About five years ago, most Subway, Little Caesars and McDonald’s franchises in Minneapolis were not in compliance with city wage standards. Now, workers at each location that violated the law are paid the required minimum wage and time off when they are unwell.
It’s all thanks to the city’s co-enforcement program, in which the city’s labor enforcement agency partners with community organizations to provide workers with awareness of their rights and the tools to advocate for themselves. Last year, the program reached more than 12,000 workers and provided labor rights training to more than 400. Since the program began in 2018, more than $3 million in unpaid wages have been recovered.
“Since we started, we’ve pretty consistently received a disproportionate number of complaints or reports of violations from restaurant workers,” said Brian Walsh, director of labor standards and contract compliance for the Minneapolis Department of Civil Rights, pointing out that in the restaurant industry, historically, most workers have made at or just above minimum wage. “… That’s the front line where some of these city labor standards are, if you will, the rubber on the road.”
Wage theft, which can include failing to pay employees the minimum wage, misclassifying employees as independent contractors or managers to avoid paying overtime, and taking tips intended for employees, is A $50 Billion Problem for US workers. This is a commitment by immense corporations, compact businesses and even state governmentsand disproportionately affects low-income workers, including women and workers of color.
Funds from the American Rescue Plan Act, the federal government’s response to the economic and health impacts of the COVID-19 pandemic, have allowed more states and cities to experiment with using community groups to connect with workers, as Minneapolis has done, according to report from the Economic Policy Institute and the Center for Labor and a Just Economy at Harvard Law School. When labor enforcement agencies that the average worker may not know about work more closely with community organizations that connect with those workers, workers perform better, experts say.
Now that most of the ARPA funds were misappropriatedSome policy advocates are pushing for states to continue this work, with employers rather than the public bearing the costs of enforcing the law, and for the U.S. Department of Labor to support the process through grants and other funding options.
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“If you have workers in the workplace that the employer knows are … aware of their rights and willing to stand up for themselves, the employer is less likely to intentionally take action to commit wage theft, which becomes a form of prevention,” said Veronica Mendez Moore, co-director of Centro de Trabajadores Unidos en Lucha (CTUL), a worker-led organization in Minneapolis focused on racial, gender and economic justice. “We’ve seen that in many cases, when workers stand up for one thing, the employer avoids another.”
Walsh meets regularly with Mendez Moore’s group, as well as with New Justice Project MN, a black organizing center focused on economic issues, and ROC Minnesota, a nonprofit working on workers’ rights, to discuss emerging phenomena, such as the wage theft trends they are seeing.
He added that closer relationships with these groups have helped strengthen law enforcement.
“[There are] about 300,000 employees throughout the city and three investigators,” he said. “It’s a really difficult, almost impossible task, to be everywhere, all the time.”
Walsh said ARPA’s total funding for the program is $750,000.
ARPA Funds to the Rescue
“The American Rescue Plan [Act] funds have provided a little more opportunity for experimentation,” said Rachel Deutsch, campaign director at the California Coalition for Worker Power and one of the co-authors of the EPI/Harvard report. “The question now is, ‘Do we just abandon this infrastructure because we’re acting like COVID is over, or do we build on it to create the mechanisms that are really needed, whether we’re in a moment of emergency response, to inform low-wage workers of their rights and inform employers of their responsibilities?’”
The report highlights efforts in several cities and states.
In 2021, Maine launched a program with $1 million in ARPA funds for job training, assistance with accessing unemployment benefits and advocacy for workers with support from community organizations, the AFL-CIO and a legal aid group, according to the EPI report. In Seattle, city Bureau of Labor Standards staff hold monthly and quarterly meetings with community organizations. Chicago, Philadelphia and San Francisco also work closely with community organizations, as do San Diego and Santa Clara counties in California.
In Iowa, the cities of Coralville, North Liberty, Iowa City and Johnson County have committed $322,000 in ARPA funds over five years to the Eastern Iowa Worker Justice Center, which investigates wage theft cases and helps build community pressure on employers to pay their workers. It has also helped workers recover lost wages.
The assist is needed because Iowa Workforce Development doesn’t have enough staff. Jesse Dougherty, the agency’s director of marketing and communications, told States Newsroom in an email that the Workforce Development Division has four positions to investigate unpaid wages. Two of those positions have been vacant for part of the past year, Dougherty said. In all, about 15 to 20 people regularly work on wage or misclassification issues.
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Mazahir Salih, who until recently was executive director of the Center for Worker Justice of Eastern Iowa, told States Newsroom that workers don’t always know how to file a complaint or that there’s a labor law enforcement agency they can file one with. They come to CWJ through word of mouth, she said. On this particular day, she was coordinating with organizers of a protest to collect the wages of a former employee at a local Mexican restaurant. He learned his employer couldn’t cover his paycheck until he tried to deposit it into his bank.
Sometimes CWJ is able to resolve the issue with the employer over the phone, but if that fails, the group sends a letter and then may escalate community pressure, including protests and sending a delegation of elected officials.
“If it’s really a misunderstanding, we can clear it up during this phone call,” Salih said. “But some of them either don’t want to talk to us on the phone or don’t want to give us any information.”
Deutsch said she would like to see more states in the South and Southwest adopt these approaches to enforce labor protections and prevent labor law violations. She said that historically, these programs have started in cities with their own wage standards. One barrier may be priority rights that have been used by state governments to prevent cities from increasing worker wages and protections beyond the state minimum wage. Many of law on the payment of minimum wages are concentrated in the Southern states.
Community-based organizations also need adequate financial support to devote time and resources to working with labor enforcement agencies. Funding problems can be addressed by allocating revenue streams to labor enforcement and having employers pay for the costs through fines they pay for labor violations, according to the report. Deutsch said that if philanthropic funding supports the pilot program and it is successful, it could also justify more public funding for these partnerships. She added that she hopes the Department of Labor will also employ its grant authority to support these models.
“As a society, we really systematically underfund agencies that are supposed to enforce our labor laws,” Deutsch said. “You hear about the latest concerns about shoplifting or whatever, and wage theft has always dwarfed retail burglary and all of those things. It’s a crisis and we’re just not funding it as such.”
Scope of the problem
The Fair Labor Standards Act requires that workers be paid at least the federal minimum wage and overtime for any hours worked over 40, but it is a law that is often broken. Last year, the Department of Labor’s Wage and Hour Division recovered back wages from workers in 13 122 cases of violations of labor law in industries with high levels of violations and low wages. The industries in which the largest number of workers were affected were catering, construction and retail.
Low-wage workers in the 10 most populous U.S. states said they were paid less than the minimum wage, meaning they were losing $8 billion a year, According to 2017 study. While National Labor Law Project In 2019, it was found that $9.27 billion was stolen from workers earning less than $13 an hour.
The January report was recently published National Bureau of Economic Research found that companies routinely deny overtime pay to employees, referring to them as managers, even though most of the work they do is not managerial work. The companies they singled out included restaurant chains Bojangles’, Sonic, Arby’s, and Domino’s, as well as companies like H&R Block, Spirit Halloween, and 84Lumber.
The report prompted Democratic U.S. Senators Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts to send a letter to the companies identified in the report, asking them to respond to questions about their overtime practices, according to a report Washington Post.
