Package of state legislation aims to tackle ‘rampant’ wage theft

OLYMPIA (Jan. 21, 2014) — Every week, thousands of people in Washington are victims of a particular kind of theft. But for this theft, there are weak laws to discourage it, small penalties to punish it, and potentially serious consequences for reporting it.

It is called wage theft. It’s the illegal under-payment or non-payment of wages, and several workers who have been victimized by it and their advocates testified Tuesday in support of a package of legislation intended to address this pervasive, growing problem. Four bills were heard in the House Labor and Workforce Development Committee that would increase penalties for wage theft, discourage employers from retaliating against workers who report wage theft, ensure proper wage payment through electronic certified payroll, and address the misclassification of workers as independent contractors.

“We have a social contract in this country in which you will be paid for a hard day’s work, and you will be rewarded for fair competition,” said Teresa Mosqueda, Government Affairs Director of the Washington State Labor Council. “But some employers commit wage theft and exploit a system that is rigged against workers and honest employers. Wage theft hurts not just workers, it also hurts law-abiding employers, it hurts local economies, and results in significant loss of state revenues. It is wrong, and it doesn’t have to be this way. These wage theft bills attempt to stem the growing tide of rampant workplace fraud by leveling the playing field to protect workers and honest employers.”

Following are excerpts from a fact sheet (download a printable version) distributed to legislators Tuesday that explains each of the bills:

The most basic assumption workers make when they show up to a job is that they will get paid for the time they spend working.  But this doesn’t happen for thousands of workers across Washington state.  Far too many workers are denied the fair wages they’ve earned for their labor, and their unscrupulous employers avoid paying the taxes, workers’ compensation contributions, and unemployment insurance premiums that are owed.  These revenues are necessary to ensure that K-12 education is funded, and that injured workers heal and return to their jobs.  Most businesses play by the rules, but those that choose to cheat the system and their employees make it harder for good corporate citizens to compete, and create jobs.

By taking a stand against wage theft, the State Legislature can level the playing field for responsible employers, ensure workers get what they’ve earned, and shore up the state’s troubled General Fund.  Washington’s working families support the passage of four bills that will equip workers with the tools they need to rebuild the middle-class:

Workplace Fraud (HB 2334) — Misclassifying workers as independent contractors is workplace fraud. This is how some businesses avoid paying the taxes and insurance premiums that protect everyone. By establishing a simple, three-part test, the State Legislature can make it clear who is a traditional employee and who is a bona fide independent contractor, so that true employees are no longer misclassified and cheated out of protections or pay:

• The person is, and will continue to be, free from control or direction over the performance of the labor or service;
• The labor or service is outside the usual course of businesses for which the service is performed, or the service is performed outside of the places of business of the purchaser;
• The individual is customarily engaged in an independently established trade.

This bill will ensure that revenue owed to the public is paid, while protecting the independence of true independent contractors and sole proprietors — like lawyers, doctors, real estate agents and home-based sales people.

Electronic Certified Payroll (HB 2331) — When the state pays for public construction, it expects that the workers are paid the local prevailing wage for the kind of work they are performing. Currently, contractors certify their wages only after the project is complete. Sometimes, contractors from out-of-state don’t pay the lawful wage, but by the time it is discovered, the contractor has already left Washington and the owed wages cannot be recovered. By requiring timely, electronic certified payroll reports, the state will make it easier for workers to verify they are being lawfully paid.

Retaliation (HB 2333) — While most employers do their best to pay workers lawfully — or quickly remedy problems when they are identified — certain bad actors do not pay what is owed even when presented with evidence showing the shortfall. Even worse, some employers will retaliate against workers seeking the wages they earned by cutting hours, terminating employment, or threatening immigration-related actions. This is amoral and unacceptable, yet there are few protections in state wage-and-hour laws to protect workers from such actions. That is why it is so important that the Legislature adopt anti-retaliation legislation to protect workers who try to get paid what they have earned.

Triple Damages (HB 2332) —  Bad employers shouldn’t be able to get away with stealing wages from their workers. By demanding that these unscrupulous businesses pay triple damages, the Legislature can send a strong message that this kind of theft will not be tolerated.

This package of legislation is supported by the Stop Wage Theft Coalition, which includes:

• Alliance for Just Society
• Brick Layers
• Bricklayers & Allied Craftworkers Local #1-WA
• Casa Latina
• Colectiva Legal
• Columbia Legal Services
• Faith Action Network
• IBEW Local 46
• International Union of Painters and Allied Trades District Council 5
• Mark Law Offices
• National Employment Law Project
• Northwest Justice Project
• Northwest Floor Covering Industry Association
• NW Laborers
• One America
• Progresso Latino
• Puget Sound Sage
• SEIU 775
• SEIU Healthcare 1199NW
• Sheet Metal Workers
• Teamsters Joint Council 28
• Teamsters Local 117
• United Food and Commercial Workers Local 21
• Unite Here Local 8
• UA (Plumbers and Pipefitters) Local 32
• United Farm Workers
• Washington State Building and Construction Trades Council
• Seattle Building & Construction Trades Council
• Washington State Labor Council, AFL-CIO
• Washington State Nurses Association
• Western Washington Signatory Painting Employers
• Working Washington