The Paycheck White-Collar Crime · Crime Lab 10 · Midwestern State University

The largest property crime in the United States, by dollars taken, is committed by employers against their own workers, and it leaves a paper trail in every pay stub. Cooper and Kroeger estimated that in the ten largest states alone, 2.4 million workers lost $8 billion a year to minimum wage violations, about $3,300 each, a quarter of their pay, and that the national figure exceeds $15 billion, before counting unpaid overtime, off-the-clock work, stolen tips, and illegal deductions. The federal agency that enforces the wage law had 611 investigators in May 2025, one for every 278,000 workers. This lab makes you the investigator. You will audit eight pay records against the Fair Labor Standards Act and Texas law and compute what each worker is owed, see how much of the theft is built into ordinary payroll design, look at who gets stolen from and how much the enforcement system recovers, and search the public record for employers in your own industry.

What the Fair Labor Standards Act requires

The FLSA of 1938 sets a federal floor. Texas has no higher minimum wage and no state overtime law, so for Texas workers the federal rules are the rules, enforced by the Wage and Hour Division of the U.S. Department of Labor and, for unpaid wages generally, by the Texas Workforce Commission under the Texas Payday Law. You will need all of the following on the next tab.

Minimum wage: $7.25 an hour
For every hour worked, paid "free and clear." Deductions for the employer's benefit (uniforms, tools, cash register shortages, breakage) cannot bring the pay for the week below $7.25 an hour. 29 U.S.C. 206; 29 C.F.R. 531.35.
Overtime: one and one-half times the regular rate after 40 hours
The regular rate is all pay for the week divided by all hours worked, including nondiscretionary bonuses, shift differentials, and commissions. A salary does not exempt anyone by itself. 29 U.S.C. 207; 29 C.F.R. 778.
Hours worked: all time the employer "suffers or permits"
Work before clocking in, work through a meal break, travel between job sites during the day, and required waiting count. A meal period can be unpaid only if it is at least about 30 minutes and the worker is completely relieved of duty. 29 C.F.R. 785.11, 785.19, 785.38.
Tip credit: cash wage of $2.13 if tips make up the rest
The employer may count up to $5.12 an hour in tips toward the minimum wage, but only if the worker's cash wage plus tips reach $7.25 for every hour in the week; if not, the employer pays the difference. Overtime for a tipped worker is computed on the full $7.25, not on $2.13. Managers cannot take from a tip pool. 29 U.S.C. 203(m)(2).
Exemptions: salary and duties, both
The executive, administrative, and professional exemptions require a salary of at least $684 a week ($35,568 a year) and duties that meet the test (for an executive: managing, directing two or more employees, authority over hiring and firing). The 2024 rule that would have raised the level to $1,128 was vacated by a federal court in Texas on November 15, 2024, and the Department formally restored the $684 level on May 14, 2026. A title is not a duty. 29 U.S.C. 213(a)(1); 29 C.F.R. 541.
Employee or contractor: economic reality
A worker is an employee if, as a matter of economic reality, they depend on the business rather than being in business for themselves: who controls the work, whether the worker can profit or lose by their own initiative and investment, the permanence of the relationship, whether the work is integral to the business. Calling someone a contractor on a form settles nothing. Since May 1, 2025, the Division has applied its older guidance (Fact Sheet 13) rather than the 2024 rule, and proposed a replacement rule in February 2026.
Remedies
Back wages for two years, three if the violation was willful (29 U.S.C. 255); an equal amount in liquidated damages, so the worker recovers double (29 U.S.C. 216(b)); civil money penalties for repeated or willful violations of up to $2,515 per violation at the 2025 level (29 U.S.C. 216(e)); criminal prosecution for willful violations, a misdemeanor, almost never used. Retaliation against a worker who complains is itself a violation.
Texas Payday Law
An employer must pay all wages due on regular paydays; a discharged worker must be paid within six days, and a worker who quits by the next regular payday. The Texas Workforce Commission takes wage claims for up to 180 days after the wages were due and can order payment and assess a penalty. Texas Labor Code ch. 61.

Sources: 29 U.S.C. 203, 206, 207, 213, 216, 255; 29 C.F.R. parts 531, 541, 778, 785; U.S. Department of Labor, Wage and Hour Division, Fact Sheets 13, 15, 16, 17A, 22, 23, and 56A; technical amendment restoring the 2019 salary levels, May 14, 2026 (as summarized by Littler); Field Assistance Bulletin 2025-1 on independent contractor enforcement (May 1, 2025); Texas Labor Code ch. 61 and Texas Workforce Commission, Texas Payday Law guidance.

