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Terra Goodnight · August 17, 2018

Wage Theft in Ohio Costs Workers $600 Million, But State Offers Little Help

Recent studies show Ohio is among the worst states when it comes to the impact of wage theft, or the practice of paying workers for fewer hours than they worked. When you look at policy decisions at the state level, it’s not hard to see why. The state has all but abandoned its role in enforcing the state’s laws to ensure workers are paid for the hours they work.

Ohio’s Poor Record for Workers

Ohio uses a complaint-driven model of enforcement in which workers must closely monitor their paycheck to ensure they were paid for all their hours, were not forced to work off the clock or denied mandatory breaks, and were paid the overtime for which they are eligible. Enforcement agents respond to their complaints to assess their merits and assess a judgement. Workers who are unaware of their rights or afraid to challenge their employers are unlikely to make a claim, meaning the state is only looking at a fraction of the overall wage theft that takes place. One recent study found that Ohio ranks 2nd among the 10 largest states for minimum wage violations, and estimates that overall, Ohio workers collectively lose $600 million each year in shorted paychecks due to wage theft. One reason cited by experts for the high rate of wage theft is that, in the past decade, the Wage and Hour Enforcement unit at the Department of Commerce — responsible for enforcement of wage and hour laws — has been gutted; its already-meager staff was reduced from 12 to just 6. That’s six individuals who are responsible for enforcement of all wage and hour violations in a state in which over 5.5 million people work outside the home for pay. By comparison, Idaho, a state with 1/10th Ohio’s population has five inspectors. The results are about as poor as you might expect. According to a Cleveland Plain Dealer investigation, just 31 percent of workers who file complaints with the state see them approved by the department. And, even among those lucky enough to have their claims approved, only half of those recover the back pay they were denied. Responsibility for collection is shared by the Department of Commerce and the Office of the Attorney General.

Role of Policymakers

It’s clear that enforcement policy is at least partially to blame. In 2009, a similar review by Policy Matters Ohio found the state resolved cases in favor of workers nearly 65 percent of the time. Since then, the enforcement workforce has been cut in half. Another factor is a change in policy to waive penalties for employers the first time they violate the law. Researchers at Northwestern University found the number of wage theft cases in Ohio rose almost immediately after that change, signaling that penalties are an effective deterrent. Lawmakers have not helped. While they have consistently refused to add funding, improve oversight, or extend overtime and minimum wage protections to more workers, in 2017, the Ohio House voted to adopt a measure (HB494) that would exempt certain franchise workers from existing wage and hour protections. It’s worth noting that the 2009 study and the Plain Dealer review earlier this year both found that food service is by far the biggest offender, so exempting franchisees from wage and hour protections would only make the problem worse.

Looking forward

The next Governor can play a big role in ensuring workers get to take home more of what they earn in their paychecks by giving the office of wage and hour enforcement a higher profile, bigger budget and more authority.
Addressing wage theft is just one way to better make work pay for working Ohioans. Read our blog (“10 Ways Ohio’s Leaders Could Increase Take Home Pay for All Ohioans“) for other ideas and check our Winning Economic Agenda for Ohio’s Working Families to review all the ideas we’ve proposed, along with our friends at Policy Matters Ohio, for Ohio’s next Governor to consider.

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