Rewarding-Work

BY Nathan Newman

Promoting Wage Enforcement Laws as an Alternative to Anti-Immigrant Proposals

The public has a justifiable concern about the existence of illegal sweatshops, given the pervasive rise of companies violating minimum wage and overtime laws.

• The U.S. Department of Labor found in 2000 that 60% of US nursing homes routinely violated overtime, minimum wage, or child labor laws.
• Another 2004 study using DOL data found that 54% of contractors in the Los Angeles garment industry violated the minimum wage law.
• And in 2005, a survey of hundreds of New York City restaurants found that more than half were violating overtime or minimum wage laws.

Instead of allowing the right-wing to scapegoat undocumented immigrant workers, Progressive States Network will be working with progressive leaders across the country to introduce wage enforcement laws that emphasize that native and immigrant workers both suffer under illegal working conditions. See State Immigration Project: Policy Options for 2009 for the full range of immigration policies Progressive States Network is supporting in upcoming legislative sessions.

By promoting these wage enforcement laws, advocates and progressive state leaders are highlighting a few key points:

• Only a minority of those working under illegal work conditions are undocumented immigrants;
• Our nation's systematic lack of wage law enforcement has contributed to the dysfunction of our immigration system; and,
• The denial of employment rights to such immigrants has further undermined wage law enforcement, thereby feeding more low-wage immigration.

Recognizing this reality, state leaders are increasingly moving beyond punishing immigrant workers toward concentrating on raising wages for all workers and increasing penalties for wage law violators across the board. Eliminating sweatshops 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. This Stateside Dispatch highlights how wage law enforcement bills can reframe the debate on immigration, how they help raise needed funds for cash-strapped state budgets, and the key provisions such bills should include to crack down on the low-road employers who violate minimum wage and other wage laws.

Please join us this Thursday, September 25th at 2:00pm (EDT) for a conference call where we will further discuss strategies for the coming legislative session. For more information and to RSVP, please visit www.progressivestates.org/conferencecallrsvp/.

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Anti-Immigrant Bills Stall Where Wage Enforcement Seen as Better Solution

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. In some cases progressive wage enforcement laws were enacted, while in others, conservative opposition to real wage enforcement actually stalled movement on all bills:

• 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 that goes after all employers who commit workers' compensation premium fraud in order to cheat workers out of benefits.
• When the Iowa Senate approved SF 2416, a bill to toughen enforcement against employers who violate Iowa wage laws, it stalled movement in that chamber of an anti-immigrant bill approved in that state's House and halted anti-immigrant legislation for 2008.
• When the Kansas House in 2008 voted to gut an anti-immigrant bill by adding provisions to severely punish employers violating wage laws and exploiting undocumented immigrants, it led to deadlock on a purely anti-immigrant bill in the state Senate that lacked those wage enforcement provisions.

If anti-immigrant politicians resist such wage enforcement proposals, it just emphasizes that their supposed concern for wage losses by low-income workers is an empty smokescreen for hatred and nativism.

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Wage Enforcement Can Be a Revenue Raiser for Strapped State Budgets

One reason for this trend towards wage enforcement is that state governments lose billions of dollars in revenue each year by failuring to enforce state wage laws. Instead of spending state money on costly, wasteful local enforcement of immigration laws, stepped up enforcement of wage laws will more than pay for itself. For example, 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 and undermining those workers' rights. Another study by New York's Fiscal Policy Institute estimated that due to off-the-book wage payment violations, the state was losing $26 million in unpaid income taxes in the construction industry alone.

• A California Joint Enforcement Strike Force on the Underground Economy was created over a decade ago. 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.
• New York State has created a Bureau of Immigrant Workers' Rights. This new agency has already moved forward to crack down on low-wage law violators, sending an outreach van to churches and community groups to encourage immigrant workers to come forward and report wage law violations. Their tactic teaches an important lesson: that encouraging immigrants to come out of the shadows is the key to raising wage standards for all. New York's new joint task force of state labor, tax and worker compensation agencies conducted a dramatic sweep this year of 117 employers, finding 2,078 illegally misclassified employees and another 646 workers who were owed minimum wage and overtime pay totaling $3 million. Massachusetts Gov. Deval Patrick created a similar task force earlier this month via Executive Order 499.
• Illinois, along with a number of other states, has instituted a study commission to collect data and information on lost tax revenues from independent contractor abuses.