Eight workers, one week each

The records below are constructed for the lab; the practices in them are the ones the Wage and Hour Division finds most often. For each worker, read the record, decide whether the law was broken, and compute the dollars owed for the week under federal law (and Texas law where noted), before any doubling. Enter your figure and check it. The reference shows the arithmetic and the rule. Your entries are logged for your submission.

0 of 8 checked.

$0
owed to eight workers for one week, before liquidated damages
$0
for a year, if every week looked like this one
$0
for two years with liquidated damages, the ordinary recovery
0 of 8
of your figures within $2 of the reference

What the eight have in common. None of them involves an employer stealing a paycheck. Every one is a design: a cash wage set at the tip-credit floor without checking whether tips fill the gap; a bonus left out of the regular rate; a title and a salary set just under the line; a schedule that starts before the clock; a deduction policy; an automatic meal deduction; a 1099 form; a rule about returning uniforms. The record on which the worker would have to prove the theft is the employer's record, and in several of the eight it is designed to show nothing. That is why the readings treat wage theft as an organizational practice rather than a series of individual acts, and why the enforcement system on the fourth tab recovers so small a share of it.

Cooper and Kroeger, 2017

The Economic Policy Institute estimate uses the Current Population Survey for 2013 to 2015: workers whose reported weekly earnings and hours put them below the minimum wage that applied to them, in the ten most populous states, which hold about half the U.S. workforce. It counts minimum wage violations only. Guess the Texas figure before you see it.

In Texas, what share of low-wage workers (those eligible for the minimum wage and earning near it) were paid below the minimum wage in a given week?

10.8%
of Texas low-wage workers paid below the minimum wage in a week
265,000
Texas workers affected
$1.165B
taken from Texas workers a year
$4,400
per Texas victim a year, 31.7 percent of their earnings
Young workers, 16 to 24
9.2%
Non-citizens
6.5%
Women
4.9%
Native-born citizens
3.8%
Men
3.5%

Across the ten states: 2.4 million workers, $8 billion a year, $3,300 each, 23.9 percent of their pay; 17 percent of low-wage workers affected; a poverty rate among victims of 21.4 percent against 6.9 percent for all minimum-wage-eligible workers; a third receiving public assistance. Florida, with no state enforcement body, had the highest violation rate. The national extrapolation, more than $15 billion a year for minimum wage violations alone, is the figure usually quoted; Barnes, Fine, Galvin, and colleagues put it at more than $13 billion for at least 4 million workers in 2025. The survey cannot see overtime, off-the-clock time, tips, or deductions, so the eight records on the previous tab would mostly be invisible to it.

Source: Cooper, D., and Kroeger, T. (2017). Employers Steal Billions from Workers' Paychecks Each Year. Economic Policy Institute, May 10, 2017 (summary and key findings, state table).

Petrescu-Prahova and Spiller: who gets stolen from

The 2008 Unregulated Work Survey asked 4,387 front-line workers in low-wage industries in Chicago, Los Angeles, and New York about the previous week, using a network sampling method built to reach workers ordinary surveys miss (p. 376). Petrescu-Prahova and Spiller use it to ask whether women are stolen from more than men, and why. Guess before you see Table 1.

Among these low-wage workers, what share had a minimum wage violation in the previous week?

Minimum wage violation last week, women
31.3%
Minimum wage violation last week, men
20.4%
Overtime violation, of those who worked over 40 hours, women
83.3%
Overtime violation, of those who worked over 40 hours, men
72.8%

26.8 percent overall, 31.3 percent of women and 20.4 percent of men (Table 1, p. 380). Among the workers who had a violation, women lost $79 a week and men $58, and because women earned less, the theft was a larger share of their pay: 22 percent against 14 percent, or $4,120 a year against $3,037 at full-time, full-year work (Table 2, p. 381). The gap is not spread evenly. Among U.S.-born workers there is no significant gender difference; the gap is concentrated among the foreign-born and is largest among undocumented workers (pp. 381-382). And when the authors add job and employer characteristics, occupation, and worker characteristics to the model, the direct gender-by-status effect falls by 83 percent, with job and employer characteristics doing more of the work than education or other worker traits (Table 4, p. 390). Their reading: "the stronger determinants of workplace violations are on the demand side" (p. 391). Where a woman works, and what her employer has set up, predicts whether she is stolen from better than who she is.

Source: Petrescu-Prahova, M., and Spiller, M. W. (2016). Women's wage theft: Explaining gender differences in violations of wage and hour laws. Work and Occupations, 43(4), 371-400, at the pages cited.

Six hundred and eleven investigators

Barnes, Fine, Galvin, Round, and Shepherd counted the Wage and Hour Division's investigators from agency records and put the May 14, 2025 figure at 611, the lowest since 1973, down from 674 at the end of the previous administration and from a peak of 1,232 in 1978, when the country had a third as many workers and a quarter as many establishments. Guess the recovery before you see it.

