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May
2011
5

AL, FL, GA, LA and MS Do Not Have State Agencies to Enforce Wage and Hour Standards


The most common method for identifying wage and hour abuse was individual wage claims filed by employees. Only Kansas, Kentucky, Maine, New York and Massachusetts made significant use (more than 5% of enforcement work) of procedures other than individual complaint processes.

The National State Attorneys General Program at Columbia Law School has issued a report on state wage and hour law enforcement, analyzing survey responses from 37 states and the District of Columbia.

A portion of the EXECUTIVE SUMMARY reads as follows:

For nearly one hundred years, state laws have played a crucial role in protecting employees’ rights and creating a level playing field for businesses. Minimum wage laws exist in 45 states, of which 16 (plus the District of Columbia) set a standard higher than the federal minimum. Thirty-two states also have overtime laws.

The mere existence of state wage and hour laws does not mean the standards they establish are followed. In fact, pervasive violation of both federal and state wage and hour laws across the United States is well documented. Without meaningful enforcement by state regulators, some employers will simply disregard their legal obligations, putting the majority who abide by the law at a significant competitive disadvantage. This creates a regulatory race to the bottom by states as they compete to attract businesses. Insufficient enforcement therefore has a considerable negative impact on employees and their families, law abiding businesses, and the communities in which they reside.

The FULL 194-PAGE REPORT is available to the public as well. Some highlights of the findings — perhaps more like lowlights — are provided below…

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WAGE AND HOUR ENFORCEMENT ENTITIES

• Representatives from Alabama, Florida, Georgia, Louisiana and Mississippi reported that they do not have a state agency that enforces wage and hour standards. In these states, inquiries regarding wage and hour enforcement are referred to federal regulators or private attorneys.

• In most states, primary responsibility for wage and hour enforcement is assigned to a labor agency that also address such issues as workers’ compensation, employment discrimination, public works, employee misclassification, child labor, licensing and certification, and worker training. About a third of the states locate wage and hour enforcement within a discrete wage and hour unit.

• It is difficult to track the resources and authority allotted to wage and hour enforcement entities, because internal shifts in funding and personnel may be made toward or away from wage and hour enforcement, while the publicly reported budget and human resources of the broader division of which the wage and hour entity is a part remains unchanged.

• The state attorney general’s office was the agency most frequently cited as providing substantive support to the wage and hour enforcers. Attorneys general perform functions including representing the primary labor agency in civil and collections matters, serving as the hearing officer for administrative hearings in wage and hour investigations, and enforcing the orders of the primary labor authority. In two states, Massachusetts and New York, the attorney general’s office pursues its own independent wage and hour investigations and enforcement measures.

METHODS OF IDENTIFYING VIOLATIONS

• The most common method for identifying wage and hour abuse was individual wage claims filed by employees. Only Kansas, Kentucky, Maine, New York and Massachusetts made significant use (more than 5% of enforcement work) of procedures other than individual complaint processes. Several respondents, including the District of Columbia, Kentucky, Massachusetts, Nebraska and Utah, noted that their use of methods other than an individual complaint process was limited due to budget and staffing shortages.

• Those states that engaged in proactive enforcement generally targeted these efforts on particular industries, employers and types of law. The most common areas of focus for proactive investigations were prevailing wage and employee misclassification violations, particularly within the construction industry.

• Because they rely largely on the initiative of employees to commence the complaint process, the extent to which individual complaint systems are successful depends on employees’ awareness of their rights and on their belief that they will not be subject to retaliation for filing a complaint. Research should be performed into the substance and enforcement of states’ anti-retaliation laws. Additionally, generating data on the demographics, occupations, positions and salaries of those who file wage complaints would help identify the classes of employees that are affected by wage and hour violations, as well as the classes that are sufficiently informed and empowered to file complaints.

PREVAILING WAGE ENFORCEMENT

• Of the states that have prevailing wage laws – which establish wages for public works projects – the vast majority located enforcement of these laws in the same division as other wage and hour enforcement. It is difficult to tell how housing prevailing wage enforcement with other wage and hour enforcement might affect either, without knowing the extent to which agency resources were divided between the two. Research into the division of resources and the performance of states in each area could provide a better sense of how much attention and resources prevailing wage enforcement receives, and the impact of this on an agency’s other duties.

EMPLOYEE MISCLASSIFICATION

• The practice of misclassifying employees as independent contractors – or of paying employees entirely off the books – negatively affects state tax revenues as well as workers’ compensation and unemployment funds, and it denies misclassified employees access to overtime, pension plans, and employers’ health insurance. Given how widespread the practice of misclassification is, stringent enforcement could raise non-compliant employers’ costs significantly, while lowering the costs born by employers who obey the law. Further research should be performed into the efficacy of misclassification enforcement.

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