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AG Frosh Joins Suit to Safeguard Key Protections for Workers in the Fair Labor Standards Act (MD)

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Unlawful Department of Labor Rule Will Increase Wage Theft for Workers

February 27, 2020
News Release, Office of the Maryland Attorney General

BALTIMORE, MD (February 26, 2020) – Maryland Attorney General Brian E. Frosh today joined a coalition of 18 attorneys general in filing a lawsuit to stop the Trump Administration from eliminating key labor protections for workers.

The lawsuit challenges a United States Department of Labor (USDOL) rule that seeks to unlawfully narrow the joint employment standard under the Fair Labor Standards Act (FLSA). The FLSA is the federal law establishing a baseline of critical workplace protections, such as minimum wage and overtime, for workers across the country. The joint employment standard determines when more than one employer is responsible under FLSA because both exert sufficient influence over a worker’s employment.

This change would undermine critical workplace protections for the country’s low-and middle-income workers and could lead to increased wage theft and other labor law violations.

Over the past few decades, businesses have increasingly outsourced and subcontracted many of their core responsibilities to intermediary entities, instead of hiring workers directly. Because these entities tend to be less stable, less well-funded, and subject to less scrutiny, they are more likely to violate wage and hour laws.

In the suit, the coalition argues that USDOL’s new rule provides an incentive for businesses to offload employment responsibilities to smaller companies, which, under the new rule, will shield them from federal liability for wage and hour obligations under the FLSA. The attorneys general argue implementing the new rule will result in lower wages and increased wage theft for workers, especially for workers in low-wage jobs. Further, the new rule will make it more difficult to collect unpaid back wages for workers.

“The rule change is unfair to working men and women around the country. It will allow businesses to outsource labor and skirt important worker protections,” said Attorney General Frosh. “The proposed rule is inconsistent with the Fair Labor Standards Act and undermines Maryland law as well.”

(Read More)

Labor Department apprenticeship rule exempts construction programs

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AUTHOR: Jenn Goodman
PUBLISHED: March 11, 2020

Dive Brief:

  • A Department of Labor rule issued yesterday that will help expand apprenticeships in the U.S. leaves out programs that seek to train apprentices to perform construction work. Those groups instead can continue to participate in a separate Registered Apprenticeship Program
  • The rule establishes a system for advancing the development of Industry-Recognized Apprenticeship Programs (IRAPs), a centerpiece of President Donald Trump’s workplace policy agenda. It will take effect May 11.
  • The idea of exempting the construction industry from IRAPs has drawn fire from major contractor groups like the Associated General Contractors of America (AGC) and Associated Builders and Contractors (ABC). On the other hand, building trade unions like North America’s Building Trades Unions (NABTU) have praised the plan.

Dive Insight:

IRAPS are recognized by a third-party entity under standards established by the department in the new rule. Through these programs, individuals will be able to obtain workplace-relevant training and progressively advancing skills that result in an industry-recognized credential while getting paid for their work.

An IRAP is developed or operated by entities such as trade and industry groups, corporations, nonprofit organizations, educational institutions, unions and joint labor-management organizations. They are seen as a way to help alleviate the labor shortage in new industry sectors and occupations that don’t traditionally have apprenticeships.

“Apprenticeships are widely recognized to be a highly effective job-training approach for American workers and for employers seeking the skilled workforce needed in today’s changing workplace,” Secretary of Labor Eugene Scalia said in a statement. “This new rule offers employers, community colleges, and others a flexible, innovative way to quickly expand apprenticeship in telecommunications, health care, cybersecurity, and other sectors where apprenticeships currently are not widely available.” …

In the end, the department concluded that registered apprenticeship programs are more widespread in the construction sector than in other sectors and therefore don’t need to be included in the plan. The decision could spur at least one legal challenge according to Bloomberg Law, and includes a clause to limit a potential lawsuit from the construction industry. …

… NABTU President Sean McGarvey said the union is pleased with the outcome and that the industry’s current apprenticeship programs won’t be “watered down” by having to participate in IRAPs.

