But Ruckelshaus, of the National Employment Law Project, said more needs to be done. If current laws were better enforced, employers would be forced to hire more workers and the jobless rate would fall, she said.
Workers should not be forced to "shoulder the burden of a weak economy without extra pay," Ruckelshaus wrote in a recent column for her organization's blog that was also featured on the AFL-CIO website.
The home health and hospitality industries as well as construction and retail are "rife with wage-theft violations," Ruckelshaus said. The same industries are harbingers of an economic recovery, so employment law violations can stall the economy's ability to recover, she said.
Misclassifying workers as independent contractors can save employers up to 30percent on payroll costs, said Sally Dworak-Fisher, an attorney with the Public Justice Center who leads its Workplace Justice Project. The practice also costs the government in lost taxes.
Independent contractors are generally exempt from wage and labor laws. Employers who rely on such contractors can save on the cost of paying workers' compensation and contributing to unemployment insurance in addition to avoiding paying overtime and benefits.
"That's one prevalent form of modern day wage theft — just call everybody an LLC," Dworak-Fisher said.
Dworak-Fisher said businesses are also using staffing agencies and labor brokers to "lease" workers as independent contractors. The idea is that employers hire those workers for sustained periods without giving them a commitment by providing benefits and job security. It's a typical practice on construction sites and in hotels, she said.
"Workers will come to us and say, 'I was just rented.' It's pretty disturbing," Dworak-Fisher said. "We also see where employers will say, 'I can't afford to raise prices for my customers or my clients, so you need to just make this work.'"
Muriel Peters, 54, of Gaithersburg worked 119 hours every two weeks as a certified nursing assistant, bathing, feeding and cleaning up after an elderly woman in her home. She alleged that her employer, Esther Guy, owner of Early Healthcare Giver, misclassified her as an independent contractor rather than a full-time employee.
In a lawsuit, Peters alleged that Guy regularly failed to pay her on time and avoided paying her overtime because of the misclassification, costing her more than $1,400 a month. She also alleged that Guy inflated her earnings reported to the IRS to account for other off-the-books salaries, which caused her daughter to become ineligible for financial aid.
The Court of Special Appeals found that Peters was not exempt from earning overtime pay but did not rule on the tax allegation. A lower court is expected to determine this spring whether Peters is entitled to recover lost earnings, and if so, how much.
Guy denied the allegations in court filings. In the most recent filing, Kevin M. Tabe withdrew as her attorney and said Guy is "no longer in business." Guy did not respond to requests for comment.
Peters, who is represented by the Public Justice Center, said she feels as if many of the hours she worked were in vain. She has considered taking out a second mortgage to help pay her bills.
"Sometimes I don't sleep," Peters said.
Alexandra Rosenblatt, an attorney for the Public Justice Center, said rampant worker misclassification led to the General Assembly's passage of the Workplace Fraud Act in 2009, which established the enforcement unit at the Maryland Department of Labor, Licensing and Regulation. But the new unit was limited to looking into landscaping and construction companies.
Rosenblatt said advocates plan to lobby in Annapolis to expand the Workplace Fraud Act to include industries such as home health care workers. The group is also backing legislation to create a wage lien law that would freeze the sale of an employer's property in bankruptcy proceedings to enable workers to collect back pay.
Often, employers who commit violations hide assets or file for bankruptcy to avoid paying for work performed, Rosenblatt said. Or they will close the company and reopen under a new name, she said.
Fiona Ong, who co-chairs the employment issues committee for the Maryland Chamber of Commerce, said companies that violate wage laws put law-abiding businesses at a competitive disadvantage while making it harder for themselves to retain workers. She also said that some businesses inadvertently violate the law while trying to manage financial pressures in the recovering economy.
This economy "requires employers to do more with less, and I think they recognize that's happening; it's a real struggle for everyone," said Ong, an employment law attorney with Baltimore-based Shawe Rosenthal LLC. "Every employer I deal with wants to have a workforce that is stable and efficient but one that is loyal to the employer. You're not going to have that if you demand too much from your employee without compensating them for it."