Against an estimated $13 billion to $15 billion a year taken in minimum wage violations alone, how much did the Wage and Hour Division recover in back wages in fiscal year 2025?

611
investigators, May 2025; one per 278,000 workers and per 20,000 establishments
$259M
back wages in FY2025, plus $58.7 million in civil money penalties
18%
of FY2025 recoveries came from violations found in FY2025; the rest were older cases
≈ 2%
of the low estimate of minimum wage theft, recovered

Read the ratio. $259 million against $13 billion is about two cents on the dollar, and that is for the one kind of theft the estimate can see. The recovery was up from $202 million in FY2024 while the number of cases concluded fell, which means larger cases and fewer of them. The report's other comparison: the 2024 federal budget for Wage and Hour enforcement was $315 million, and for immigration enforcement $4.5 billion, about fifteen times more, in a labor market where the workers most stolen from are the ones with the most reason not to complain. Four states have no federal investigator at all; in Maine, Maryland, and Washington there is one for every 500,000 workers. Galvin's article, your other Meeting A reading, shows that where the state fills the gap, with its own penalties, its own investigators, and worker organizations that bring cases, compliance rises; where it does not, the federal floor is the ceiling.

Sources: Barnes, J., Fine, J., Galvin, D. J., Round, J., and Shepherd, H. (2025). Labor investigator staffing hits 52-year low, raising the risk of wage theft. Workplace Justice Lab, Rutgers School of Management and Labor Relations, and Northwestern University, May 2025. U.S. Department of Labor, Wage and Hour Division, fiscal year 2025 enforcement data as reported by Bloomberg Law, January 8, 2026 ($259 million back wages, $58.7 million penalties; FY2024: $202 million and $35.9 million). Galvin, D. J. (2016). Deterring wage theft. Perspectives on Politics, 14(2), 324-350.

Search the record yourself

Three public databases show what the enforcement system found. Use at least one and record what you find below. The Department of Labor's Workers Owed Wages search (webapps.dol.gov/wow) lists employers from whom the Division collected back wages it could not deliver, searchable by employer name and state. Good Jobs First's Violation Tracker (violationtracker.goodjobsfirst.org) lists wage and hour penalties by company, industry, and state. The Department's enforcement data site (enforcedata.dol.gov) has the full Wage and Hour compliance-action dataset, including findings by employer, city, and industry code, for anyone willing to download it. Pick the industry you work in or have worked in, and the county or city you live in.

Database used
Industry and place searched
Employers found with findings or back wages
Largest single finding (employer, amount, year)
Kind of violation most common in what you found

Lab 10 response sheet

Answer the four questions below in complete sentences. Then use the button at the bottom to assemble your answers, your audit figures, and your search into one block of text, and paste that text into the Lab 10 submission in D2L before you leave class. Your answers stay on this page and are not sent anywhere until you paste them.

Your name
1. Your audit. Which of the eight records was hardest to compute, and why: the rule, the arithmetic, or a missing fact? Say what the worker would need to prove the underpayment and who holds that record.
Three to five sentences. Use your figures.
2. Petrescu-Prahova and Spiller find the gender gap in wage theft concentrated among undocumented workers and mostly explained by job and employer characteristics rather than by the workers themselves. Say what that implies about where an enforcement agency with 611 investigators should look, and what it implies about the argument that workers who are stolen from should simply complain.
Three to five sentences. Cite the article by page.
3. Wage theft takes more than all robberies, burglaries, and larcenies reported to police, and its remedy is usually the wages plus an equal amount, with no one charged. Using Lab 8's price of a death and Lab 1's definitions, say why the law treats these two kinds of taking differently and whether the difference is defensible.
Four to six sentences.
4. Your case project. Were workers among the people harmed in your case (as employees of the company, as contractors, as customers' employees)? If so, say how the harm to them was counted and remedied compared to the harm to investors or the government. If not, say what your search on the fourth tab found for your case's company or industry.
Three to five sentences. This is material for Part 2 and Part 4.

About the records and the figures

The eight pay records are constructed for the lab from the violation types the Wage and Hour Division describes in its fact sheets and finds most often; no employer or worker is real. The legal rules are as stated in the statutes and regulations cited on the first tab, at the levels in effect in September 2026. Estimates of wage theft and of enforcement capacity are from the sources cited on the third and fourth tabs; the property crime comparison in question 3 rests on the FBI's Uniform Crime Reporting estimates of losses to robbery, burglary, and larceny-theft, which came to roughly $9 billion to $10 billion a year in the last years of full reporting (Crime in the United States, 2019), and on Cooper and Kroeger's $15 billion estimate for minimum wage violations alone.