“Given the widespread and effective nature of our privately financed and jointly managed registered programs for the construction industry, the final rule recognizes our rightful place as the standard bearer in the workforce development space,” he said.

(Read More)

Bill aims at cracking down on companies committing wage theft (HI)

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Representative Chris Lee says his bill would subject employers who willingly withhold money from their employees’ paychecks to criminal charges.

Thursday, February 27th 2020

Have you ever felt like you’ve been underpaid? A new bill could help prevent that from happening to you.
A bill moving through the capitol looks to crack down on companies that commit wage theft.

Representative Chris Lee says his bill would subject employers who willingly withhold money from their employees’ paychecks to criminal charges. Violators could face up to five years in prison and up to $10,000 in fines.

“In cases around the country we’ve seen employers intentionally dock wages from their employees, underpay their employees, pocket the money themselves, and in those cases they can be charged with a felony — which could be thousands of dollars, years in prison, because that is the same as someone going to a store nearby and robbing them of the same amount of money. So this protects workers from exploitation,” Lee said.

Under current law, the penalties for employers convicted of wage fraud ranges from a fine of $50 to up to a year in prison.

(See Article)

Employers Misclassifying Workers as Independent Contractors: A Six-Pack of Employee Misclassification Laws

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The National Law Review
Friday, January 24, 2020

… Gov. Murphy signed 6 new laws that address the misclassification issue and provide for significant liabilities for those employers found to have misclassified workers. …

A 5838 – Stop Orders

Under this law, the New Jersey Department of Labor (“DOL”) is now empowered to issue stop-work orders against any employer who is found to be a violation of “any State, wage, benefit and tax law.” This would include failure to pay wages required by law and misclassification of a worker as an independent contractor. The stop-work order would require the cessation of all business operations at the place where the violation exists. …

A 5839 – Additional Penalties

… New penalties are now available against employers who misclassify workers. The new law provides an administrative “misclassification penalty” of up to $250 for each misclassified employee for first violations, and up to $1,000 per employee for each subsequent violation. In addition, a penalty will be paid to the misclassified worker of “not more than 5 percent of the worker’s gross earnings over the past twelve months from the employer who failed to properly classify them.”

A 5840 – Joint Liability

… Gov. Murphy amended the Wage Theft Act so that there is also joint and several liability when the state employment tax laws are violated. So, if you use contract employees and your contractor improperly classifies its workers as independent contractors, you could be liable for all the fines, penalties, and damages resulting from this misclassification.

A 5843 – Notice Posting

This law requires employers to post in the workplace a notice of the prohibition against misclassifying workers, the benefits and protections available to employees and the remedies available under all of the new laws. The DOL is tasked with developing and issuing a form of notice for employers. The law also … provides a private cause of action for employees who are retaliated against. Finally, any employer who violates any part of this law shall be guilty of a disorderly person’s offense and pay fines between $100 and $1,000. …

S 4226 – DOL Website Posting

This law permits the DOL to post on its website the name of any person who is found to be in violation of any state wage, benefit, or tax law, and who has had a final order issued against them by the DOL Commissioner. …

S 4228 – Tax Data Sharing

This law permits the State Division of Taxation to share with the DOL the following information (which was previously deemed confidential): tax information statements, reports, audit files, returns, or reports of any investigation for the purpose of labor market research or assisting in investigations pursuant to any state wage, benefit or tax law.

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STUDY: Should Prevailing Wages Prevail? Reexamining the Effect of Prevailing Wage Laws on Affordable Housing Construction Costs

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Matt Hinkel, Michigan State University, Dale Belman, Ph.D., Michigan State University (ICERES, Institute for Construction Economic Research)

A current policy debate surrounding state prevailing wage laws is centered on whether they are costly to state governments and taxpayers. The authors contribute to this debate by extending and utilizing data from a 2017 prevailing wage study to replicate and investigate a controversial paper often cited in this debate. The authors examine the relationship between California’s prevailing wage law and the costs of building affordable housing, and they do so by going beyond the 2017 study’s estimates and estimating a carefully-constructed two-stage model. The authors find no causal effect of prevailing wages on affordable housing construction costs, contradicting previous literature. Further, in a supplemental analysis, the authors examine and highlight key methodological deficiencies present in a prior study. This timely research is designed to contribute to the current prevailing wage debate, which has important implications for researchers, practitioners, and legislators.

