Wage Theft Prevention and Wage Recovery Act

I 116TH CONGRESS 1ST SESSION H. R. 3712 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 HOUSE OF REPRESENTATIVES JULY 11, 2019 Ms. DELAURO (for herself, Mr. LOWENTHAL, Mr. COHEN, Mrs. NAPOLITANO, Ms. SCHAKOWSKY, Ms. VELA´ZQUEZ, Ms. LEE of California, Mr. POCAN, Mr. DESAULNIER, Ms. KAPTUR, Ms. NORTON, Mr. LEVIN of Michigan, Ms. MCCOLLUM, Mr. BRENDAN F. BOYLE of Pennsylvania, Ms. ROYBAL- ALLARD, Mr. TAKANO, Ms. OMAR, Mr. SIRES, and Mrs. WATSON COLE- MAN) introduced the following bill; which was referred to the Committee on Education and Labor 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Wage Theft Prevention 4 and Wage Recovery Act’’. 5 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 2 •HR 3712 IH SEC. 2. FINDINGS. 1 Congress finds the following: 2 (1) Wage theft occurs when an employer does 3 not pay an employee for work that the employee has 4 performed, depriving the worker of wages and earn- 5 ings to which the worker is legally entitled. This 6 theft occurs in many forms, including by employers 7 violating minimum wage requirements, failing to pay 8 overtime compensation, requiring off-the-clock work, 9 failing to provide final payments, misclassifying em- 10 ployees as being exempt from overtime compensation 11 or as independent contractors rather than as em- 12 ployees, and improperly withholding tips. 13 (2) Wage theft poses a serious and growing 14 problem across industries for working individuals of 15 the United States. Wage theft is widespread and is 16 estimated to cost workers more than 17 $15,000,000,000 per year. In certain industries, 18 compliance with Federal wage and hour laws is less 19 than 50 percent. 20 (3) Wage theft is closely associated with em- 21 ployment discrimination, with women, immigrants, 22 and minorities being disproportionately affected. 23 Women are significantly more likely to experience 24 minimum wage violations than men, foreign-born 25 workers are nearly 2 times as likely to experience 26 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 3 •HR 3712 IH minimum wage violations as their counterparts born 1 in the United States, and African Americans are 3 2 times more likely to experience minimum wage viola- 3 tions than their White counterparts. 4 (4) Wage theft is closely associated with unsafe 5 working conditions. 6 (5) Wage theft— 7 (A) depresses the wages of working fami- 8 lies who are already struggling to make ends 9 meet; 10 (B) strains social services funds; 11 (C) diminishes consumer spending power 12 and hurts local economies; 13 (D) reduces vital State and Federal tax 14 revenues; 15 (E) places law-abiding employers at a com- 16 petitive disadvantage with noncompliant em- 17 ployers; 18 (F) burdens commerce and the free flow of 19 goods; and 20 (G) lowers labor standards throughout 21 labor markets. 22 (6) Low-wage workers are at the greatest risk 23 of suffering from wage theft. A survey of 4,387 low- 24 wage workers in New York, Los Angeles, and Chi- 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 4 •HR 3712 IH cago found that 68 percent of the workers surveyed 1 had experienced some form of wage theft in the 2 workweek immediately before the survey was con- 3 ducted. These workers experienced a range of wage 4 and hour violations: 26 percent of such workers were 5 not paid minimum wage; 76 percent of such workers 6 who worked more than 40 hours in the workweek 7 immediately before the survey was conducted were 8 not paid at the overtime rate; and, in the year before 9 the survey was conducted, 43 percent of the workers 10 who attempted to address such issues by filing a 11 complaint with their employer or who attempted to 12 form a labor organization experienced retaliation by 13 their employers, including by being fired, suspended, 14 or receiving threats of reductions in their hours or 15 pay. 16 (7) In 2012, State and Federal authorities as 17 well as private attorneys recovered at least 18 $933,000,000 in wage theft enforcement actions, 19 which was nearly 3 times the value of all bank rob- 20 beries, residential robberies, convenience store and 21 gas station robberies, and street robberies in the 22 United States during that year. 23 (8) A Department of Labor study of wage theft 24 in California and New York found that wage theft 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 5 •HR 3712 IH deprived workers of 37 percent to 49 percent of 1 their income, pushing at least 15,000 families below 2 the poverty line and driving another 50,000 to 3 100,000 families deeper into poverty. 