Wage Theft Prevention and Wage Recovery Act

II 116TH CONGRESS 1ST SESSION S. 2101 To amend the Fair Labor Standards Act of 1938 and the Portal-to-Portal Act of 1947 to prevent wage theft and assist in the recovery of stolen wages, to authorize the Secretary of Labor to administer grants to prevent wage and hour violations, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 11, 2019 Mrs. MURRAY (for herself, Ms. BALDWIN, Mr. BLUMENTHAL, Mr. BOOKER, Mr. BROWN, Ms. CANTWELL, Mr. CARDIN, Mr. CASEY, Ms. DUCKWORTH, Mr. DURBIN, Mrs. GILLIBRAND, Ms. HARRIS, Ms. HIRONO, Mr. KAINE, Ms. KLOBUCHAR, Mr. MARKEY, Mr. MERKLEY, Mr. MURPHY, Mr. PETERS, Mr. SANDERS, Mr. SCHATZ, Ms. SMITH, Ms. STABENOW, Mr. VAN HOLLEN, Ms. WARREN, and Mr. WYDEN) intro- duced the following bill; which was read twice and referred to the Com- mittee on Health, Education, Labor, and Pensions A BILL To amend the Fair Labor Standards Act of 1938 and the Portal-to-Portal Act of 1947 to prevent wage theft and assist in the recovery of stolen wages, to authorize the Secretary of Labor to administer grants to prevent wage and hour violations, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 2 •S 2101 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Wage Theft Prevention 2 and Wage Recovery Act’’. 3 SEC. 2. FINDINGS. 4 Congress finds the following: 5 (1) Wage theft occurs when an employer does 6 not pay an employee for work that the employee has 7 performed, depriving the worker of wages and earn- 8 ings to which the worker is legally entitled. This 9 theft occurs in many forms, including by employers 10 violating minimum wage requirements, failing to pay 11 overtime compensation, requiring off-the-clock work, 12 failing to provide final payments, misclassifying em- 13 ployees as being exempt from overtime compensation 14 or as independent contractors rather than as em- 15 ployees, and improperly withholding tips. 16 (2) Wage theft poses a serious and growing 17 problem across industries for working individuals of 18 the United States. Wage theft is widespread and is 19 estimated to cost workers more than 20 $15,000,000,000 per year. In certain industries, 21 compliance with Federal wage and hour laws is less 22 than 50 percent. 23 (3) Wage theft is closely associated with em- 24 ployment discrimination, with women, immigrants, 25 and minorities being disproportionately affected. 26 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 3 •S 2101 IS Women are significantly more likely to experience 1 minimum wage violations than men, foreign-born 2 workers are nearly 2 times as likely to experience 3 minimum wage violations as their counterparts born 4 in the United States, and African Americans are 3 5 times more likely to experience minimum wage viola- 6 tions than their White counterparts. 7 (4) Wage theft is closely associated with unsafe 8 working conditions. 9 (5) Wage theft— 10 (A) depresses the wages of working fami- 11 lies who are already struggling to make ends 12 meet; 13 (B) strains social services funds; 14 (C) diminishes consumer spending power 15 and hurts local economies; 16 (D) reduces vital State and Federal tax 17 revenues; 18 (E) places law-abiding employers at a com- 19 petitive disadvantage with noncompliant em- 20 ployers; 21 (F) burdens commerce and the free flow of 22 goods; and 23 (G) lowers labor standards throughout 24 labor markets. 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 4 •S 2101 IS (6) Low-wage workers are at the greatest risk 1 of suffering from wage theft. A survey of 4,387 low- 2 wage workers in New York, Los Angeles, and Chi- 3 cago found that 68 percent of the workers surveyed 4 had experienced some form of wage theft in the 5 workweek immediately before the survey was con- 6 ducted. These workers experienced a range of wage 7 and hour violations: 26 percent of such workers were 8 not paid minimum wage; 76 percent of such workers 9 who worked more than 40 hours in the workweek 10 immediately before the survey was conducted were 11 not paid at the overtime rate; and, in the year before 12 the survey was conducted, 43 percent of the workers 13 who attempted to address such issues by filing a 14 complaint with their employer or who attempted to 15 form a labor organization experienced retaliation by 16 their employers, including by being fired, suspended, 17 or receiving threats of reductions in their hours or 18 pay. 19 (7) In 2012, State and Federal authorities as 20 well as private attorneys recovered at least 21 $933,000,000 in wage theft enforcement actions, 22 which was nearly 3 times the value of all bank rob- 23 beries, residential robberies, convenience store and 24 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 5 •S 2101 IS gas station robberies, and street robberies in the 1 United States during that year. 2 (8) A Department of Labor study of wage theft 3 in California and New York found that wage theft 4 deprived workers of 37 percent to 49 percent of 5 their income, pushing at least 15,000 families below 6 the poverty line and driving another 50,000 to 7 100,000 families deeper into poverty. 