Chairwoman DeLauro Statement at Hearing on Combating Wage Theft

2019-04-09 11:00

Congresswoman Rosa DeLauro (D-CT), Chair of the Labor, Health and Human Services, Education, and Related Agencies Appropriations Subcommittee, delivered the following remarks at the Subcommittee's hearing "Combating Wage Theft: The Critical Role of Wage and Hour Enforcement”:

Good morning. Welcome everyone to the Labor, HHS, and Education Appropriations Subcommittee. Today’s oversight hearing will examine wage theft and the critical role of the Department of Labor’s Wage and Hour Division in combatting it.

I will introduce them before their remarks, but let me thank our distinguished panelists for being here today:

  • Daniel Katz, Senior Counsel with the Washington Lawyers’ Committee for Civil Rights and Urban Affairs;
  • Paul DeCamp, Member, Epstein, Becker and Green;
  • The Honorable Kwame Raoul, Attorney General of the State of Illinois;
  • And, Laura Huizar, Senior Staff Attorney with the National Employment Law Project.

Today, we are focused on combatting wage theft and the critical role of the Wage and Hour Division.

The National Interfaith Committee for Worker Justice is a grassroots organization founded to spotlight and combat wage theft. They define wage theft as a violation of the Fair Labor Standards Act (FLSA), which provides for a federal minimum wage and allows states to set their own higher minimum wage, and requires employers to pay time and a half for all hours worked above 40 hours per week. When employers violate those requirements in federal law, and thus fail to pay working people the full wages they have earned and are legally-entitled to, those companies are committing wage theft.

Let us call it for what it is: wage theft. And, we have an agency responsible for investigating all forms of wage theft: the Wage and Hour Division of the Department of Labor. Its mission is to, quote, “promote and achieve compliance with labor standards to protect and enhance the welfare of the Nation's workforce.”

This is so important. The single biggest economic challenge of our time is that people are in jobs that do not pay them enough to live on. They are struggling. It is even more difficult for people to survive if they are not being paid the wages they have earned. It creates that much more of an economic burden.

The Wage and Hour Division under the Trump administration has itself recognized the problem of wage theft. Because on its website, under data, it champions that WHD has recovered $304 million in, quote, “wages owed to workers in fiscal year 2018” and more than $1.3 billion in the last 5 years.

But unfortunately, these amounts are just a drop in the bucket when we look at what workers are owed. According to informed analysis by the Economic Policy Institute, the federal government, states, and private action in the U.S. has recovered only $2 billion dollars in 2015 and 2016. Yet, that is not even ten percent of the total cost of wage theft, which EPI estimates to be as much as $50 billion dollars a year. For context, motor vehicle thefts costed the U.S. $5.9 billion in 2016 according to the FBI. Working people are losing nine times that.

It is not just fly by night businesses. In fact, a 2018 report by Good Jobs First found more than half of wage theft cases involved Fortune 500 companies or Fortune Global 500 companies.

Nor are these just small violations. A 2014 study by the Department of Labor found minimum wage workers in California, quote, “experienced violations equal to 49 percent of the earnings they took home.” Nearly half. It is egregious and inexcusable.

And, those who can least afford it are most affected. The National Employment Law Project conducted a groundbreaking survey in 2009 of more than 4,000 low-wage workers in New York, Los Angeles, and Chicago. It found that women, immigrants and minorities were disproportionately affected.

There is a significant and severe problem taking place that is hurting working people and middle-class Americans.

We must be doing more to address wage theft, to prevent it, to combat it and to ensure working people receive the pay they earned and are legally entitled to.

Some states are stepping up. I look forward to hearing from the Attorney General of the State of Illinois Kwame Raoul later this morning. He and other witnesses will share what efforts States are taking to protect workers.

California, Illinois, Massachusetts and my home state of Connecticut, to name a few, are states that are true leaders in this fight. Many state attorneys general have established units to combat wage theft by targeting high-impact violators through investigations and legal action.

Yet, we cannot leave this to the states. For example, in Georgia, Alabama, Florida, Louisiana and Mississippi, there is no state-level enforcement. Claims of wage theft must be filed directly with the U.S. Department of Labor.

So, I believe firmly that the federal government has a central role to play in addressing and combatting wage theft.

I have introduced legislation. The Wage Theft Prevention and Wage Recovery Act is comprehensive legislation that will strengthen current federal law and empower employees to recover their lost wages. Whether it is compensation for a day’s work, or overtime, employees should be paid what they earn. This legislation not only protects workers, but it will help our economy grow.

That is a legislative reform that I believe is warranted. But, as the title of our hearing should indicate, we need more enforcement at the Department of Labor, and at Wage and Hour in particular. WHD is the cop on the beat. We need to be helping them leverage their resources in smart ways.

Because right now, they are having to do less with less. In fact, WHD employs less investigators today than it did in 1948, despite the workforce having grown significantly in that time. And as a result, the number of cases investigated by WHD decreased by 63 percent (between 1980 to 2015).

I believe it is part of an alarming trend with this administration. Last week, I laid out the unacceptable rollbacks at the Department of Labor under the Trump administration. The department is moving away from being a tough cop on the beat for workers to being an ally of industry.

But, we need more enforcement. And, investing in enforcement at Wage and Hour Division is a smart use of federal funds.

As we know, not all companies are bad actors. But, we can identify where the greatest risks are. That is why WHD should pursue, quote, “strategic enforcement.”

Former Wage and Hour Administrator David Weil has written, quote, “strategic enforcement seeks to use the limited enforcement resources available to a regulatory agency to protect workers as proscribed by laws by changing employer behavior in a sustainable way.”

Strategic enforcement represents a sustainable and proactive approach to protect workers. The idea is to make excellent use of data to identify those industries and employers most likely to be violating wage and hour laws, and those the types of workers most likely to be exploited. Then, prioritize precious resources there.

This sounds like a commonsense approach to me. I hope this subcommittee can come together on a bipartisan basis to increase our investment in the Wage and Hour Division and in a strategic enforcement approach.

We certainly should not be taking away from their enforcement work. That is why I challenged the secretary’s efforts to expand the Payroll Audit Independent Determination (PAID) program, which lacked any evidence of its success. And, that is why I oppose the president’s budget proposal for WHD. It fails to increase funding for WHD’s enforcement only a 1.6% percent increase mainly for IT.

Kim Bobo is a workers rights advocate and author. She has said, quote, “If you steal from your employer, you’re going to be hauled out of the workplace in handcuffs. But if your employer steals from you, you’ll be lucky to get your money back.”

This subcommittee has a duty to understand the breadth and depth of wage theft and to help combat it. We must. Working people cannot afford to have us stand pat.

Now, let me turn it over to my friend from Oklahoma, the Ranking Member, Mr. Cole, for any opening comments he cares to make.

116th Congress