4 (9) A study analyzing wage theft claims in the 5 State of Washington from 2009 to 2013 estimated 6 that the total economic cost of wage theft to the 7 State totaled more than $64,000,000 resulting from 8 the lower economic activity and spending of low- 9 wage workers due to their lost wages. 10 (10) A Department of Labor study of wage vio- 11 lations in California and New York found that wage 12 theft deprived families of $5,600,000 in possible 13 earned income tax credits and resulted in a 14 $22,000,000 loss in State tax revenue, a 15 $238,000,000 loss in payroll tax revenue, and a 16 $113,000,000 loss in Federal income tax revenue. 17 (11) Barriers to addressing wage theft continue 18 to exist decades after the enactment of the Fair 19 Labor Standards Act of 1938 (29 U.S.C. 201 et 20 seq.). These barriers have resulted, in significant 21 part, because enforcement of such Act has not 22 worked as Congress originally intended and because 23 many of the provisions of such Act do not include 24 sufficient penalties to discourage violations. Improve- 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 6 •HR 3712 IH ments to enforcement and amendments to such Act 1 are necessary to ensure that such Act provides effec- 2 tive protection to individuals subject to wage theft. 3 (12) The lack of a Federal right for employees 4 to receive full compensation at the agreed upon wage 5 rate for all work performed by the employee has re- 6 sulted in workers being able to recover only the ap- 7 plicable minimum wage, or the overtime rate if ap- 8 plicable, when employers engage in wage theft. 9 (13) The lack of a Federal requirement to pro- 10 vide employees with paystubs indicating how their 11 pay is calculated or to allow employees to inspect 12 their employers’ payroll records significantly impedes 13 efforts to identify and challenge wage theft. 14 (14) The lack of a Federal requirement to pay 15 employees their final payments in a timely manner 16 upon termination of the employment relationship be- 17 tween the employer and employee has led to unrea- 18 sonable, and sometimes indefinite, delays in com- 19 pensation after an employment relationship ends. 20 (15) While the Fair Labor Standards Act of 21 1938, and regulations promulgated by the Secretary 22 of Labor, as in effect on the day before the date of 23 enactment of this Act, require employers to com- 24 pensate employees at the minimum wage rate and to 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 7 •HR 3712 IH provide overtime compensation when appropriate, 1 the lack of civil penalties for violations of these re- 2 quirements has dampened their effectiveness. 3 (16) While the Fair Labor Standards Act of 4 1938 and regulations promulgated by the Secretary 5 of Labor, as in effect on the day before the date of 6 enactment of this Act, provide employees who are 7 subject to wage theft with the right to unpaid min- 8 imum wages or unpaid overtime compensation plus 9 an additional equal amount as liquidated damages, 10 this low level of damages has proved insufficient to 11 deter employers from stealing the wages of their em- 12 ployees. 13 (17) While the Fair Labor Standards Act of 14 1938 and regulations promulgated by the Secretary 15 of Labor, as in effect on the day before the date of 16 enactment of this Act, require employers to keep 17 records of employees’ pay, the lack of remedies for 18 this requirement diminishes the effectiveness of the 19 requirement. 20 (18) While the Fair Labor Standards Act of 21 1938 and regulations promulgated by the Secretary 22 of Labor, as in effect on the day before the date of 23 enactment of this Act, provide for limited criminal 24 penalties when employers violate the provisions of 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 8 •HR 3712 IH such Act, the Secretary of Labor rarely resorts to 1 these penalties, causing them to serve as a hollow 2 threat. 3 (19) The statute of limitations under section 6 4 of the Portal-to-Portal Act of 1947 (29 U.S.C. 255), 5 in effect on the day before the date of enactment of 6 this Act, precludes employees from bringing claims 7 for wage theft 2 years after the cause of action ac- 8 crued, or 3 years after the cause of action accrued 9 if the claim is with respect to a willful violation by 10 the employer. Additionally, the statute of limitations 11 is not suspended while the Secretary of Labor inves- 12 tigates a complaint. These strict confines of the stat- 13 ute of limitations sometimes result in employees 14 being deprived of their ability to institute a private 15 lawsuit against their employer in order to recover 16 their stolen wages. 