California Wage Theft Victims Miss Out on Millions in Collected Funds

Federal labor enforcement officials recover millions of dollars each year from employers who break minimum wage or overtime pay laws, but a significant percentage never makes it to workers who are owed.

More than $166 million was unclaimed by nearly 200,000 wage theft victims over the last three years, according to the U.S. Department of Labor. If workers don’t claim that money within three years, it’s sent to the U.S. Treasury.

Many don’t know they are entitled to compensation. More than 15,000 employees with money waiting for them worked for businesses in California, one of the top states with unclaimed wages.

“It’s frustrating and sad all around,” said Yvonne Medrano, an attorney with Bet Tzedek Legal Services, a Los Angeles nonprofit that represents undocumented immigrants in wage theft cases. “It’s workers’ hard-earned money and yet it’s not getting to where it needs to be, which is into the workers’ pockets.”

Labor officials acknowledged that the department is more efficient at recovering wages from about nine in 10 employers through investigations than it is in getting the owed wages to the workers whose rights were violated.

Investigations often uncover past abuses in targeted low-wage industries that rely heavily on a transient or immigrant workforce, such as restaurants, agriculture and construction. By the time cases are resolved, people entitled to back pay may have moved on to other jobs or changed home addresses and phone numbers, making it hard to notify them of the resolution.

Another hurdle to receiving remuneration is that many undocumented immigrants may recoil from filing ID verification documents with a federal agency to get a check because they fear that it could lead to deportation.

Most of the $660 million in back pay the labor department has recovered from employers from fiscal year 2021 through 2023 was distributed to workers, according to a high-ranking official with the wage and hour division, which investigates alleged violations. The official estimated that, potentially, as much as one-fifth of those funds don’t reach workers.

The department could not immediately provide how much money was transferred to the U.S. Treasury in recent years, a Labor Department spokesperson said. Alberto Raymond, a district director with the wage and hour division in San Francisco, said the agency pursues several avenues to try to get wage theft victims relief.

“We want workers to be paid. They are due that money, and we will work very, very, very hard to get them paid,” said Raymond, an investigator with the labor department for 27 years.

A handful of dedicated staff throughout the country combs public databases to find impacted workers, confirm their identities and disburse their wages.

The department distributed about $27 million to nearly 4,000 workers through its Workers Owed Wages program in fiscal year 2023. More than 1,600 people claimed $9 million through the program in the previous fiscal year. Community organizations or foreign government authorities, such as Mexican Consulates in the United States, also help find people.

Dozens of migrant vineyard workers, who were underpaid and retaliated against by a labor contractor in California, were sent checks after the Mexican Consulate in San Francisco located them, according to a labor department spokesperson. Some of the 55 farmworkers were still in the U.S., but others had returned to remote, rural towns in Mexico, said Arturo Zaldivar, the Consulate staffer who tracked the workers. Finding them took weeks, Zaldivar said.

“They weren’t expecting that money. They thought they’d lost it forever,” he said in Spanish, adding that the farmworkers told him the money would cover food and rent for weeks or even months. “I’ve had contact with many workers in Mexico and supporting them in this way is very encouraging.”

Zaldivar said he is scouring social media accounts and calling current and former employees of a business to find dozens of additional impacted workers. Once he gets in touch with one, that person can help find former co-workers who can also claim wages, he said.

“Our compatriots trust us, the Consulate,” he said. “If you say wage and hour division, they are like, ‘What’s that?’”

Historically, labor enforcement agencies were hesitant to collaborate with community groups out of fear that they’d appear biased, though that has been changing, according to advocates and academics who study wage theft.

To increase remuneration, the labor department should partner with more churches, immigrant rights organizations and others who can knock on doors and help find workers because they are trusted messengers, Medrano said.

“The disconnect and the lack of local relationships is clear in moments like this,” she said, referring to the $166 million in unclaimed wages. “I see the DOL moving towards a more community-oriented role, but we’re not there yet. And I think this is very much a symptom of that issue.”

Still, a top priority of the department is not distributing all uncollected wages but increasing businesses’ compliance with the rules, said Paul DeCamp, an attorney who ran the wage and hour division during the George W. Bush administration.

“Honestly, I think the bigger priority for the department is stopping the violations and getting the back wages disgorged” from employers, said DeCamp, who represents and advises businesses at Epstein Becker Green, a law firm. “And if we can get the wages into the hands of the workers, all the better.”

Department officials said there are roughly 700 wage and hour investigators nationwide, with just a handful of staffers dedicated to getting money into the hands of the workers.

In California, workers don’t have a time limit to claim wages recovered by the state’s labor enforcement agency, the California Labor Commissioner, according to a spokesperson who said California’s Unpaid Wage Fund had a balance of $18.3 million as of Aug. 26.

The state also takes money from that fund for other expenditures. From fiscal years 2020 through 2022, nearly $17 million due to workers who weren’t found was transferred to the state’s general fund, according to the Department of Finance.

Know someone who might need to claim owed wages? Workers should call 877-552-9832 for help in Spanish or search the Workers Owed Wages website to find out if they are due money and apply for compensation.