wages.

Naxhili Perez, a former worker at a Cheesecake Factory restaurant in San Diego, who along with her co-workers, recovered millions in stolen wages, said, “When we were working long nights cleaning the kitchen and the dining room of the restaurant, we knew the employer and the restaurant owner were taking advantage of us. It took a lot of courage to speak up and put the fear behind us, but we did and we won. The more workers know that they are not alone, and the more employers who skirt the law are exposed, the better for everyone so that we create a just and fair economy.”

Alexandra Suh, Co-President of the California Coalition for Worker Power, said, “California workers have fought to raise wages so their families can thrive, but too many employers blatantly disregard their workers’ right to fair wages. As business groups abuse the ballot to attack our labor enforcement tools, California workers will continue to fight for stronger and more innovative enforcement that leaves no workers behind.”

Megan Whelan Escobar, Deputy Director of the California Domestic Workers Coalition, said, “Domestic workers are the backbone of our economy. It is time we shift the culture to ensure that housecleaners, nannies, and homecare workers receive the rights they deserve. We need government agencies to take the egregious exploitation that is happening in this industry seriously and to invest in community-based strategies to make domestic worker rights a reality.”

Kate O'Hara, Executive Director of East Bay Alliance for a Sustainable Economy, said, “When employers in Oakland steal workers’ hard-earned wages, they are forcing workers and their families to make untenable choices among getting groceries, paying the rent, and buying necessities. Employers' theft of $400 a month has a huge impact on workers, especially people of color and immigrants, who are impacted the most by minimum wage violations. We all must stand together—workers, community, and local government—to hold employers accountable for paying full wages if we want safe, healthy, and racially just communities.”

Ken Jacobs, Co-Chair of the UC Berkeley Labor Center, who was not involved in the study, said, “This is very important research. We’ve known for a long time that wage theft is a serious problem in California, but the Rutgers study shows that it’s getting worse instead of better. At best, some employers are not keeping up with the rising minimum wage. At worst, they are intentionally underpaying their most vulnerable workers. Policymakers should pay attention to this because wage theft harms workers and local economies and puts compliant businesses at a disadvantage. And if it’s happening in big cities, it’s happening everywhere.”

Press Contact
Steve Flamisch
Rutgers School of Management and Labor Relations
848.252.9011 (cell)

About the Report
Wage Theft in California: Minimum Wage Violations, 2014-2023 was written by Daniel Galvin, Jake Barnes, Janice Fine, and Jenn Round.

About Us
The Rutgers School of Management and Labor Relations (SMLR) is the world’s leading source of expertise on managing and representing workers, designing effective organizations, and building strong employment relationships.

The Workplace Justice Lab@Rutgers University (wjl@RU) exists to address economic inequality through supporting and strengthening grassroots organizing and democratic governance. We do this through building dynamic communities of learning and practice, carrying out cutting edge research, and offering specialized training and in-depth one-on-one consultations.