Wage Theft Goes Unpunished

If you rob a liquor store and get caught, you may serve time in prison.

But nothing much happens when an unscrupulous employer steals money from an employee’s paycheck.

That’s the sad conclusion of a national report recently released by the Progressive States Network (PSN), entitled,  Where Theft is Legal: Mapping Wage Theft Laws in the 50 States.

The PSN report finds that state laws are grossly inadequate to combat the epidemic of “wage theft” by unscrupulous employers in the United States. Some states levy no fines at all for wage theft, according to the report, while most others invoke penalties smaller than a speed­ing ticket.

 Wage theft is the systemic non-payment of wages that owed to workers.

The PSN estimates that more than 60% of low-wage workers suffer wage violations each week. On average, the PSN reports, low-wage workers lose $51 per week to wage theft, or $2,634 per year.  For low-wage workers, that amounts to 15% of their annual income, at average earnings of $17,616 per year.

The problem also costs states millions of dollars each year in lost revenue.  Yet, according to PSN, the vast majority of states have few, if any, protections against wage theft.   “Our comprehensive survey of state laws … reveals that 44 of the 50 states (plus Washington, DC) do not receive passing grades on combat­ing the wage theft epidemic,” states the PSN report.

Even states that ranked highly in the PSN survey –  New York and Massachusetts –  received barely passing grades.

Two states — Alabama and Mississippi — scored zero points in the survey, indicating they essentially offer workers no protection at all against wage theft.

Wage theft typically occurs when employers misclassify workers as exempt employees under federal or state wage and hour laws to avoid paying overtime. For example, a cashier may be called a manager even though he or she has no management duties.. Or employers fail to pay workers the minimum wage or cheat them of earned benefits.  Subcontracting employers often try to shirk their responsibilities under wage-and-hour law by claiming that a temp agency or another inter­mediary is actually the sole employer responsible for wage payment.

The PSN reports the ability of the federal and state governments to enforce wage and hour laws has sharply declined in recent years.

The U.S. De­partment of Labor (USDOL) has only one enforcement agent for every 141,000 workers, down from one per 11,000 workers in 1941.  The PSN reports that state revenue shortfalls and layoffs have resulted in less than 15% of the enforcement coverage offered by state agencies several decades ago.

In 2008, the National Employment Law Project (NELP) and a team of advocates, policy groups, and academic research centers surveyed workers in Chicago, Los Angeles and New York and  found:

  •  64% of low-wage workers experience wage theft each week.
  • 26% are paid under the legal minimum wage.
  • 76% of workers owed overtime go unpaid or underpaid.

Since the NELP report, New York passed the Wage Theft Prevention Act of 2010, which is considered to be the strongest state law in the country, with beefed up anti-retaliation provisions, requirements for notification, and a remedy that allows workers to recover damages.

Founded in 2005, the PSN provides coordinated research and strategic advocacy tools to state legislators and their staffs, empowering these decision-makers to adopt progressive policies.

How the Justice Dept. Gets Away With It

 The U.S. Department of Justice is advertising for experienced, licensed “volunteer”  attorneys to work for a year or two without pay alongside Assistant U.S. Attorneys, who earn a starting salary of more than $75,000.

If such an  advertisement was placed by a private employer, it would raise questions of legality? How does the Justice Dept. get away with blatant exploitation of workers?

The Fair Labor Standards Act (FLSA) requires employers to pay workers the minimum wage and overtime except in a few limited circumstances – those who volunteer for religious, charitable, civic or humanitarian non-profit organizations and (you guessed it) individuals who volunteer to perform services for a state or local government agency.  The only time a for-profit employer can get away without paying a worker is when the worker is a so-called “intern,”

All of this comes at a time of high unemployment for lawyers, particularly graduating law school students.

The Wall Street Journal did a story on Sept. 2, 2011 stating there currently is less than one opening for every 100 working attorneys. Unemployment is a serious problem for attorneys, just as it is for every other occupation right now.  The unpaid “volunteers”  displace regular employees. Also, there is just something downright hypocritical about the situation. How can federal prosecutors go after employers who violate the FLSA with a straight face?

Finally, there is a great deal of “classism” in our society. We bemoan the immigrant farm worker who is cheated by the big farm corporation but it’s OK for some reason to exploit attorneys?  Is it some kind of misguided vanity that allows the bar to look at a situation such as this and fail to see the problem?

Without the  FLSA exemption, the use of unpaid Special Assistant U.S. Attorneys (SAUSA) would clearly violate the FLSA.

The SAUSA does not qualify as an intern because training is not the primary purpose of the SAUSA; because the government derives benefit from the SAUSA’s work; and, the SAUSA is doing the work of a regular employee and replaces regular employees.

The SAUSA is already a trained, licensed, experienced professional.  In fact, they have to have “outstanding” academic records and “superior” research and writing skills.   The SAUSA works alongside paid Assistant U.S. Attorneys doing legal research, drafting briefs, conducting hearings and trials, and attending judicial proceedings .  The “volunteer” gets nothing except the dim, uncertain hope of future employment.

Imagine a situation where a SAUSA, who is working for nothing, prosecutes a for-profit employer for failing to pay just wages and overtime.

The DOL issued a “fact sheet” last year listing the circumstances that dictate whether or not an intern must be paid. Essentially, a for-profit institution does not have to pay an employee whose work serves only his or her own interests.  The DOL listed six criteria to determine whether a worker is a bona fide intern:

  1. The internship is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

There is little question that a SAUSA does not qualify as an “intern” and that is probably why the SAUSA is not called an intern.

Ironically, the Justice Department advertisements assure that it is an “Equal Opportunity/Reasonable Accommodation” employer.

(Note: this is Part II of a story written on Sept. 7, 2011, Justice Department Seeks Law-Unteers)