8 (9) A study analyzing wage theft claims in the 9 State of Washington from 2009 to 2013 estimated 10 that the total economic cost of wage theft to the 11 State totaled more than $64,000,000 resulting from 12 the lower economic activity and spending of low- 13 wage workers due to their lost wages. 14 (10) A Department of Labor study of wage vio- 15 lations in California and New York found that wage 16 theft deprived families of $5,600,000 in possible 17 earned income tax credits and resulted in a 18 $22,000,000 loss in State tax revenue, a 19 $238,000,000 loss in payroll tax revenue, and a 20 $113,000,000 loss in Federal income tax revenue. 21 (11) Barriers to addressing wage theft continue 22 to exist decades after the enactment of the Fair 23 Labor Standards Act of 1938 (29 U.S.C. 201 et 24 seq.). These barriers have resulted, in significant 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 6 •S 2101 IS part, because enforcement of such Act has not 1 worked as Congress originally intended and because 2 many of the provisions of such Act do not include 3 sufficient penalties to discourage violations. Improve- 4 ments to enforcement and amendments to such Act 5 are necessary to ensure that such Act provides effec- 6 tive protection to individuals subject to wage theft. 7 (12) The lack of a Federal right for employees 8 to receive full compensation at the agreed upon wage 9 rate for all work performed by the employee has re- 10 sulted in workers being able to recover only the ap- 11 plicable minimum wage, or the overtime rate if ap- 12 plicable, when employers engage in wage theft. 13 (13) The lack of a Federal requirement to pro- 14 vide employees with paystubs indicating how their 15 pay is calculated or to allow employees to inspect 16 their employers’ payroll records significantly impedes 17 efforts to identify and challenge wage theft. 18 (14) The lack of a Federal requirement to pay 19 employees their final payments in a timely manner 20 upon termination of the employment relationship be- 21 tween the employer and employee has led to unrea- 22 sonable, and sometimes indefinite, delays in com- 23 pensation after an employment relationship ends. 24 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 7 •S 2101 IS (15) While the Fair Labor Standards Act of 1 1938, and regulations promulgated by the Secretary 2 of Labor, as in effect on the day before the date of 3 enactment of this Act, require employers to com- 4 pensate employees at the minimum wage rate and to 5 provide overtime compensation when appropriate, 6 the lack of civil penalties for violations of these re- 7 quirements has dampened their effectiveness. 8 (16) While the Fair Labor Standards Act of 9 1938 and regulations promulgated by the Secretary 10 of Labor, as in effect on the day before the date of 11 enactment of this Act, provide employees who are 12 subject to wage theft with the right to unpaid min- 13 imum wages or unpaid overtime compensation plus 14 an additional equal amount as liquidated damages, 15 this low level of damages has proved insufficient to 16 deter employers from stealing the wages of their em- 17 ployees. 18 (17) While the Fair Labor Standards Act of 19 1938 and regulations promulgated by the Secretary 20 of Labor, as in effect on the day before the date of 21 enactment of this Act, require employers to keep 22 records of employees’ pay, the lack of remedies for 23 this requirement diminishes the effectiveness of the 24 requirement. 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 8 •S 2101 IS (18) While the Fair Labor Standards Act of 1 1938 and regulations promulgated by the Secretary 2 of Labor, as in effect on the day before the date of 3 enactment of this Act, provide for limited criminal 4 penalties when employers violate the provisions of 5 such Act, the Secretary of Labor rarely resorts to 6 these penalties, causing them to serve as a hollow 7 threat. 