What Happened to the Wage-Theft Ordinance?

Jan. 23, 2013 - PRLog -- In October 2009 the Workers Interfaith Network (WIN) in Memphis conducted a non-scientific survey of 141 low-wage workers at social service agencies around town. (I know the numbers don’t add up. But I’m just reporting the numbers from the website.) Sixty-six percent reported they had personally experienced some form of wage theft.

·      38% (53 people) had not received a final paycheck from an employer

·      35% (49 people) percent had experienced either unpaid overtime or had been paid for fewer hours than they worked

·      23% (32 people) had been paid below the federal minimum wage

·      19% (26 people) had an employer take tips given by customers for them.

The WIN survey showed that 65% of African-Americans reported some form of wage theft, with unpaid overtime being the most common form of wage theft.  Sixty-seven percent of Latinos reported some form of wage theft. The most common form was not being paid a final check the most common form of wage theft.  

In June 2010 Wendi Thomas wrote in her column in the Memphis Commercial Appeal, “Wage theft – an affront to everyone,” that studies have found that women are more frequent victims of wage theft than men, black people more than white, the foreign-born more than those born in the states.

Shelby County Proposed Wage-Theft Ordinance

The Proposed Ordinance would have made it a violation of the Shelby County Code of Ordinances for an employer doing business in the unincorporated areas of Shelby County to deprive an employee of agreed upon wages. Here’s how the process would have worked:

1.     An employee complaining of wage theft would file a complaint with a designated County administrator.  

2.   The administrator, who would not have subpoena power, would then conduct an investigation.  

3.   If the administrator believes that a violation of the ordinance has occurred, he or she would issue the employer a citation and summons to appear in Shelby County General Sessions Court.

4.     The General Sessions Court would then be tasked with determining whether a violation of the ordinance did occur and would have the power to order payment of any wages determined to be owed and to impose a fine, which would be capped at three (3) times the amount of wages owed.

5.     If during the County process an employee claiming wage theft files another complaint with the federal or state department of labor, the County proceeding would be halted and the employee’s complaint dismissed.

Some concerns for employers and HR professionals are:

1.     How is the Proposed Ordinance not redundant of the existing protections provided by federal and state law?

2.     Will the Proposed Ordinance contain a cost-shifting provision to deter frivolous claims by requiring a claimant to pay the employer’s attorneys’ fees in the event the claim is determined not to be valid, and what would be the standard of proof for an employer to obtain a fee award?

3.     The term “Wage Theft” alludes to criminal activity when an organization could possibly have made an honest mistake. It is a bad stigma.

On January 14th the Shelby County Commission voted against the wage-theft ordinance for the unincorporated areas of Shelby County. Those opposed felt the ordinance would impose another layer of government bureaucracy and discourage business and investment in the county. There was also a fear that disgruntled employees could use the proposed system to damage the reputation of their employers.

The Memphis Chamber issued a statement saying the ordinance could give the “misimpression that we are overregulating business and industry.” In addition, the proposed ordinance would require valuable time and financial resources to refute meritless claims.

A similarly proposed ordinance was sponsored by Memphis City Council member, Myron Lowery. The third and final reading is scheduled for February 5. The Workers Interfaith Network has vowed to keep fighting regardless of whether the proposed city ordinance fails.

Before we go further with a new ordinance, let us consdider what the U. S. Department of Labor is doing to stop wage-theft. You many be surprised.

What is the Department of Labor Doing About Wage-Theft?

In the last three years, the U.S. Department of Labor’s (DOL) approach to increasing compliance with the Fair Labor Standard’s Act (FLSA) has become increasingly punitive. The DOL is conducting more unannounced investigations sending up to four investigators without notice into businesses with no prior record of violations.

The DOL is giving employers less time to respond, threatening subpoena actions in federal court against employers who fail to respond in 72 hours. Targeted industries are Construction, Food Services, and Hospitality. They have also enforcement priorities in low wage industries that also include restaurants and hospitality. The initiative focuses on industries that have high rates of violations where vulnerable employees are less likely to complain if not paid as required.

DOL’s New Program, “We Can Help!”

Over the past three years the DOL has implemented several new programs to educate employees on FLSA requirements and make it easier to file complaints. One program, “We Can Help!” is a public awareness campaign to “connect America’s most vulnerable and low-wage workers with the broad array of services offered by the DOL with a ‘special focus on reaching employees in such industries as construction, janitorial work, hotel-motel services, food services, and home health care”, to name a few.

The DOL is partnering with worker advocates to assist the DOL in investigations. HR professionals should spend a few minutes to review the materials on the “We Can Help!” website at www.dol.gov/wecanhelp

DOL Smartphone Apps

HR professionals should also download the DOL’s two new free smartphone apps and be prepared to answer employee questions about them. The “Timesheet” app allows employees to keep track of their hours worked by simply touching the screen of their smartphone and emailing a record of their hours worked to their employer (or their attorney.) The new “EatShopSleep” app won a prize from the DOL for the best applicationusing the employer-specific enforcement information now available in the public database. The application allows the user to locate nearby restaurants and get a review of the restaurant’s wage and hour violations!!

The DOL 2013 Budget Increase for Its New “Gotcha” Approach

In its fiscal year 2013 budget request to Congress, the DOL asked for $237.7 million and 1,839 FTEs for the Wage and Hour Division alone. This is an increase of $10.7 million over the 2012 budget. Compared to the 2008 budget, it’s an increase of $62 million.

Hhhhmm. Sounds like the DOL is already on the case! Who knew?? Perhaps we could do a better job of getting this information to the employees and educating HR professionals. Every employer should review their timekeeping and payroll practices to identify potential compliance issues. Every employer should have a toll free ethics complaint line for wage and hour issues for employees who believe they are being paid incorrectly.

Perhaps the Workforce Interfaith Network could partner with the DOL to ensure that workers know about these new DOL initiatives and help get the word out. Perhaps we could all do a better job enforcing the laws that already exist to protect low wage-workers.