Tough Wage Enforcement Law Approved in Iowa Senate; Anti-Immigrant Measures Rejected

The Iowa Senate on Tuesday approved SF 2416, a bill to sharply increase fines on employers violating Iowa state wage laws, crack down on the practice of misclassifying employees as "independent contractors" to evade those laws, and protect workers reporting violations from retaliation.  

As Iowa Assistant Majority Leader Joe Bolkcom, the main sponsor of the Iowa bill, wrote in an editorial published in the Des Moines Register, such an approach is the real solution to the problem of the underground economy, not punitive attacks on undocumented workers:

As families in Iowa struggle to make ends meet, they are justified in feeling threatened when they see what were once good jobs turned into low-wage, sweatshop labor...  If Iowa were to ensure that all employers paid a decent wage, the attraction of hiring undocumented immigrants would diminish tremendously.  Any hiring of undocumented immigrants would then be due to legitimate shortages in the labor supply, not to employers using those workers to illegally undermine wage standards for the rest of the work force.

The Iowa Senate approach contrasts sharply with the punitive approach against immigrants embodied in a competing proposal approved by the Iowa House this week which would create new state ID requirements for new hires and "employee theft" provisions that would criminalize many immigrant workers.

Unreported Trend of Rising Wage Enforcement in States: In passing the bill, the Iowa Senate followed the increasing trend of states rejecting such punitive measures against immigrants in favor of working to enforce higher wage standards for all workers, citizen and immigrant alike.  Despite the media focus on a handful of states passing anti-immigrant measures, the unreported story has been the increasing crackdown by state governments on wage law violators as a response to the growing underground economy.  A few examples include:

  • The Arizona and Ohio minimum wage ballot initiatives passed by voters in 2006 included new triple damages against employers violating their state wage laws.  Just this week, Massachusetts made it the law that triple damages will be mandatory for violations of that state's wage law.

  • In 2007, Minnesota and Colorado both enacted new laws cracking down on misclassification of employees as "independent contractors" to evade state wage laws.
  • In New York, a new state joint task force of state labor, tax and worker compensation agencies conducted a dramatic sweep this year of 117 employers, finding 646 workers were owed minimum wage and overtime pay totaling $3 million.  Massachusetts created a similar task force earlier this month.
  • Illinois, along with a number of other states, has mandated a state study commission to collect data and information on lost tax revenues due to independent contractor abuses.

In 2008, California, Connecticut, Illinois, Indiana, Kentucky, Louisiana, Maryland, Minnesota, New HampshireNew York, Pennsylvania, Rhode Island, Vermont, and Wisconsin all introduced new laws to crack down on wage law violators and on employers misclassifying employees as independent contractors to evade those laws.

Anti-Immigrant Bills Stall; Wage Enforcement Seen as Better Solution:  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 problem outraging state voters:

  • In Connecticut in 2007, a bill was introduced that would have made it a criminal offense to hire undocumented workers, but instead it was modified into a state law to go after all employers who commit workers' compensation premium fraud to cheat workers out of benefits.
  • The  Kansas House this year voted to gut an anti-immigrant bill and added provisions to severely punish employers exploiting undocumented immigrants by violating state wage laws and cracked down on misclassification of independent contractors.

One reason for this trend towards wage enforcement is that state governments lose billions of dollars in revenue each year due to the failure to enforce state wage laws.  Instead of wasting state money on costly, wasteful local enforcement of immigration laws, stepped up wage law enforcement will more than pay for itself.

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