How to Fight Wage Theft on a Budget

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Different but complementary strategies are proposed for reducing wage theft in the United States.

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The fight to raise minimum wages around the country makes headlines on a regular basis. But the minimum wage debate masks another serious problem: low-wage workers around the country likely lose more than $50 billion every year to theft by their employers.

Two recent articles discuss strategies for better enforcing the laws around worker pay. In one article, David Weil—former head of the Wage and Hour Division of the U.S. Department of Labor under the Obama Administration—describes the strategies that worked best for combatting wage theft with government resources. In the other, professors Janice Fine and Tim Bartley focus on ways that community organizations and non-profits can better assist workers in fighting for the pay that they earn. Yet, the authors of both articles highlight public-private partnerships as a workable and inexpensive enforcement strategy to counteract wage theft with existing resources.

Wage theft can describe a number of wage-related violations of federal, state, and local regulations. It includes failure to pay minimum wage and overtime, forcing employees to work off the clock without pay, preventing workers from taking meal breaks, illegally deducting costs from workers’ pay, stealing tips, and retaliating against workers who report violations.

Wage theft can be particularly hard to fight. Though low-wage workers—particularly immigrants, minorities, and women—face the greatest amount of wage theft, they report violations and problems less often because they fear losing their jobs. Furthermore, activists and officials who seek to enforce wage and hour regulations usually face low funding and not enough manpower to address wage theft fully.

In an effort to tackle this issue more effectively, Weil considers how government agencies can improve outcomes and help protect more workers under existing budget constraints. His proposal for “strategic enforcement” captures changes he attempted to put in place during his tenure in the Wage and Hour Division.

Specifically, he argues that agencies need to focus on engaging in proactive investigations, rather than relying solely on complaints from workers, because many of the workers most likely to have problems are the least likely to report. He proposes giving greater attention to industries with high violations—such as restaurants, hotels, janitorial services, agriculture, and home health care—and mapping supply chains to increase accountability from the biggest companies down to the smallest suppliers.

Under his direction, the Wage and Hour Division also used its full range of enforcement tools, including assessing more civil monetary penalties and using “hot goods” provisions that stop goods produced under illegal employment practices from making it to market. The Division also undertook a significant structural overhaul to improve communication and coordination within the agency on both budgets and priority setting.

By contrast, Fine and Bartley, in their recent article, focus on ways that the private sector and worker organizations, which they call “civil society,” can help enforce wage and hour regulations. They study the creation of private governance mechanisms where workers and their organizations can set binding contracts by leveraging their market power.

Fine and Bartley primarily discuss the Coalition of Immokalee Workers (CIW) and the Fair Food Program in Florida. These organizations helped tomato growers convince major fast food companies to increase pay by a penny or two more per pound of tomatoes purchased and convinced the growers to pass along that increase in wages to their farm workers. The Florida program then engages in consistent monitoring and contractually requires buyers to stop purchasing goods from growers who violate the employment standards, including by committing wage theft, in the agreement. Through this process, farmworkers received nearly $26 million more for their work.

CIW accomplished pay increases through organized student demonstrations and an understanding of the way the supply chain forced growers to operate on incredibly slim profit margins. Fine and Bartley argue this effective organizing strategy implemented by CIW and the Fair Food Program provides an excellent example of the ways that workers can create their own wage and hour standards and enforce them without much government assistance. They acknowledge, however, that victories in the tomato market may not be replicable in other supply chains.

Despite Fine and Bartley’s focus on the private sector and Weil’s focus on government enforcement, the authors do agree on one possible strategy for fighting wage theft: co-enforcement of wage and hour regulations.

Co-enforcement entails public-private partnerships between agencies and community groups that focus on employment issues. In these partnerships, the community organizations focus on communicating with workers regularly and building relationships of trust with them to help police workplaces for violations. The government then shifts some of its resources from investigating to enforcing regulations, including by pursuing settlement with employers or taking legal action. In this way, co-enforcement allows local organizations and government agencies to focus on using their respective strengths to reduce wage and hour violations.

Similar strategies are already being used in a few places around the country. Weil discusses the outreach efforts of the Wage and Hour Division and the productive relationships built with local organizations during his tenure. Fine and Bartley focus on the Seattle Office of Labor Standards and its extensive work with a variety of community organizations that many workers in the city already knew and trusted.

Both articles describe the challenges these programs face in terms of trust and communicating under confidentiality requirements, but their authors remain optimistic about the possibilities.

Agencies and community organizations that operate under tight budget constraints will likely find the innovations like those described by Weil and Fine and Bartley appealing. Worker rights advocates and workers themselves may have reason to be cautiously optimistic about reducing the epidemic of wage theft if innovative public and private strategies spread throughout the United States.