(PDF Copy of Full Study)

(Visit the ICERES Website)

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IL: Attorney General Raoul Convenes First Meeting Of Worker Protection Task Force

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1/23/20

Chicago, IL (WorkersCompensation.com) – Attorney General Kwame Raoul today convened the first meeting of a task force that will facilitate collaboration between the Attorney General’s office, county prosecutors and state agencies in order to better protect workers’ rights and law-abiding businesses in Illinois.

The Worker Protection Unit Task Force was created under Senate Bill (SB) 161, which was initiated by Attorney General Raoul and signed into law by Gov. JB Pritzker. The new law became effective on Jan. 1, 2020. The task force will bring together the state’s leading regulatory agencies that impact workers, law enforcement and worker protection advocates in order to better combat wage payment violations and unfair labor practices. …

… The new law established a Worker Protection Unit Task Force to facilitate information sharing and collaboration between the Attorney General’s office, local prosecutors, the Illinois Department of Labor, the Illinois Department of Human Rights, the Illinois Department of Employment Security and the Workers’ Compensation Commission. …

In addition to establishing the Worker Protection Unit Task Force, Senate Bill 161 codified the Worker Protection Unit within the Attorney General’s office to enforce violations of worker protection laws. The law also gives the Attorney General clear legal authority to investigate and bring enforcement actions against employers that commit wage theft and other workplace rights violations.

(Read More)

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City officials: Getting tax breaks on your project? Pay prevailing wage (MO)

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February 07, 2020

ST. LOUIS (KMOX) — St. Louis Mayor Lyda Krewson has signed an ordinance guaranteeing a prevailing wage for workers on all projects in that receive City of St. Louis incentives.

Krewson says the idea is to avoid developers who get tax breaks and then try to hire workers on the cheap.

“We want to make sure if the city is investing in a project, that the workers are treated fairly and the contractors are treated fairly,” Krewson told KMOX. …

“This is very important to our construction workers on city tax incentivized projects — they’ll be getting a fair wage and benefits on any of these projects,” said Alderwoman Sarah Martin, who sponsored the ordinance.

(Read More)

Fair Contracting Foundation of Minnesota

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January 2020 Newsletter

Trades Women Build Nations: Epic Movement in the Making

The next generation of building trades members came to Minneapolis in October. To organize, to learn, but most importantly, to celebrate being in the trades.

The 9th National Trades Women Build Nations Conference solidified itself as the North America’s Building Trades Union’s (NABTU’s) largest annual gathering. More than 2,700 women from across North America attended, surpassing last year’s total. Equally impressive is that the attendees paid their own way.

“The people in leadership who attended were very surprised at the pride women have in being union trades workers. They couldn’t believe the energy of the conference as a whole,” said Vicki O’Leary, chairwoman of the NABTU committee. “More general presidents taking a role is exactly what we need to keep women’s membership growing.”

Local Minnesota unions and their leadership made a strong contribution to the success of the conference according to Jessica Looman, executive director of the Minnesota Building Trades. “The conference was very well supported by the locals. One thing really exciting to see was local union leadership really embrace the conference not just by asking their members to attend but by encouraging them to be leaders,” she said.

(PDF Copy of January 2020 Newsletter)

(Visit FCFMN’s Resources Page)

Wage theft: An underreported crime

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Catholic News Service |Mark Pattison
February 21, 2020

A rising tide lifts all boats, according to the popular economic adage.

But what if the reverse also is true? What happens when wages are depressed, and illegally so?

