McDonald’s wage theft suits: Just the tip of the iceberg
FORTUNE — McDonald’s workers may be getting paid even less than we thought.
McDonald’s MCD workers claimed in six separate lawsuits filed in three states on Thursday that the company and some of its franchisees systematically shorted them pay.
A lawsuit in Michigan against two Detroit-area franchise owners says that workers showed up on time but were forced to wait to punch in until more customers arrived. In California, workers claim that the restaurants shaved hours from their time sheets and didn’t give them required meal periods or rest breaks. And in New York, McDonald’s employees contend that they were not reimbursed for the cost of cleaning their uniforms.
McDonald’s has said that it’s reviewing the allegations and is committed — along with its franchisees — to taking any necessary actions as they apply to the company’s respective organizations.
Sharnell Grandberry, a McDonald’s worker in Detroit and a plaintiff in the Michigan suit said in a statement, “It is time for McDonald’s to stop skirting the law to pad profits. We need to get paid for the hours we work.”
But when pointing at alleged culprits of wage theft, the finger ought to extend beyond McDonald’s.
It’s hard to get a firm handle on just how often wage theft occurs, but there’s no doubt it’s widespread. Wage theft — defined as employers cheating their workers out of rightfully earned minimum wage or overtime pay — falls under the Department of Labor’s wage and hour division. The department’s most recent statistics on the number of wage and hour complaints filed are from 2008, and they show a decrease in the number of claims, down to about 24,000 in fiscal year 2008 from 29,000 in 2001. (The DOL did not respond to a request for updated statistics.)
A 2011 study from Columbia Law School found a general increase of state-based complaints from 2005 to 2006 and from 2008 to 2009 and then a decrease until the time the study was published in April 2011. The study surmised that complaints increased as economic conditions took a turn for the worse and employers were either unable or unwilling to pay workers but were not yet prepared to terminate them. As the recession deepened, high unemployment could have discouraged workers from filing complaints out of fear of losing their job.
But just because wage theft complaints have decreased doesn’t mean it’s not happening.
A more recent survey points to wage theft’s prevalence, especially among fast-food workers. A report by Anzalone Research Group published by Fast Food Forward, the campaign behind the fast food strikes in New York, found that of the 500 fast food workers it surveyed in New York in April 2013, 84% said that their employer had committed at least one form of wage theft in the past year. Two-thirds said their employer had perpetrated two forms of wage theft, and nearly half said they’d suffered wage theft in three different ways.
“Wage theft actually happens across sectors, but especially in low-wage jobs — in, retail, fast food, the service sector, like home health care,” says Tsedeye Gebreselassie, an attorney with the National Employment Law Project. “These jobs are by their nature pretty precarious,” she says. “They’re very low wage, and workers are especially fearful of speaking up because literally if you lose the job you have no savings to rely on.”
Wage theft persists, in part, because there are simply too many companies for the government to monitor. “There are about 1,000 investigators tasked with covering about 130 million workers under the Fair Labor Standards Act,” Gebreselassie says. “There’s just no way they can go out and investigate every workplace.”
Enforcement is difficult on the private level too. If workers end up filing and winning a wage theft case, they stand to gain their back pay, plus liquidated damages, which is two times the back pay amount. They also receive attorneys fees. The back wages and damages add up to a lot for the individual worker; a 2008 study by NELP estimated that an employee working full-time for a full year lost about $2,600 annually to wage theft, out of total earnings of $17,616. But in the grand scope of litigation that’s not a huge sum, so not very many private lawyers — who only get paid if they win — are jumping to take such cases.
Though the allegations against McDonald’s are concerning, the lawsuits could incite positive change.
“McDonald’s is one of the country’s biggest employers with more than 700,000 workers,” Gebreselassie says. And with that many workers comes a lot of sway. “If McDonald’s changes its practices, that could have a ripple effect across low-wage industries.”