Wednesday, May 15, 2013

Employers who Dodge the Minimum Wage Law

Until the fire in 1911, the Triangle Waist Company in New York City employed about 500 workers, mostly young immigrant women, who worked nine hours a day on weekdays and seven hours on Saturdays, while earning between $7 and $12 a week That equates to about 52 hours a week for 23¢ an hour, which is much more than what Nike currently pays it's factory workers today. That's because, in America, slavery has been illegal since 1865.

The Fair Labor Standards Act was passed in 1938, and it introduced a maximum 44-hour workweek and established a federal minimum wage of 25¢ per hour, which would only be $4.13 in 2013 dollars.

The FLSA also guaranteed "time-and-a-half" for overtime hours in certain jobs and prohibited the employment of most minors in hazardous occupations, preventing the exploitation of child labor (excluding farms). Roosevelt called it the most important piece of New Deal legislation passed since the Social Security Act of 1935.

In 1949 the FLSA raised the minimum wage from 40 cents an hour to 75 cents per hour; and in 1955 the FLSA was amended once again to increase minimum wage to $1.00 an hour. Today it's $7.25 an hour.

The U.S. Department of Labor's Bureau of Labor Statistics has recently released a report titled "Characteristics of Minimum Wage Workers: 2012." The report shows that among the 75.3 million hourly paid workers, 1.6 million earned exactly the prevailing federal minimum wage of $7.25 per hour --- and about another 2 million had wages below the federal minimum.

Acting Secretary of Labor Seth D. Harris issued a statement about the report, saying "Workers earning the federal minimum wage have not had a raise in nearly four years. As the report makes clear, many are working adults with full-time jobs, and we know that some low-wage workers are holding down more than one job." According to the Bureau of Labor Statistics' most recent report, over 7 million Americans work multiple jobs.

Secretary Harris goes on to say that "raising the federal minimum wage will result in nearly 15 million low-wage workers getting a raise in their take-home pay. That money will be spent locally at the grocery store, to buy school supplies and clothing for children, to pay rent and utility bills, and in many other ways to support families." They might also mean 15 million Americans could also be taken off food stamps, because these "government entitlements" are really "wage subsidies", and companies such as Wal-Mart and McDonald's benefit the most.

But ever since Fair Labor Standards Act was passed in 1938, there are still many American employers who steadfastly refuse to abide by the federal law, and insist on illegally paying their workers LESS than the even the current (and puny) federally mandated minimum wage.

In Secretary of Labor Seth D. Harris' statement, he noted, "In fiscal year 2012, the department's Wage and Hour Division found minimum wage violations in more than 12,500 investigations — more than a third of all cases concluded by the agency that fiscal year. These cases resulted in $35.2 million in back minimum wages for more than 107,000 workers, more than twice what we recovered in similar investigations in fiscal year 2009. Unfortunately, our ability to enforce the law and protect our most vulnerable workers will be threatened if Congress fails to act to avert the coming sequester."

But because the Department of Labor has already been under-funded for many years, just like with the IRS, many more investigations against these law-breakers have gone unpunished, and many employers will continue wage violations with impunity.

So not only are millions of Americans not being paid a "fair" or "living wage", but of the wages that American workers are legally entitled to, many are still being denied the minimum wage by many American business owners today.

The Meyer's Family Restaurant (no relation to this author) has agreed to pay $116,102 in back wages to 38 employees following an investigation by the U.S. Department of Labor's Wage and Hour Division that disclosed violations of the Fair Labor Standards Act's (FLSA) overtime pay and record-keeping provisions. The Meyer's Family Restaurant failed to compensate workers with overtime pay at time and one-half their regular rates of pay for hours worked beyond 40 hours in a week

Also, in accordance with the FLSA, an employer of a tipped employee is required to pay no less than $2.13 an hour in direct wages, provided that amount -- plus the tips received -- equals at least the federal minimum wage of $7.25 an hour. If an employee's tips, combined with the employer's direct wages, do not equal the minimum wage, the employer must make up the difference.

A group of 15 Boston-area restaurants and their owners, Patrick Lyons and Edward Sparks, have agreed to pay $424,000 (including $212,000 in back wages and an equal amount in liquidated damages) to 409 employees to resolve violations of the Fair Labor Standards Act. The DOL found that employees of the following restaurants were not properly compensated for all work hours: Alibi Bar & Lounge; Back Bay Social Club; Bleacher Bar; The Estate; Game On; Harvard Gardens; Kings Boston; Kings Dedham; La Verdad; The Lansdowne Pub; Lucky's Lounge; Scampo; Sonsie; Sweetwater Café; and Towne Stove & Spirits. Many of these employees were paid straight time wages rather than time and one-half their regular rates of pay for hours worked in excess of 40 hours in a workweek.