The bottom line is that by enforcing existing wage laws states can raise billions of dollars in revenue, as they also raise wage standards for all workers.

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Key Provisions for a Wage Enforcement Bill

Iowa's SF 2416 approved by their Senate has good model language for other state bills to emulate, including these key provisions:

• 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.

• Tighten Employer Record Keeping and Employee Information: Proving violations of the law is a challenge for employees when they don't have written records of their wages or of changes implemented by their employers, and where the employer fails to keep records that can provide documentation of problems. Laws should require that employees generally be informed at the time of hiring what their wages will be, of any changes in those wages, and require employers to maintain wage records for three years.

• Increase Damages collected by Employees: Given the relatively low wages involved in many wage disputes, many employers treat the (rare) payment of damages as a cost of doing business -- a cost that is easily offset by the savings from paying sub-legal wages to employees too intimidated to come forward to demand fair wages. For this reason, increasing damages for employees who do win in court is critical to creating an effective deterrent to illegal behavior. To create tough deterrence, some states already require that employers caught violating the law pay double damages on top of the wages not paid, plus any legal fees incurred to collect those withheld wages.

• Increase Civil Violations Collected by State: States should define a violation as any week when an individual employee is not paid a legally required wage, so that employers will be assessed heavier fines for chronic week-after-week violations of the law. Chronic violators of the law will face increasingly steep civil fines, thereby creating a strong deterrent.

• Strengthen Power of State Investigators: State officials should be able to investigate employers suspected of illegal activity in the absence of a written complaint by an employee. A number of states have discovered large numbers of employers engaged in illegal activity by undertaking financial analyses that were then followed by investigations identifying failures to pay wages due to employees. By removing the requirement for a written complaint, employers will also have no reason to automatically suspect there was a complaint and try to retaliate against employees.

• Prevent Retaliation Against Employees: Beyond protecting confidentiality of complaintants where possible, states should provide for significant fines and financial damages for employers who retaliate against workers, either those who directly complained about lost wages, educated other employees about their rights, or testified on their behalf.

Other provisions states might consider include:

• Deny Public Contracts or Operating Licenses to Wage Law Violators. See the Los Angeles Responsible Contractor Ordinance for one example, as well as San Francisco's municipal minimum wage, for provisions that authorize city agencies to revoke permits or licenses for businesses that violate the law.

• Increase Use of Criminal Sanctions Against Wage Law Violators: Many states already have "theft of wages" statutes on the books, so all that is needed is proper enforcement. See NELP's Using Criminal Theft of Service Laws To Enforce Workers' Right to be Paid for more on how to use such criminal theft statutes or add them to a state's criminal code.

• Make Clear that All Remedies Are Available Regardless of Immigration Status: California, through passage of SB 1818, and New York in Balbuena v. IDR Realty by the New York Court of Appeals, have declared that all legal remedies are available to workers regardless of immigration status.

• Allow Private Attorneys General to Act: Laws can be modeled on California's Labor Code Private Attorneys General Act, which allows present and former employees to collect not only damages for unpaid wages, but also twenty-five percent of the civil penalties that are paid to the state when they pursue full investigations.

• Give labor advocates access to non-work areas of employer property to educate employees on their rights. Massachusetts, California (see §20900 of the CA Agricultural Labor Relations, Solicitation by Non-Employee Organizers regulations) and a few other states give farm worker advocates access to agricultural fields to educate employees about their rights.

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Conclusion

There has been a lot of movement in recent years to raise minimum wage rates around the country. 2009 should be the year when states make full enforcement of those laws a reality. Such a movement will resonate nationally with a populace looking for real solutions to stagnant wages and repulsed by the continued existence of exploitative sweatshops still existing in America. Rather than allowing anti-immigrant politicians on the Right to divide workers based on scapegoating, such a crackdown on wage law violations can unite workers across race and citizenship lines, in an effort to raise wage standards for everyone.

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