Monday Nov 19

Everybody’s Business: The Battle Over Labor Standards

The Trump Administration has left little doubt that one of its main missions is to roll back the regulatory initiatives of the Obama years, especially the Clean Power Plan and the Consumer Financial Protection Bureau. Although Trump has been less overt about it, his corporate-friendly approach also includes weakening rules that have been around for decades.

An important case in point concerns the Fair Labor Standards Act, the key federal wage and hour law that was signed into law 80 years ago by President Franklin Roosevelt. The culmination of decades of struggle over excessive workweeks, inadequate pay levels and child labor, the FLSA put the federal government in the business of combating wage theft and other forms of workplace exploitation. It accomplished that through an extensive system of workplace investigations and the imposition of financial penalties on employers large and small.

In a move that has received limited attention, the Trump Labor Department has been moving to replace rigorous enforcement with a system called Payroll Audit Independent Determination (or PAID) that puts employers on the honor system. Beginning with the dubious premise that wage and hour violations mainly derive from inadvertent mistakes made by managers, PAID will encourage employers to report irregularities on their own. When they do they will still have to pay back wages but will not be assessed damages or penalties.

Such a system makes a mockery of real enforcement. Employers will either report nothing or will disclose only a few minor infractions to give the impression they are fully complying with wage and hour standards.

What makes matters worse is that PAID, which is being billed as a pilot program for now, is being pursued right after the U.S. Supreme Court in the disastrous Epic Systems ruling. That decision affirmed the right of employers to compel workers to sign mandatory arbitration agreements that severely curtail their ability to bring collective action lawsuits.

As my colleagues and I at the Corporate Research Project and Jobs with Justice Education Fund showed in a recent report, these lawsuits have allowed workers to recover billions of dollars from large corporations. These employers include not only the usual suspects such as retailers and fast food operators but also banks, high-tech companies and pharmaceutical producers. In the wake of the Epic Systems decision, some federal judges began to dismiss pending cases against major companies.

After PAID was featured in an NBC News segment on how the Trump Administration is relaxing regulatory enforcement in numerous areas, a group of Democratic Senators wrote a letter to Labor Secretary Alexander Acosta expressing concern about the program. DOL responded that it was “premature” to comment on the program.

The controversy over PAID comes amid growing concern about the prevalence of wage theft. Some of those abuses apparently exist right inside the federal government. DOL, which has not yet left the investigation business, was reported to be examining the practices of a company called Seven Hills, which manages the food court at the Pentagon.

Faced with the prospect of diminished DOL enforcement and restrictions on federal collective action lawsuits, activists are looking to other solutions. There are some hopeful signs at the state level, especially in California. In June that state’s Labor Commissioner fined the Cheesecake Factory restaurant chain and a contractor more than $4 million for wage theft involving janitorial workers. California’s strong labor code also provides opportunities to take private legal action against abusive employers in spite of the Epic Systems ruling.

Some of the most encouraging work is happening at the local level. For example, Centro de Trabajadores Unidos en la Lucha (Center for Workers United in Struggle) has been pressing Minneapolis Mayor Jacob Frey and the City Council to pass an ordinance dealing with wage theft.

In some parts of the country, law enforcement officials are taking the term wage theft literally and treating it as a criminal offense. For example, after a joint investigation by the Washington State Attorney General’s Office and the Department of Labor & Industries, a construction company and its owner pled guilty to a criminal charge of first-degree theft. Later, the New York Attorney General and the Inspector General of the Port Authority of New York and New Jersey announced the arrest of a contractor for failing to pay prevailing wages at a publicly-funded construction project at LaGuardia Airport.

While it would be terrible to see DOL’s wage and hour
enforcement system dismantled, there are other ways rogue
employers can be brought to justice.

Philip Mattera heads the Corporate Research Project in Washington, DC, and writes the blog Dirt Diggers Digest.

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