AGs Ramping Up Enforcement of Wage Theft Law

An increasing number of attorneys general are ramping up their enforcement of wage theft. On July 15, Minnesota Attorney General Keith Ellison became the latest when he announced the formation of a special unit, created with bipartisan support, and other attorneys general are soon to follow.

Stephen Montemayor, “Minnesota lawmakers, officials hail new wage-theft law as nation's strongest,” Star Tribune, July 15, 2019.

Forum News Service, “Minnesota to open wage theft investigation unit,” Echo Press and Forum Communications Company, July 16, 2019.

Christopher Magan, “Under Minnesota’s new wage theft law, bosses who don’t pay workers could face prison,” St. Paul Pioneer Press, July 21st, 2019.

IL AG Madigan & NY AG Underwood settle with WeWork over "non compete" agreements, benefiting workers

Illinois Attorney General Lisa Madigan and New York Attorney General Barbara Underwood just settled a case that will benefit up to 1400 workers by giving them the ability to move on to better jobs in their field.  The settlement was with the co-working space company WeWork (press releases here and here, media coverage here, here, and here).

Under the terms of the settlement, 1400 lower level WeWork employees nationwide (like janitorial workers or baristas) will no longer be subject to "non compete" agreements, while 1800 higher-level employees of the company will have non compete agreements that are significantly narrowed in key ways.

Non compete clauses unfairly limit workers from getting ahead as they should be free to leave their jobs and advance in their lives. The attorneys general of New York and Illinois have been working extensively on this issue (settlements with Jimmy Johns by Illinois and New York; Illinois case against a national payday lender; New York settlements with Law360 and with a medical information services company).

Because use of these restrictions has been growing in recent years — one report found that nearly 20% of workers are covered by non competes — their unfairness may put this issue on the agenda of a growing number of attorneys general in the years to come.

For more information, please see this paper co-authored by Illinois Attorney General Lisa Madigan and the Chief of her Workplace Rights Bureau, Jane Flanagan.

State AGs Taking on "No Poach" Agreements

Washington Attorney General Bob Ferguson and his staff have secured agreements with eight fast food chains to stop using “no poach” or “no hire” agreements. No-poach clauses prevent workers from switching jobs within the same chain, limiting workers’ ability to advance and depressing their wages and bargaining power.

In addition, in July, ten state attorneys general and D.C. initiated a separate inquiry into a number of fast food companies for this same practice. Since then, three additional states have joined that multi-state effort.

CA and MA Taking On the Scourge of Wage-Theft

The wage-theft saga continues, as evidenced by these recent actions brought by California Attorney General Xavier Becerra and Massachusetts Attorney General Maura Healey.

In a May 2017 report, the Economic Policy Institute found that in 10 states (California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas) 2.4 million workers lose approximately $8 billion annually as a result of receiving an effective hourly rate less than the states' mandated minimum wage. These findings suggest that nationally, employers are pocketing $15 billion in employee wages! This scourge overwhelmingly impacts low-wage industries, where immigrant and other vulnerable, marginalized communities predominate the labor force.

These cases will generally not garner the national spotlight. But they are just as important as the actions that have generated far greater national attention. They have immediate real-life impact on affected communities and send a clear signal that some state attorneys general remain on the labor law enforcement beat.

EPI Report: Employers steal $15 billion a year from workers by paying less than the minimum wage, Economic Policy Institute, May 10, 2017.

California Case:  Attorney General Becerra Files Suit Against Janitorial Subcontracting Company for Wage Theft and Violating Tax Laws, Highland Community News,  Nov 30, 2017.

Massachusetts Case: Sean Philip Cotter, AG: Cohasset hotel didn’t pay workers enough, The Patriot Ledger, Dec 1, 2017.

On Labor Blog: State AGs: Stepping Up to Protect People on the Job

“In recent months, progressive state attorneys general have emerged as some of the nation’s foremost champions of civil rights and of humane, sensible policy in the face of declining protection at the federal level. As income inequality grows and too many American workers struggle to get a fair deal in our economy, the role of state attorneys general in enforcing statutes that protect workers’ economic interests has taken on new importance. ”

— Terri Gerstein, Sharon Block, and Jim Tierney, "State AGs: Stepping Up to Protect People on the Job"

• Terri Gerstein, Sharon Block, and Jim Tierney, "State Attorney Generals:  Stepping Up to Protect People on the Job," On Labor Blog, August 14, 2017.

Misclassification is Not Going Away

While the eyes of the world are on the litigation between the attorneys general and the Trump Administration's immigration ban, a January 20th article in the Florida Record carries a story that highlights an issue of great importance to all Americans.

The article discusses a Florida case that alleges an employer misclassified his employees as independent contractors in order to avoid paying employment taxes. In addition, the employer "made illegal deductions from [workers'] earnings to pay insurance on company vehicles."

The article cites a 2011 report we published at Columbia Law School, where we argued that stronger enforcement of state labor laws would benefit both workers and the marketplace. “Without meaningful enforcement by state regulators, employers will simply disregard legal obligations if doing so allows them to save time, money or effort, putting the majority who wish to abide by the law at a significant competitive disadvantage,” the report stated.

According to the National Employment Law Project (NELP), misclassification not only imposes costs to workers, but deprives state/federal coffers billions of dollars in tax revenues annually. The issue is not going away, and with the expansion of the gig economy, it's likely getting worse. Combating misclassification falls squarely in the wheelhouse of all state attorneys general.

• Nancy Crist, Lawsuit reflects conflicting 'independent contractor' definition among enforcement agencies, Florida Record (Jan. 20, 2017).

• See, National Employment Law Project Fact Sheet: Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries (July 2015).

• See, Editorial: Defining 'Employee' in the Gig Economy, New York Times (July 18, 2017).

• See, Jacob Meyer and Robert Greenleaf, Enforcement of State Wage and Hour Laws: A Survey of State Regulators, National State Attorneys General Program at Columbia Law School (April 2011).

National Employment Law Project

Because enforcement of state labor laws is often done by a number of agencies (attorney general, labor department, civil rights divisions, etc.), it is often difficult to keep track of them.  The National Employment Law Project is an excellent resource for following all labor law issues including those by attorneys general. 

See: National Employment Law Project (NELP)

AG Maura Healey Announces Innovative Web Initiative to Enforce State Labor Laws

On Labor Day, Massachusetts Attorney General Maura Healey announced an enhanced initiative in continuing her states's long commitment to enforce her state's labor laws. Because these matters are increasingly taking on a multistate component, other attorneys general will be watching closely.

See: Sampan, AG Healey issues first-ever Labor Day Report on efforts to combat wage theft, revamps workplace rights website with innovative features

AG's continue Success in Labor Cases: Jimmy John's Stops Non Compete Clauses

The NY AG has announced that Jimmy John's has terminated its indefensible requirement that their employees sign non-compete clauses, and that, of course, is a good thing for those employees.  It is also a good thing for those who are watching carefully and seeing state attorneys general in how they are enforcing their state labor laws.

IL AG Sues Jimmy Johns Chain on Behalf of Low Wage Earners

State AG's are stepping up their efforts on behalf of low wage earners at food chains.   Today the Il AG in a Complaint filed by AAG Jane Flanagan, a long time friend of the Columbia AG Program, sued the Jimmy Johns Sub chain for non-compete clauses that effectively lock in their employees at their 270 Illinois locations.  The food chain said they were "disappointed."  The founder of Jimmy Johns, actually named Jimmy John Liautaud, says that he wants to "be the best at what I do," and "learn from mistakes."  Well, Jimmy John, I hope you are learning that barring your own employees from seeking a better life is not only a mistake, but illegal.