Florida Association of County Attorneys Tampa, Florida June 27, 2013 Presented by: David Ottey Assistant County Attorney Palm Beach County, Florida
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1 Florida Association of County Attorneys Tampa, Florida June 27, 2013 Presented by: David Ottey Assistant County Attorney Palm Beach County, Florida
2 WAGE THEFT DEFINITION GENERALLY, THE SYSTEMIC UNDERPAYMENT OR NONPAYMENT OF WAGES DUE TO ANY EMPLOYEE 2
3 Minimum wage violation Overtime violations Off the clock violations Pay Stub and Illegal deductions Meal break violations e.g Wal-Mart settled cases in 42 states, for $352M allegedly forced thousands of workers to work off the clock 1 In FL 2010 the US Department of Labor ( DOL ) recovered $433, from Walt Disney World for back wages owed to 69 employees for off the clock work and meal time violations Keeping employees tips and gratuities Employer retaliation Failure to pay final paycheck after employment is terminated Employee Misclassification +++ 3
4 Employers classify employees as independent contractors to avoid labor laws and taxes Minimum wage Worker s compensation Overtime Health insurance Unemployment insurance Businesses that operate unlawfully get a competitive advantage More significantly, the cost to the government is enormous 2012 report revealed that misclassified NY truck drivers short the state $88 million/year in workers compensation alone 2 A similar California study shows that the number of misclassified employees over a two-year period grew by 54% and the state recovered $170M in payroll taxes, fines and fees 3 Also 200 FedEx drivers in California misclassified as independent contractors filed suit and were awarded $14.4M 4 4
5
6 A DOL study confirmed the findings of numerous studies and surveys that wage theft is pervasive across all industries and geographic locations 50% of restaurants in Pittsburg 74% of day care in Georgia 50% of nursing home in St. Louis 38% of hotels in Reno 5 However, wage theft is most prevalent among low-wage employees Seminal study in 2009 of approximately 4500 low-wage employees revealed that over 60% experience a wage theft violation in the previous work week, primarily minimum wage and overtime violations 6 6
7 California Assembly Bill 469 reforms state law and criminal penalties for violating minimum wage and overtime requirements and ensures that workers have a written disclosure, in their primary language and in English, of basic job terms at the time of hire and after significant changes are made to those terms Employee Misclassification Act (SB 459) - Makes it unlawful for any person or employer to engage in willful employee misclassification (classifying an individual as an independent contractor when he or she should really be classified as an employee. ) This practice not only cheats the state out of payroll taxes, but robs workers of workers compensation benefits, unemployment insurance and antidiscrimination protections and increases the likelihood that they will suffer minimum wage violations. 7
8 The Illinois Wage Payment and Collection Act went into law on January 1, 2011 and provides the Illinois Department of Labor with additional enforcement tools, including enhanced penalties against employers. The Maryland Wage Payment & Collection Law governs the timing of payment and payment of wages (such as salary, bonus or commissions) upon the termination of employment and also adjusted the definition of wage to include overtime wages. 8
9 Massachusetts passed a bill in 2008 to Clarify the Law to Protect Employee Compensation that states that employers found guilty of violating wage and hour laws, including inadvertent violations, will be subject to mandatory treble damages. Missouri has laws on the books to protect employees from getting misclassified as independent contractors and has given the Missouri Attorney General the power to go after employers. 9
10 Nebraska passed the Employee Classification Act in 2010 to provide for protection of workers in construction and delivery services from misclassification as subcontractors for the purposes of tax withholding, unemployment insurance and workers' compensation insurance benefits. New Mexico passed a law increasing employer liability for the failure of paying wages as well as provided protection to employees from retaliation. 10
11 Texas--Under Texas law, cases of wage theft are handled by local law enforcement under the Theft of Services law. Prosecution depends on establishing intent to steal, and the law now specifies that partial payment of wages is not sufficient to negate the intent to steal wages. Utah--In 2008 Utah passed SB 159 which makes it fraud to misclassify an employee to avoid the obligation to obtain workers' compensation insurance coverage, and it establishes a council to study how to reduce costs resulting from the misclassification of workers. 11
