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Wage Law Enforcement State Trend: Illinois Becomes Most Recent State to Crack Down on Wage Theft
PSN on May 17, 2010 - 10:58am
Wage Law Enforcement State Trend: Illinois Becomes Most Recent State to Crack Down on Wage Theft
Monday, May 17th, 2010
A crime wave has been sweeping Illinois, with surveys of low-wage workers in the Chicago area showing an average of 146,300 cases of wage theft each week -- resulting in about $7.3 million each week in unpaid wages, or $380 million stolen from workers each year.
In order to crack down on this criminal wage theft, the Illinois General Assembly on May 3 nearly unanimously (56-0 in the Senate and 112-1 in the House) passed SB 3568, which will strengthen the state’s ability to enforce violations of the Wage Payment and Collection Act, including these new or enhanced provisions:
The Legislature's action came in response to University of Illinois research highlighting that low-wage workers were losing an average of 16% of their earnings each year to employer malfeasance.
Wave of Wage Law Enforcement Around Country: Illinois' legislative action follows a growing number of states and counties enacting wage enforcement laws to address the crime of wage theft by employers. In 2009, New Mexico, Delaware, Maryland and Iowa enacted wage enforcement laws, as did Washington in March of this year. A wage law enforcment bill, S 07050, is now before the New York State Senate this session. Municipalities are also taking up the issue, with Miami-Dade County passing a county-level wage enforcement law in February. The City of San Francisco also passed a strong enforcement statute as part of its minimum wage law a few years ago, and bills are expected to be introduced in the cities of Los Angeles and New Orleans.
Some states have begun to address the issue through adapting their existing enforcement programs. In the past few years, for instance, New York and California formed multi-agency task forces to compile information and target industries where violations are known to be rampant. However, leaders in those states have usually found it necessary to strengthen the existing laws through creating stiffer penalties, expanding enforcement measures, and making the system more responsive to victims of wage theft.
The Cost to Communities from Wage Theft: Legislators are responding to research highlighting the severe toll wage theft is taking not just on workers, but on local economies and state and municipal tax rolls. Because low-wage earners spend a greater percentage of their income on local goods and services, wage theft on such a large scale does not merely affect workers and their families -- it has a major community-wide impact. Research in Chicago mirrors results from other cities studied by the University of Illinois and the National Employment Law Project. Even a business-community think tank, the Economic Policy Foundation, admits that wage theft is widespread: it estimated $19 billion per year in unpaid overtime alone, not to mention other wage and hour violations.
The rise in wage and hour violations is particularly prevalent among businesses with a high percentage of low-wage employees and/or immigrant workers. Lack of enforcement contributes both to downward pressure on wages and income levels and creates an incentive for employers to recruit undocumented workers, who are even less likely to know their rights and to press charges against their employers. For this reason, forward-thinking legislators are also promoting wage enforcement as a positive measure states can take in support of comprehensive immigration reform and as an alternative to regressive, anti-immigrant measures such as Arizona’s SB 1070. See Progressive States Network's Promoting Wage Law Enforcement Policies in 2010 for more on key provisions, model legislation and resources to support state wage enforcement campaigns.
After years of states leading the fight to promote clean energy and reverse climate change and the House passing an energy bill last year, U.S. Senate leaders have finally introduced climate change legislation, the American Power Act (APA). The bill is lengthy and complex with compromises that many leading environmental groups object to (see Greenpeace and Friends of the Earth for examples of statements by major organizations and coalitions criticizing the bill), although other groups (see Center for American Progress, Apollo Alliance, Environment America, Blue Green Alliance and Natural Resources Defense Council) have more positive evaluations of the bill as a flawed, but important step forward.
The proposed Senate bill includes a wide range of provisions, including a cap and allowance on greenhouse gas emissions, a target for reducing those emissions to 17% below 2005 levels by 2020 (and 80% below by 2050), and a fee for "carbon leakage" on imports to level the playing field between American manufacturers and foreign competitors that emit climate change-inducing carbon. For more bill details, the NRDC has a comprehensive initial summary of provisions here.
The impact of the federal bill on state government efforts to promote clean energy policy could be profound, with at least three major effects:
State Cap and Trade Programs: Long before federal efforts, states created their own cap and trade initiatives, which will be shut down under the federal bill and replaced by a national system more favorable to polluting industries. The first cap-and-trade government program was the Regional Greenhouse Gas Initiative (RGGI), composed by 10 Northeastern and Mid-Atlantic states. To date, eight auctions have taken place under RGGI and the revenues have been reinvested in energy-efficiency initiatives and innovations. Other states in the West and Midwest have similar regional cap-and-trade programs.
