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PSN on December 14, 2009 - 2:08pm
Promoting Wage Law Enforcement Policies in 2010
Monday, December 14, 2009
Promoting Wage Law Enforcement Policies in 2010
The problem of wage law violations and flat-out theft of wages from employees has become one of the most endemic crime waves suffered by Americans. Workers suffer silently as their already meager wages are reduced. Honest employers suffer as they lose out to competition willing to violate the law. And state budgets lose out as employers fail to pay the taxes they would have owed if they followed the law.
Progressive States Network will be working with state leaders around the country to promote policies to improve enforcement of minimum wage, overtime and related wage laws in the states. This Dispatch will highlight the chronic wage violations in the workplace, model wage law enforcement language for states to promote, messaging to support those campaigns, and specific ways such an approach has the added benefit of undercutting anti-immigrant attacks in the states.
Wage Law Violations are Endemic for the Low-Wage Workforce
This fall, one of the most comprehensive reports on these violations, Broken
Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's
Cities, was published jointly by the Center for Urban Economic Development,
the National Employment Law Project and the U.C.L.A. Institute for Research on
Labor and Employment. In their survey of 4,387 low-wage workers in Chicago, Los
Angeles and New York City, the authors documented how chronic these violations
This lack of enforcement follows decades of neglect by the federal government. In 2009, there was only one federal investigator for every 170,000 workers, a radical decrease from one investigator for every 9,000 workers in 1941. In fact, this year the Government Accountability Office (GAO) conducted a study finding that wage theft has not been properly investigated by the Department of Labor's Wage and Hour division for years.
Promoting Model Wage Law Policies
To address this under-enforcement problem, a number of states have promoted good enforcement policies in recent years. The following model language primarily combines provisions from Iowa's SF 2416 (approved by its Senate in 2008), Maryland's Workplace Fraud Act of 2009 and California's Labor Code Private Attorneys General Act. PSN has worked especially closely with the National Employment Law Project over the years in developing and supporting state wage law enforcement language in the states.
Key Provisions in the Model Language include:
Create Expansive Definition of "Employer": A chronic problem in enforcing wage laws is legal structuring of employment relationships through independent contracting or through shell subcontractors. This allows real control and the decision to violate the law to be made by companies that do not formally employ a person. The key is to hold any company with authority over a person's work responsible for payment of all wages, and prevent those with such authority from manipulating corporate forms and subcontracting relationships to evade legal responsibility. The model language creates tight definitions of independent contractor as well to give greater legal protections to more employees currently falsely classified as independent contractors.
Strengthen State Powers to Enforce Wage Laws:
Help Employees Enforce their Rights:
Messaging on Wage Law Enforcement
Wage law enforcement is both needed policy and a strong political message that state leaders are upholding the law and wage standards.
Wage law violations are endemic in the low-wage
workforce: Along with documentation in the Broken
Laws, Unprotected Workers report, earlier surveys have also found pervasive
violation of workers rights:
Wage Law Enforcement Levels the Playing Field for Honest Employers: Companies violating wage laws gain an unfair competitive advantage over employers who follow the law. Strengthening enforcement will benefit employers who obey the law and pay their workers fairly. Business for a Fair Minimum Wage note that higher wage standards can even boost local economies as workers spend increased wages locally.
Wage Law Enforcement is a Values Issue: Organizations like Let Justice Roll and Interfaith Worker Justice stress that paying workers a fair wage is supported by religious and community leaders across the country.
Wage Enforcement Can Be a Revenue Raiser for Strapped State Budgets: State governments lose billions of dollars in revenue each year by failing to enforce state wage laws. A California Joint Enforcement Strike Force on the Underground Economy was created over a decade ago and a 2005 state labor department report found that in one year, various agencies investigating labor and pay reporting violations collected over $100 million in citations and assessments. A February 2007 report by Cornell University researchers estimated that 704,000 of the seven million private-sector workers in New York state were misclassified as independent contractors, costing the state $175 million in unemployment insurance taxes each year.
The bottom line is that by enforcing existing wage laws states can raise hundreds of millions of dollars in revenue, as they also raise wage standards for all workers.
How Wage Law Enforcement Counters Anti-Immigrant Attacks
For state leaders confronting attempts to scapegoat immigrant workers, increasing penalties for wage law violators across the board has been a way to undercut such rhetorical attacks. Eliminating sweatshops generally removes most of the incentive for employers to recruit undocumented workers in the first place, making it more likely that undocumented immigrants will be hired only where legitimate labor shortages exist. Since going after employers who violate wage laws politically unites all workers, immigrant and native alike, cracking down on those employers will actually strengthen the progressive political base.
By promoting these wage enforcement laws, advocates and progressive state leaders are highlighting that only a minority of those working under illegal work conditions are undocumented immigrants. Instead, it is our nation's systematic lack of wage law enforcement has contributed to the dysfunction of our immigration system. In fact, the denial of employment rights to such immigrants has further undermined wage law enforcement, thereby feeding more low-wage immigration.
Wage Enforcement Campaigns Have Undermined
Anti-Immigrant Attacks: Many advocates of "fighting illegal
immigration" claim to be doing so in the name of helping low-income workers, yet
almost none will address the pervasive theft of low-income worker wages that
results from employer wage law violations. In fact, when real crackdowns on the
low-wage economy are proposed, many of the supposed defenders of native workers
suddenly become opponents of dealing with the problem. In recent legislative
sessions, a number of states that initially debated purely anti-immigrant
measures recognized that failure to enforce state wage laws is the crux of the
economic problems facing workers and outraging voters.
Why E-Verify is a Bad Alternative: Wage law enforcement is a far better alternative to imposing onerous "e-verify" documentation requirements on employers. The U.S. Chamber of Commerce concluded that the net societal and business costs of implementing E-verify just for federal government contractors alone would be $10 billion a year, to say nothing of all employers. Corporations that have tried to implement E-Verify have found it to be extremely faulty and the process uneven and counter-intuitive, which is why 99% of businesses have declined to participate.
And E-verify would not prevent employers from hiring undocumented immigrants. A study by the Congressional Budget Office found that mandatory implementation of E-verify would lead more companies to bypass the unwieldy system and enter the underground economy. This would result in a cost of more than $17.3 billion over ten years of unpaid Social Security taxes.
So fully enforcing existing wage laws is a far better approach to eliminating the underground economy, raising wage standards for all workers in our economy, and improving the economic competitiveness of companies that obey the law.
Building Wage Law Enforcement Campaigns
There are a few key resources and organizations
supporting wage enforcement campaigns, including:
For dealing with the misclassification of independent contractors, see NELP's 2009 Independent Contractor Round-Up
On the Benefits to State Budgets from Wage Law
Using wage law enforcement to address
anti-immigrant policy proposals, see:
Research Reports on wage law
With low-wage workers facing multiple challenges in the current economy, wage law enforcement is a critical tool in preventing illegal work conditions from further undermining their living standards. By creating a level playing, wage law enforcement creates a fairer workplace for both workers and honest employers. And by undercutting the underground economy, it can raise revenue for state budgets severely under strain.
3 Steps Forward
2 Steps Back
The Stateside Dispatch is written and edited by:
Nathan Newman, Executive Director
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