12 Washington--Washington's law provides the State's Department of Labor and Industries with new tools to combat wage theft, including imposing penalties on businesses that repeatedly violate wage laws and allows the Department to require wage bonds of businesses that habitually fail to pay wages owed to their workers. 12
13 In Florida a movement erupted over the last 6 years that brought awareness to the epidemic-that is wage theft-at the local level and statewide. FIU REPORT ( The Research Institute on Social and Economic Policy ) Florida Wage Theft Task Force ( WTTF ) 2006 group of organization including faith based, legal advocates, immigrant rights, unions, and university researchers. --purpose to address wage theft violations in South FL --led to drafting of Miami-Dade Ordinance in Feb Published reports in 2010 and
14 The focus of the 2010 report was on Miami-Dade and Palm Beach Counties, using information collected by two community worker centers and by the Wage and Hour Division (WHD) of the U.S. State of Florida abolished its Department of Labor in 2002, leaving enforcement to the understaffed U.S. D.O.L s Wage and Hour Division. 14
15 FIU 2010 report --DOL collected back wages for the six quarters from September 2008 through March 2010 for Miami-Dade and Palm Beach counties Miami-Dade County $2,619, Palm Beach County $947, Total $3,567,
16 Report from the community worker centers from August 2006-August 2010 of back wages owed We Count! $255, El Sol $153, Approximately 26% back wages collected 16
17 Accommodation and food services industry Construction industry (2nd highest number of violations) Health and social assistance industry Administrative and support, waste management, and remediation service industry (security guards, solid waste collectors, telemarketers, and temp agency workers) Arts, entertainment, and recreation industry (musicians, dance and theatre groups, and amusement park employees.) Professional, scientific and technical service industry (most often employees working in law, accounting, and veterinary offices. 17
18 More than 9,100 cases of wage theft were reported to DOL in Florida from September 2008 through January Florida s key industries tourism, retail trade and construction have the highest numbers of reported wage violations. 18
19 From September 2008 through January 2011 the DOL recovered just under $16 million in wages for more than 24,000 workers from Miami-Dade, Hillsborough, Broward, Pinellas, Palm Beach and Orange counties. 19
20 The Creation of Other Wage Theft Ordinances at the Local Level Encourage the Florida Attorney General to Improve the Enforcement of the Minimum Wage and other Workplace Protections Encourage the Right to Organize Labor Education and Protection to All Workers, Regardless of Immigration Status Re-Establish a Florida Department of Labor 20
21 Federal Law 1.) Fair Labor Standards Act (FLSA) The FLSA requires certain employers to pay employees at least the federal minimum wage, which is currently $7.25 per hour. The FLSA further requires that employers pay covered, non-exempt employees at least one-and-one-half times their regular rate of pay for any hours worked over 40 hours in a work week. The FLSA is enforced by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL). 21
22 An employee may file a complaint with the WHD alleging a violation of the FLSA, or an employee can file a private suit in court. An employee can be awarded back pay for unpaid wages under the FLSA for the two years previous to filing the complaint. If an employer s violations of the FLSA are determined to be willful, then the employee can be awarded back pay for three years previous to filing the complaint. 22
23 An employer can be required to pay all unpaid wages occurring during the appropriate time frame, plus an equal amount in liquidated damages. Moreover, an employer can be required to pay reasonable attorney s fees and costs. 23
24 The coverage of the FLSA applies to all employees of any employer that Has employees engaged in interstate commerce, producing goods for interstate commerce, or handling, selling or otherwise working on goods or materials that have been moved in or produced for interstate commerce; and i.) more; Has annual gross sales or business of $500,000 or or 24
25 ii.) Is operating a hospital or institution primarily engaged in the care of the sick, aged, or mentally ill who reside on the premises; or iii.) Is operating a school for mentally or physically disabled or gifted children; or iv.) Is operating a preschool, an elementary or secondary school, or an institution of higher education; or v.) Is an activity of a public agency. 25
26 Employees of employers not covered by the FLSA may still be individually covered if they are individually engaged in interstate commerce or in the production of goods for interstate commerce. Moreover, domestic service workers such as day workers and housekeepers are individually covered by the FLSA if their cash wages from one employer in a calendar year are at least $1,700 or they work a total of more than 8 hours per week for one or more employers. 26
