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April 25, 2006

Cracking Down on Wage Law Violations

One thing you can say-- the current debate on immigration is at last focusing attention on the pervasive violations of our labor laws in sweatshops and other parts of the low-wage economy. But instead of getting national legislation to shut down sweatshops around the country, we are getting policies to punish some of the victims -- while leaving the underground economy that breeds undocumented immigration largely in place.

Across the country, various states and local governments have created innovative laws and programs to take on wage law violators, as a new analysis at PLAN details, although none have put all the pieces together.

The facts of illegal violations of our wage laws have been clear for years:

  • 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 from DOL data found that 54% of contractors in the Los Angeles garment industry violated the minimum wage law.
  • And last year, a survey of hundreds of New York City restaurants found that more than half were violating overtime or minimum wage laws.
  • Read those sentences again. A MAJORITY of businesses in these industries and other low-wage sectors routinely disregard our wage laws. If we are going to hear about "respect for the law," ending this pervasive illegal conduct by employers should be the focus. And while some sweatshop workers are undocumented, the majority are not; so even if you eliminated every undocumented worker from the economy, the sweatshops would remain.

    Conversely, eliminate the sweatshops and most of the incentive for employers to recruit undocumented workers disappears, a point we have made, but also one that the Bush administration endorsed in their recent budget document, which argued, "[L]abor standards enforcement efforts...will help to reduce the economic incentive for such illegal employment practices and will, in turn, help reduce illegal immigration." The problem is that while this rhetoric is nice, the reality is that the federal government has let the minimum wage rate decline to an abysmally low level at $5.15 per hour, provides few enforcement dollars, and applies minor punishments to offenders even if they get caught.

    States have begun raising the minimum wage rate across the country, but the next step is for states to pass comprehensive enforcement measures to make sure workers actually get paid. As detailed at PLAN's analysis, a number of states and local governments have created new innovative approaches to enforcing wage standards. Unfortunately, no state has joined them altogether in a comprehensive enforcement package, which is what is needed to make serious inroads against the pervasive violations of wage laws in our states.

    But the outline of the key policies needed to shut down the underground economy is clear.


    • Increase the punishment for violations, including increased financial penalties, denying operating licenses and public contracts to repeat violators, and applying criminal sanctions against willful wage law violators;

    • Expand funding for enforcement, including dedicated more state budget dollars, encouraging local governments to act, funding expanded legal services at the state level, and using "private attorneys general" statutes to encourage private lawsuits to enforce the laws;

    • Encourage employees to bring complaints through measures to better educate employees about their rights, encourage anonymous complaints, prevent retaliation by harsh punishments for employers violating employee free speech rights, and protect the ability of immigrants to hold exploitative employers accountable;

    • Hold employers accountable for "fly-by-night" operations, including holding businesses liable for wage violations by subcontractors, hold key shareholders in private firms liable for wage claims if their firms refuse to pay, tighten definitions of "independent contractors", and discourage temporary and day labor exploitation.

    Read the full details of what states have been doing and can do to eliminate wage violations across the economy.

    Posted by Nathan at April 25, 2006 12:15 PM