The employer perspective on wage law non‐compliance: State of the field and a framework for new understanding

Abstract

This article offers the first systematic review of empirical research addressing the question of why employers underpay their employees, from the perspective of employers themselves – a perspective largely missing from scholarly examination of wage law non‐compliance. We conducted a comprehensive search of the vast peer‐reviewed literature on the topic, identifying studies which collected and analyzed primary data from employers regarding why they breached wage laws. A review of these studies identified four broad types of explanation offered by employers relating to financial viability, perceived consequences of non‐compliance, ethical and normative rationalization, and the role of external actors. We propose a research agenda and theoretical framework based on the key empirical, methodological and theoretical gaps which remain in understanding why employers underpay their employees, and discuss how this agenda can inform policy interventions designed to ameliorate the problem.