A federal judge has ordered KGB USA Inc., the world's largest independent provider of directory assistance and enhanced information services, to pay $1.3 million in minimum wage compensation to 14,568 of its current and former employees nationwide for violations of the Fair Labor Standards Act. The DOL found that the company misclassified employees as "independent contractors" and paid them a "piece rate", without regard to the number of hours they worked. FLSA violations resulted when piece rate earnings failed to yield at least the federal minimum wage of $7.25 per hour.

Hutco Inc., a major industrial services employment agency, has agreed to pay $1,916,850 in back wages to 2,267 temporary workers assigned to work sites throughout Louisiana, Mississippi and Texas. An investigation conducted by the DOL found that the company utilized improper pay and record-keeping practices that resulted in employees being denied overtime compensation in violation of the Fair Labor Standards Act.

Daniyal Enterprises LLC and owner Waseem Chaudhary, and other companies owned and operated by Chaudhary, have agreed to pay $2 million in overtime back wages and an additional $1 million in liquidated damages to 417 workers employed at 72 of Chaudhary's New Jersey gas stations after investigations by the DOL found violations. Investigators found that employees often worked up to 84 hours per week, but did not receive any overtime pay.

U.S. District Court Judge Margaret Morrow has ordered Los Angeles-based apparel retailer Forever 21 to produce documents demanded by an administrative subpoena issued by the DOL regarding violations which prohibits employers from shipping any goods produced in violation of the minimum wage, overtime or child labor standards. The subpoena initially was issued following the department's sweep of garment sewing factories in downtown Los Angeles, which began Aug. 7, 2012, and uncovered minimum wage and overtime violations in shops producing goods for major garment retailers. Investigators determined that garments produced in at least one of the shops investigated were destined for Forever 21 stores, who refused to comply with the subpoena.

Sunnyvale, Calif.-based Bloom Energy Corp. has been ordered to pay $31,922 in back wages and an equal amount in liquidated damages to 14 workers that the company brought in from Chihuahua, Mexico, to the company headquarters. A U.S. District Court judge ordered the payments after an investigation by the DOL disclosed that the employer willfully violated the law when they learned that the 14 workers were paid in Mexican pesos equivalent to $2.66 per hour.

Paradise Detail Ltd. in Dallas has agreed to pay 82 current and former detail and car wash employees $229,475 in back wages following an investigation by the DOL after discovering the company's timekeeping system always rounded time worked in the employer's favor, resulting in paying employees for fewer hours than they had actually worked.

Azteca Restaurante Mexicano Inc and Salvador B. Alatorre, the manager and part-owner of the Akron Ohio establishment, have agreed to pay $45,781 in back wages and liquidated damages to 18 employees following an investigation by the DOL. Employees, including bussers, cooks and dishwashers, were paid weekly salaries --- but were found to regularly work 60 or more hours per week, and their salaries didn't meet the federal minimum wage requirements.

L-3 Communications Vertex Aerospace LLC (based in Madison, Miss.) has agreed to pay $261,899 in back wages to 361 workers employed at Hunter Army Airfield in Savannah Georgia following an investigation by DOL that found employees were not being compensated in compliance with the McNamara-O'Hara Service Contract Act (the government contractor wrongfully computed employees' vacation benefits).

Officials of the DOL and Iowa Workforce Development signed a "memorandum of understanding" to protect the rights of employees by preventing their misclassification as "independent contractors" by employers. Since September 2011, the Wage and Hour Division has collected $9.5 million in back wages for more than 11,400 workers where the primary reason for minimum wage or overtime violations under the Fair Labor Standards Act was that workers were not treated or classified as regular employees, but as "independent contractors".

A group of 1,245 dancers at a gentleman's club (a strip bar) in New York City have reached an $8 million preliminary settlement in a lawsuit over unpaid tips and wages, the latest in a series of employment cases in the exotic-dance industry. The Penthouse Executive Club misclassified its dancers as "independent contractors". The DOL also said the club had failed to pay the federal minimum wage and overtime pay.

Business models that attempt to change or obscure the employment relationship through the use of independent contractors and the misclassification of employees presents a serious problem, as these employees often are denied access to critical benefits and protections — such as family and medical leave, overtime compensation, minimum wage pay and Unemployment Insurance — to which they are entitled. In addition, misclassification can create economic pressure for law-abiding business owners, who often find it difficult to compete with those who are skirting the law. Employee misclassification also generates substantial losses for state Unemployment Insurance and workers' compensation funds.

San-Way Farms Inc. and owner Wayne Moss have paid $53,800 in back wages to 391 employees after an investigation by the DOL disclosed significant violations of the Migrant and Seasonal Agricultural Worker Protection Act. The department assessed the employer an additional $35,000 in civil money penalties, which have also been paid in full.