The Catholic Labor Network, based in Washington, is testing that theory right now through its Mid-Atlantic Construction Wage Theft Project. It has sent a man to construction sites in Maryland and the District of Columbia to talk to workers to learn who hired them and how much they’re getting paid.

Ernesto Galeas, who has gone to the job sites, said a growing number of builders are going through labor brokers to obtain workers. The brokers get their fee – and, according to Galeas, the workers get about $10 an hour with no overtime, no Social Security, no worker’s compensation and no health insurance. …

In a February phone interview with Catholic News Service, Galeas said: “In every job that I visit, most of them have labor brokers in drywall, carpentry, siding, plumbing, electricians. I would say that of 10 jobs, eight of them are under labor brokers.”
While labor brokers were more common in new-home construction, it has spread to commercial development, he added. …

The attorney general’s office in the District of Columbia levied fines this winter totaling roughly $3.25 million against three firms found to have violated the city’s wage-theft law. Some of that money will go to workers as back pay. Two of the three companies specialize in drywall hanging and electrical work.

D.C.’s Workplace Fraud Act, which applies to the construction industry, requires companies to classify most workers as employees. Those who violate the law can face significant fines. Maryland has a similar bill, hence the Catholic Labor Network’s focus there with its wage-theft initiative. …

California passed the Private Attorneys General Act, which allows workers to stand in the shoes of their state’s labor department and seek civil penalties for wage theft; they also generate millions in new revenue for state enforcement agencies, expanding their capacity to root out wage theft. Such legislation also has been proposed in New York, Oregon, Maine, Massachusetts, Vermont and Washington. …

A 2017 study by the Economic Policy Institute found wage theft “causes many families to fall below the poverty line, and it increases workers’ reliance on public assistance, costing taxpayers money. Lost wages can hurt state and local economies, and it hurts other workers in affected industries by putting downward pressure on wages.”

In examining the 10 most populous states, which hold a bit more than half the U.S. population, wage theft comes to more than $8 billion a year. “If the findings for these states are representative for the rest of the country, they suggest that the total wages stolen from workers due to minimum wage violations exceeds $15 billion each year,” the report said.

Just how much is that? David Cooper, a senior analyst at the Economic Policy Institute and co-author of the report, told CNS that “when you look at the amount of wage theft that takes place, it’s significantly more than the value of property theft.” The report quotes FBI statistics from 2015 that show the combined value of money and property stolen in robberies, burglaries, larceny and motor vehicle theft in the United States was $12.7 billion.

“The magnitude,” Cooper said, “is a lot larger than people think.”

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Illinois law promoting diversity in construction set to take effect (IL)

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Posted by Adam Redling
December 30, 2019

Illinois Governor J.B. Pritzker signed Illinois Works Jobs Program legislation Dec. 10 to strengthen a pillar of the state’s Rebuild Illinois initiative and increase diversity in apprenticeships for construction and the building trades. Senate Bill 177 takes effect Jan. 1, 2020.

Rebuild Illinois is a $45 billion capital program designed to improve the state’s infrastructure and provide resources to those in the building profession.

The Illinois Works Jobs Program will help ensure that Illinois residents from all communities not only benefit from capital projects, but also have access to careers in the construction industry and building trades.

The law encompasses a $25 million investment and works through community-based organizations. These organizations will help recruit new apprentices to work on construction projects and sets strong apprentice participation goals of 10 percent on public works projects. Through this pre-apprenticeship program, bid credit program and review panel, the new law is designed to help ensure the Illinois Works Jobs Program can build and maintain a diverse workforce on Rebuild Illinois projects.

“Rebuild Illinois is the largest, most robust capital plan in state history. We’re working with our partners to make sure every community in the state benefits from these good jobs-especially those who have been left out for far too long,” Pritzker says. “We’re putting Illinois’ government back on the side of working families, designing a state that is economically prosperous not just for the few, but for every Illinoisan, no matter the color of their skin or their ZIP code.”

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