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02/5/2016 | Combating Wage Theft, Improving Job Quality, Restoring Community Wealth

Combatting Wage Theft with the Maryland Paystub Transparency Act of 2016

Wage theft, or the illegal nonpayment of earned wages and benefits, affects millions of workers across the country and amounts to an estimated $50 billion in lost wages annually. The Center for Popular Democracy estimates that in Maryland alone, 580,000 workers are cheated out of a cumulative $875 million in gross wages each year.

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    Executive Summary

    Wage theft, or the illegal nonpayment of earned wages and bene ts, a ects millions of workers across the country and amounts to an estimated $50 billion in lost wages annually.1 The Center for Popular Democracy estimates that in Maryland alone, 580,000 workers are cheated out of a cumulative $875 million in gross wages each year.2 Wage theft is pervasive in numerous sectors of the economy and a ects workers across the income spectrum, though it hurts low-wage workers most acutely.3

    In states with weak paystub reporting requirements, unscrupulous employers perpetrate wage theft by masking illegal conduct on paystubs. Maryland’s paystub requirements are exceptionally weak compared to other states, requiring employers to report only total gross pay and deductions.4 As a result of Maryland’s outdated paystub requirements, some employers commit wage theft with impunity, creating an illegal competitive advantage and an uneven playing eld for law-abiding competitors.

    Maryland’s legislature now has the opportunity to take a simple yet e ective step to reduce wage theft by strengthening paycheck transparency. The Maryland Paystub Transparency Act of 2016 requires employers to include crucial information on the paystubs they distribute to employees: pay rate (hourly, overtime, atten- dance, bonus, and/or piece rate), allowances, deductions, hours worked, and basic identifying information for the employer. Since employers are already required to maintain such information, simply sharing it with their employees requires a minimal shift in practice, striking a signi cant blow against wage theft at virtually no cost. The Maryland Paystub Transparency Act of 2016 will help employees understand whether they have been paid correctly, deter deceptive payroll practices, and make employers more accountable to workers.