These vulnerable migrant farm workers performed intense physical labor, planting and harvesting crops, but in turn, were denied their rightful wages --- and many even suffered unsafe housing conditions. Investigators found many San-Way Farms employees, such as those hired to hand-harvest strawberries, were being paid piece-rate wages, varying from $1.75 to $3 per "flat" of picked crops. The employer failed to keep daily and weekly time records when employees were paid on a piece-rate basis, so these employees were not paid for all hours worked, causing some employees' wages to fall below the federal minimum wage of $7.25 per hour.

Many small businesses and large businesses alike attempt to use all sorts of ways to skirt the labor and wage laws, especially if they can't outsource jobs to Asia. Besides labor unions, the GOP would like nothing better than to de-fund the government institutions that protects the rights of Americans workers and enforces fair labor laws, such as the Department of Labor (DOL), the Equal Employment Opportunity Commission (EEOC), the National Labor Relations Board (NLRB), and the Occupational Safety and Health Administration (OSHA) --- just to name a few.

A few American and European garment companies have signed the "Bangladesh Fire and Building Safety Agreement". Gap Inc and Wal-Mart are two who have not. Gap is one of the largest purchasers of Bangladeshi garments, and says it will only sign the Agreement "so long as it isn't legally binding". The GOP would prefer that no American business should be legally bound to any safety or wage regulations in the U.S. as well. They would prefer NO minimum wage at all. It's no coincidence that most Americans believe the GOP represents the wealthy and large corporations. For the past 40 years their actions have spoken much louder than their words.

And these grievous wage violations of the fair labor laws aren't just happening in the continental U.S.A., or to immigrant and/or farm workers. Following an investigation by the DOL, the Commonwealth of Puerto Rico has agreed to pay $35,037,586 in back wages and interest to 4,490 current and former employees of the territory's Department of Corrections and Rehabilitation. This is one of the largest settlements in the Wage and Hour Division's history. The government of Puerto Rico was screwing over their own prison guards, those who oversee others who broke the law.

I propose that employers who "willfully, knowingly, and continually" break the law (provided for in the Fair Labor Standards Act), should also spend some time in jail for "willfully, knowingly, and continually" to negatively impact the livelihoods of other human beings. We can start with the CEOs of Wal-Mart and McDonald's, America's largest private sector employers. But just like the banks, our government probably believes they're also "too big to jail". The GOP wants to de-fund the DOL so much that they can't even afford to investigate small businesses like the Meyer's Family Restaurant...let alone a much larger corporation who has an army of lawyers.

The Revel casino, a $2.4 billion mega-resort in Atlantic City New Jersey, imposed "term limits" on some of it's frontline employees. Many major corporations are reducing workers hours to skirt the new healthcare law. If they aren't "outsourcing", they're "insourcing" with H-1B visas for cheaper labor. If they aren't "robotizing", they're "downsizing", forcing workers to produce more without any (or very little) wage increases.

These corporations lobby Congress to vote against raising the minimum wage. They lobby for preferential tax laws, and threaten cities, states, and even the country, that they will leave if their demands aren't met (using "jobs" as hostages). They lobby for free trade agreements. They lobby for weaker environmental and other regulatory laws. They lobby to gut worker's safety and labor laws. The lobby for "right to work" laws, to weaken labor unions, so that no one is left to lobby on behalf of American workers. American corporations also lobby in foreign countries as well, imposing their will on everyone they can in their quest for more profits.

The CEOs, who are making record-breaking multi-million-dollar annual salaries, call themselves the "job creators", but yet they bankrupt companies to renegotiate union contracts, steal the workers pensions, ship jobs to Asia, and then pay themselves fat bonuses, all while paying a very low "effective tax rate" on corporate profits and capital gains on their stock options. The American worker has been under attack for decades; but it's more than just "class warfare", it's fast becoming a mass extermination of the American middle-class worker.

If these corporations were allowed to have their own way, we'd all be working 52 hours a week (or more) for 23¢ an hour (or less)...or they'd pay us like a Nike factory worker in Vietnam today. So even if the proposed legislation to raise the minimum wage (and indexed it to inflation) were ever to pass Congress, what's to keep our "job creators" from just ignoring the law? They might just make us all "independent contractors" to keep from having to pay us "unfair" wages, let alone a real "living wage" with healthcare insurance, vacation pay, sick days or a pension plan --- or anything else for that matter. They call this "free enterprise", when the CEOs can have it all for free.

I'll bet our business leaders miss the days before 1938, or better yet, before 1865. That's why they're trying so hard to take us back to that time in American history. And little by little, using their unlimited ingenuity and vast power over our political leaders, they have been succeeding. Maybe some day they'll also attempt to have the 13th Amendment repealed.

1 comment:

  1. What we need is a total commitment to eradicate poverty through full employment. Government should be employer of last resort. Cheaper than welfare or unemployment insurance.