17 (20) Section 16(b) of the Fair Labor Standards 18 Act of 1938 (29 U.S.C. 216(b)), as in effect on the 19 day before the date of enactment of this Act, re- 20 quires employees to affirmatively ‘‘opt-in’’ in order 21 to be a party plaintiff in a collective action brought 22 by another aggrieved employee seeking to recover 23 stolen wages in court. This provision limits the abil- 24 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 9 •HR 3712 IH ity of employees to unite and pursue private lawsuits 1 against employers. 2 (21) Under the penalty structure of the Fair 3 Labor Standards Act of 1938, as in effect on the 4 day before the date of enactment of this Act, many 5 employers who are caught violating such Act con- 6 tinue to violate the Act. A Department of Labor in- 7 vestigation found that one-third of employers who 8 had previously engaged in wage theft continued to 9 do so. 10 (22) The Government Accountability Office and 11 the Department of Labor have recognized that when 12 employers are assessed civil penalties, they are more 13 likely to comply with the law in the future and other 14 employers in the same region—regardless of indus- 15 try—are also more likely to comply with the law. 16 (23) States that have enacted legislation to ad- 17 dress wage theft by increasing the damages to which 18 employees are entitled following violations of wage 19 and hour laws have positively impacted the workers 20 in such States. However, many States have not en- 21 acted such legislation and, worse still, some States 22 do not have any laws protecting workers from wage 23 theft or even agencies to enforce workers’ rights to 24 compensation for work. This discrepancy in State 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 10 •HR 3712 IH laws has resulted in a fragmentation of workers’ 1 rights across the United States, with some workers 2 having a measure of protection from wage theft and 3 other workers being left extremely vulnerable to 4 wage theft. 5 (24) Effective enforcement of wage and hour 6 laws is critical to increasing compliance. Given the 7 limited resources available for enforcement, en- 8 hanced strategic enforcement of Federal wage and 9 hour laws is crucial. 10 (25) For enhanced strategic enforcement to be 11 effective, government regulators must work with 12 community stakeholders who have direct knowledge 13 of ongoing violations of Federal wage and hour re- 14 quirements and who are in a position to prevent 15 such violations. 16 (26) Partnerships between regulators, workers, 17 nonprofit organizations, and businesses can increase 18 compliance by educating workers about their rights, 19 collecting evidence, reporting violations, identifying 20 noncompliant employers, and modeling good prac- 21 tices. 22 (27) Partnerships between regulators, workers, 23 nonprofit organizations, and businesses have been 24 successful in combating wage theft. In 2006, the Di- 25 VerDate Sep 11 2014 23:13 Jul 15, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3712.IH H3712 kjohnson on DSK79L0C42 with BILLS 11 •HR 3712 IH vision of Labor Standards Enforcement of the State 1 of California created a janitorial enforcement team 2 to work closely with a local janitorial watchdog orga- 3 nization. As of 2015, the partnership had resulted in 4 countless administrative, civil, and criminal actions 5 against employers and in the collection of more than 6 $68,000,000 in back pay for janitorial workers. 7 (28) The Comptroller General of the United 8 States has recommended that the Department of 9 Labor identify ways to leverage its resources to bet- 10 ter combat wage theft by improving services pro- 11 vided through partnerships. 12 SEC. 3. PURPOSES. 13 The purposes of this Act are to prevent wage theft 14 and facilitate the recovery of stolen wages by— 15 (1) strengthening the penalties for engaging in 16 wage theft; 17 (2) giving workers the right to receive, in a 18 timely manner, full compensation for the work they 19 perform, certain disclosures, regular [Text truncated for display. Full text available on Congress.gov.]