The wage-theft saga continues, as evidenced by these recent actions brought by California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey.
In a May 2017 report, the Economic Policy Institute found that in 10 states (California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas) 2.4 million workers lose approximately $8 billion annually as a result of receiving an effective hourly rate less than the states' mandated minimum wage. These findings suggest that nationally, employers are pocketing $15 billion in employee wages! This scourge overwhelmingly impacts low-wage industries, where immigrant and other vulnerable, marginalized communities predominate the labor force.
These cases will generally not garner the national spotlight. But they are just as important as the actions that have generated far greater national attention. They have immediate real-life impact on affected communities and send a clear signal that some state attorneys general remain on the labor law enforcement beat.
EPI Report: Employers steal $15 billion a year from workers by paying less than the minimum wage, Economic Policy Institute, May 10, 2017.
California Case: Attorney General Becerra Files Suit Against Janitorial Subcontracting Company for Wage Theft and Violating Tax Laws, Highland Community News, Nov 30, 2017.
Massachusetts Case: Sean Philip Cotter, AG: Cohasset hotel didn’t pay workers enough, The Patriot Ledger, Dec 1, 2017.
While the eyes of the world are on the litigation between the attorneys general and the Trump Administration's immigration ban, a January 20th article in the Florida Record carries a story that highlights an issue of great importance to all Americans.
The article discusses a Florida case that alleges an employer misclassified his employees as independent contractors in order to avoid paying employment taxes. In addition, the employer "made illegal deductions from [workers'] earnings to pay insurance on company vehicles."
The article cites a 2011 report we published at Columbia Law School, where we argued that stronger enforcement of state labor laws would benefit both workers and the marketplace. “Without meaningful enforcement by state regulators, employers will simply disregard legal obligations if doing so allows them to save time, money or effort, putting the majority who wish to abide by the law at a significant competitive disadvantage,” the report stated.
According to the National Employment Law Project (NELP), misclassification not only imposes costs to workers, but deprives state/federal coffers billions of dollars in tax revenues annually. The issue is not going away, and with the expansion of the gig economy, it's likely getting worse. Combating misclassification falls squarely in the wheelhouse of all state attorneys general.
Nancy Crist, Lawsuit reflects conflicting 'independent contractor' definition among enforcement agencies, Florida Record (Jan. 20, 2017).
See, National Employment Law Project Fact Sheet: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries (July 2015).
See, Editorial: Defining 'Employee' in the Gig Economy, New York Times (July 18, 2017).
See, Jacob Meyer and Robert Greenleaf, Enforcement of State Wage and Hour Laws: A Survey of State Regulators, National State Attorneys General Program at Columbia Law School (April 2011).
Because enforcement of state labor laws is often done by a number of agencies (attorney general, labor department, civil rights divisions, etc.), it is often difficult to keep track of them. The National Employment Law Project is an excellent resource for following all labor law issues including those by attorneys general.
On Labor Day, Massachusetts Attorney General Maura Healey announced an enhanced initiative in continuing her states's long commitment to enforce her state's labor laws. Because these matters are increasingly taking on a multistate component, other attorneys general will be watching closely.
The NY AG has announced that Jimmy John's has terminated its indefensible requirement that their employees sign non-compete clauses, and that, of course, is a good thing for those employees. It is also a good thing for those who are watching carefully and seeing state attorneys general in how they are enforcing their state labor laws.
State AG's are stepping up their efforts on behalf of low wage earners at food chains. Today the Il AG in a Complaint filed by AAG Jane Flanagan, a long time friend of the Columbia AG Program, sued the Jimmy Johns Sub chain for non-compete clauses that effectively lock in their employees at their 270 Illinois locations. The food chain said they were "disappointed." The founder of Jimmy Johns, actually named Jimmy John Liautaud, says that he wants to "be the best at what I do," and "learn from mistakes." Well, Jimmy John, I hope you are learning that barring your own employees from seeking a better life is not only a mistake, but illegal.