Although a federal standard is necessary, an RGGI official stated, “you don’t want to preempt states who can go further and become a model for the country.’’ Preemption would be extremely damaging to states that depend on the clean energy economy to create more jobs and reduce the high levels of pollution. Thanks to the allowances operating in these states, hundreds of millions of dollars have already been raised to create jobs and help homes and businesses become more energy efficient. While there are promises in the Senate bill to compensate states for those losses, it is unclear how complete that compensation will go.
More positively, state authority to set vehicle standards is retained, as is authority to establish clean energy, energy efficiency, and other greenhouse gas control programs with higher standards than federal requirements.
Funding for Renewable Energy Programs: The Act supports state renewable energy programs by promising that a percentage of the revenues raised by allowances be distributed to the states. APA recommends the development of energy efficient buildings (see PSN’s Green Buildings Shared Agenda), as well as renewable electricity incentives, gas utility efficiency programs and smart appliances. The bill also defines the smart grid and promotes its development in the states, including the integration of renewable energy resources and distributed generation, demand response, demand-side management, and system analysis. For a detailed analysis on how the smart grid and other technologies build a green economy, click here.
Off-Shore Drilling and The States: In response to the catastrophe caused by the oil spill in the Gulf of Mexico, the bill now includes two restrictions to off-shore drilling. First, states can opt-out of drilling up to 75 miles offshore. Second, states can veto the drilling plans if they “suffer significant adverse impacts in the event of an accident.” On the other hand, the bill offers large financial rewards to states that allow offshore drilling, with 37.5 percent of royalties from new offshore rigs directed to states, and 12.5 percent of royalties would be deposited in the Land and Water Conservation Fund for federal and state parks and land acquisition. With hard-pressed state budgets, many environmental leaders see these provisions encouraging states to take reckless risks to allow drilling near their states.
A Preemption Dilemma for State Leaders: Many of the states that have pioneered green energy programs are left in a confusing position. On one hand, the bill offers general support for states to run renewable energy programs, but on the other, it will prevent those states who were first to adopt comprehensive energy solutions to fulfill their cap and trade programs and will preempt them from taking some additional steps in regulating destructive industry practices. Many federal environmental laws have long allowed states to adopt standards that are more stringent than federal policies, so any preemption of state initiatives that cap greenhouse gas emissions is a step backwards that should be reevaluated as debate on federal legislation moves forward.
The payday lending trap has been shorting working families to the tune of nearly $5 billion per year ever since the industry exploded onto the scene in the 1990’s. The number of payday lending institutions has jumped exponentially from 500 in 1990 to about 22,000 today (compared with 14,000 McDonald's), mainly targeting low-income African American and Latino communities.
But two weeks ago, Colorado enacted payday industry reforms, squeaking by with a one-vote margin in the Colorado House. Though lenders can still charge a $75 origination fee as well as monthly fees of up to $30 on top of interest, the bill addresses cycles of debt by capping APR interest rates at 45% and mandating that borrowers be given as long as six months to pay back loans.
Colorado’s joins sixteen other states and the District of Columbia which have already passed limits on interest rates for short-term loans, ranging from 17 percent to 60 percent.
Beyond Capping Interest Rates: A number of other reforms have been enacted or proposed in other states to prevent workers being bled dry by payday loans, including:
Unfortunately, two states passed weaker legislation designed to appease the payday lending industry, throwing consumers under the proverbial bus in the process. Utah and Wisconsin both caved to threats that the industry would shed jobs with further regulation, approving bills that stopped short of requiring much-needed limits on interest rates.
Stopping Steps Backward: Advocates are also working to defeat legislation in California, AB 377, that would be a huge step backward, increases the maximum payday loan amount from $300 to $500 and allows lenders to charge consumers an APR as high as 459% for a two week loan. It would also establishes de facto legalization of internet payday lending. It passed the Assembly in May 2009 and is awaiting a hearing in the Senate Judiciary Committee.
Progressive States Network - Promoting Wage Law Enforcement Policies in 2010
American Power Act
Center for Responsible Lending - Pay Day Lending
The Stateside Dispatch is written and edited by:
Nathan Newman, Executive Director
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