8 (19) The statute of limitations under section 6 9 of the Portal-to-Portal Act of 1947 (29 U.S.C. 255), 10 in effect on the day before the date of enactment of 11 this Act, precludes employees from bringing claims 12 for wage theft 2 years after the cause of action ac- 13 crued, or 3 years after the cause of action accrued 14 if the claim is with respect to a willful violation by 15 the employer. Additionally, the statute of limitations 16 is not suspended while the Secretary of Labor inves- 17 tigates a complaint. These strict confines of the stat- 18 ute of limitations sometimes result in employees 19 being deprived of their ability to institute a private 20 lawsuit against their employer in order to recover 21 their stolen wages. 22 (20) Section 16(b) of the Fair Labor Standards 23 Act of 1938 (29 U.S.C. 216(b)), as in effect on the 24 day before the date of enactment of this Act, re- 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 9 •S 2101 IS quires employees to affirmatively ‘‘opt-in’’ in order 1 to be a party plaintiff in a collective action brought 2 by another aggrieved employee seeking to recover 3 stolen wages in court. This provision limits the abil- 4 ity of employees to unite and pursue private lawsuits 5 against employers. 6 (21) Under the penalty structure of the Fair 7 Labor Standards Act of 1938, as in effect on the 8 day before the date of enactment of this Act, many 9 employers who are caught violating such Act con- 10 tinue to violate the Act. A Department of Labor in- 11 vestigation found that one-third of employers who 12 had previously engaged in wage theft continued to 13 do so. 14 (22) The Government Accountability Office and 15 the Department of Labor have recognized that when 16 employers are assessed civil penalties, they are more 17 likely to comply with the law in the future and other 18 employers in the same region—regardless of indus- 19 try—are also more likely to comply with the law. 20 (23) States that have enacted legislation to ad- 21 dress wage theft by increasing the damages to which 22 employees are entitled following violations of wage 23 and hour laws have positively impacted the workers 24 in such States. However, many States have not en- 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 10 •S 2101 IS acted such legislation and, worse still, some States 1 do not have any laws protecting workers from wage 2 theft or even agencies to enforce workers’ rights to 3 compensation for work. This discrepancy in State 4 laws has resulted in a fragmentation of workers’ 5 rights across the United States, with some workers 6 having a measure of protection from wage theft and 7 other workers being left extremely vulnerable to 8 wage theft. 9 (24) Effective enforcement of wage and hour 10 laws is critical to increasing compliance. Given the 11 limited resources available for enforcement, en- 12 hanced strategic enforcement of Federal wage and 13 hour laws is crucial. 14 (25) For enhanced strategic enforcement to be 15 effective, government regulators must work with 16 community stakeholders who have direct knowledge 17 of ongoing violations of Federal wage and hour re- 18 quirements and who are in a position to prevent 19 such violations. 20 (26) Partnerships between regulators, workers, 21 nonprofit organizations, and businesses can increase 22 compliance by educating workers about their rights, 23 collecting evidence, reporting violations, identifying 24 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2101.IS S2101 kjohnson on DSK79L0C42 with BILLS 11 •S 2101 IS noncompliant employers, and modeling good prac- 1 tices. 2 (27) Partnerships between regulators, workers, 3 nonprofit organizations, and businesses have been 4 successful in combating wage theft. In 2006, the Di- 5 vision of Labor Standards Enforcement of the State 6 of California created a janitorial enforcement team 7 to work closely with a local janitorial watchdog orga- 8 nization. As of 2015, the partnership had resulted in 9 countless administrative, civil, and criminal actions 10 against employers and in the collection of more than 11 $68,000,000 in back pay for janitorial workers. 12 (28) The Comptroller General of the United 13 States has recommended that the Department of 14 Labor identify ways to leverage its resources to bet- 15 ter combat wage theft by improving services pro- 16 vided through partnerships. 17 SEC. 3. PURPOSES. 18 The purposes of this Act are to prevent wage theft 19 and facilitate the recovery of stolen wages by— 20 (1) strengthening the penalties for engaging in 21 wage theft; 22 (2) giving workers the right to receive, in a 23 timely manner, full compensatio [Text truncated for display. Full text available on Congress.gov.]