States Stand Up for Workers By Passing Wage Theft Protection Laws

This week, New York Governor David Paterson signed the Wage Theft Protection Act [1] into law, ending a long grassroots and legislative campaign to address the myriad ways workers are routinely cheated out of a fair day's pay by their employers, all in direct conflict with federal and state wage and hour laws.  The problem is widespread, and of colossal proportions in many low-wage industries, including the garment, retail, and service sectors.  A comprehensive study [2] of New York City low-wage workers conducted by the National Employment Law Project found [3]21% of workers were paid less than the state's minimum wage; 77% did not receive mandatory time-and-a-half pay when they put in overtime work; and 69% didn't receive any extra pay they were promised for coming in to work early or staying late after their shift.  Unscrupulous New York City employers cheat workers out of $18.4 million a week - adding up to nearly $1 billion in annual lost wages in New York City alone.  In fact, wage theft is a crime that affects the bottom line for hard-working individuals and their families - as well as the state budget and all taxpayers - at a time when states are confronting historic budget deficits.

The new law requires employers to pay workers their due in back pay, interest, and lawyers' fees, in addition to damages equal to the total back pay owed.  The law also increases protection for workers who speak up against exploitative employers and creates new tools for the State Department of Labor to investigate employers and force them to pay their workers. 

The Wage Theft Prevention Act was enacted after a long and sustained campaign led by Make the Road New York [4], a grassroots immigrant organization; the Retail Action Project [5], a group that organizes retail workers; the Retail, Wholesale and Department Store [6]Union [6]United [7] Food and Commercial Workers [7] (RWDSU), and the (UFCW).  New York now joins Illinois [8], which passed a broad wage theft law earlier this year.  Other wage theft victories in 2010 include:

• Maryland (SB 694 [9]) – Levies penalties of triple damages for unpaid overtime wages.
• Miami-Dade County, Florida (File No. 093228 [10]) – Establishes triple damages for violations, creates an administrative process for processing claims, provides for enforcement through the County Attorney’s office.
• Nebraska (LB 563 [11]) – Employee Classification Act.  Protects construction workers from being misclassified as independent contractors, provides funding for enforcement and creates a hotline for reporting claims, levies elevated fines for repeat offenses, provides for collection of unpaid taxes and workers’ compensation, and bans contractors who violate the law while doing business with the state  from future public contracts.
• Washington State (HB 3145 [12]) – Increases penalties and requires repeat offenders to provide wage bonds to the state Department of Labor.

Campaigns [13] are also underway in several states and localities, including Little Rock, Arkansas and throughout Florida.  Spurred by the prospect of recouping critical payroll tax revenue as they seek to address budget shortfalls, municipal and state governments are increasingly pursuing local wage theft ordinances and state-level laws.  These proposals are often relatively inexpensive for state governments, and generally focus on using existing state labor agencies and mechanisms to increase and enforce penalties imposed on employers who commit wage theft as well as allow workers to sue their employers for back pay and other workplace violations. Increasing enforcement and penalties against employers who defraud workers and by extensiion the government effectively removes any incentive for businesses to not play by the rules and  pay their workers in states where fines were previously (and perversely) extremely low. 

Helpful messaging on this issue includes:

• Wage enforcement against unscrupulous employers is a basic way to put money in the pockets of working families who are struggling in this difficult economy.
• Wage Enforcement Can Be a Revenue Raiser for Strapped State Budgets
• Wage Law Enforcement Levels the Playing Field for Honest Employers  - this is especially important for companies bidding on public contracts that use the public's tax dollars.  

As states seek vehicles and opportunities to protect workers' rights and economic development vehicles to improve the current economic climate, pursuing wage theft legislation will likely continue to be a critical tool.