Minimum Wage Violations and Payday Wage Theft in Texas

Most workers in Texas are entitled to a minimum wage—last raised to $7.25 in July 2009—either through state or federal law. While inflation has continued to decrease the real value of the minimum in the years since (with $7.25 today worth just $5.25 in 2009 dollars), this report finds that thousands of Texans are illegally paid below the minimum wage each year. To estimate the incidence of minimum wage violations in Texas between 2009 and 2022, this memo uses Current Population Survey (CPS) Outgoing Rotation Group data, widely considered the best publicly available survey data on hours and earnings. CPS data enable us to identify minimum wage violations for all covered, nonexempt workers in Texas. Estimates should be considered conservative underestimates due to data limitations and methods used. Also crucial to Texas’ labor standards landscape is the Texas Payday Law, giving workers key wage protections since its passage in 1989. In order to understand the Texas Workforce Commission (TWC)’s enforcement of wage theft provisions under the Texas Payday Law, the workplace justice lab@RU analyzed 136,420 claims filed from July 2009 to December 2020. We find that wage theft is persistent and widespread in Texas, and that TWC is struggling to keep up with both claims from workers and collections from employers.

Key findings include:

1. Over 3 million workers are estimated to have suffered a minimum wage violation in Texas between 2009 and 2022 (3% of all workers, 11% of low-wage workers).
2. Minimum wage violations cost individual workers in Texas nearly $4,000 per year on average and over $12 billion in aggregate over the last fourteen years.
3. Minimum wage violations caused victims’ income to fall below the national poverty line every year between 2009 and 2022.
4. Minimum wage violations disproportionately harm immigrants, women, Latinx, and Asian workers; younger workers (under 25) and older workers (over 65); those with less education; unmarried workers; workers with children; non-unionized workers; those working in the service sector; part-time workers; and workers not paid by the hour (flat daily/weekly payments, project-based pay, piece-rates).
5. Significant variation also exists across industries: the highest-violation industries were Private Households (maids, housecleaners, child care workers), Food Services and Drinking Places (waiters, waitresses, and cooks), and Personal and Laundry Services (hairdressers, cosmetologists, and personal appearance workers).
6. Across all industries, the highest violation rates were found in the following occupations: waiters and waitresses; teacher assistants; maids and housekeeping cleaners; child care workers; grounds and maintenance workers; personal and home care aides; cooks; and janitors and building cleaners.
7. Violation rates vary geographically across the state of Texas: four of the five highest-violation metropolitan statistical areas sit along the Mexican border: Laredo, McAllen-EdinburgMission, Brownsville-Harlingen, and El Paso (Victoria is the fifth).

In regard to the enforcement of the Texas Payday Law, we find that:

1. While average wages ordered per claim continued to rise from $1,613 in 2010 to $2,249 in 2020, the average amount paid during the same period declined slightly from $435 to $406.
2. While nearly $99 million in wages were ordered across more than 57,000 cases from 2010 to 2020, over $78 million—or 80% of wages ordered—has yet to be received by workers.
3. More than 39,000 claimants have not seen any portion of their ordered wages, yet nearly 17,000 of these claims are marked as being “closed” and “paid in full.”
4. TWC’s database of active administrative liens shows over 10,000 open liens, with delinquency amounts totaling a potential $113 million.