27 The DBRA applies to contractors and sub-contractors on contracts for the construction, alteration or repair of public buildings or public works exceeding $2000 that are financed in whole or in part by federal funding. 27
28 Employers covered by the DBRA must pay their laborers and mechanics at least the prevailing wage rate and fringe benefits for corresponding work on similar projects in the area, as determined by the DOL. An employee alleging a violation of the DBRA may file a complaint with the WHD of the DOL or file suit in court. 28
29 Protects migrant and seasonal agricultural workers by establishing employment standards related to wages, housing, transportation, disclosures and recordkeeping. MSPA also requires farm labor contractors to register with the U.S. Department of Labor (DOL). 29
30 - Wages Agricultural associations, agricultural employers, and farm labor contractors must pay workers their wages when due, and give workers itemized, written statements of earnings for each pay period, including any amount deducted and the reasons for the deduction. 30
31 -Recordkeeping Agricultural associations, agricultural employers, and farm labor contractors must keep complete and accurate payroll records for all workers; in addition, farm labor contractors must give any other farm labor contractor, agricultural employer, or agricultural association to whom they supply workers, copies of payroll records for each worker supplied to that particular contractor, employer, or association 31
32 The Copeland "Anti-Kickback" Act Prohibits contractors from in any way inducing an employee to give up any part of the compensation to which he or she is entitled under his or her contract of employment, and requires contractors to submit a weekly statement of the wages paid to each employee performing DBRA covered work. 32
33 1.) Florida Minimum Wage Act Article X, Section 24, of the Constitution of the State of Florida provides for the establishment of the Florida minimum wage rate, which is currently $7.79 per hour. This amendment further provides for the remedy and enforcement of minimum wage violations. 33
34 An employee alleging a violation of the Florida minimum wage law may file a civil action in a court of competent jurisdiction. If a plaintiff employee prevails, he or she shall be awarded the full amount of any back wages unlawfully withheld, plus an equal amount in liquidated damages. In addition, the prevailing plaintiff employee shall be awarded reasonable attorney s fees and costs. 34
35 The statute of limitations for actions to enforce the Florida minimum wage is four years. Five years for willful violations. In addition, an employer found liable for willfully violating the Florida minimum wage shall be fined by the state in the amount of $1000 for each violation. Additional guidelines regarding the enforcement and available remedies under Florida s minimum wage law exists under Chapter 448, Florida Statutes 35
36 2.) Chapter 448, Part I, Florida Statutes Terms and Conditions of Employment An employee alleging that he or she is due unpaid wages from an employer may file a complaint in state court. 36
37 Chapter 448 also prohibits an employer from taking any retaliatory personnel action against an employee who has disclosed, or threatened to disclose, to any appropriate government agency a policy or practice of the employer that is in violation of any law, rule or regulation. 37
38 Section , Florida Statutes, also provides guidelines for the enforcement of the Florida minimum wage law in Article X, Section 24, of the Florida constitution. This statute requires that before an employee files a claim in state court, the employee must first notify his or her employer in writing of the alleged violation, including the actual or estimated dates and hours for which payment is sought and the total amount of alleged unpaid wages. 38
39 If the employer does not resolve the claim to the satisfaction of the employee within fifteen days of the employee s notice, then the employee may file a complaint in state court. However, this statute provides that if the employer proves that the violation of the Florida minimum wage law was in good faith, or that the employer had reasonable grounds to believe that there was no violation, then the court may, in its discretion, not award liquidated damages and award an amount not to exceed the actual unpaid wages 39
40 Many workers never make complaints about wage theft violations, fearing retaliation if they speak up. This fear is well-founded according to one major study, 43% of workers who raised complaints faced employer retaliation such as termination or suspension, cuts in wages or hours, and threats to call or actual calls to immigration authorities 7 40
41 Public enforcement of wage and hour laws cannot keep up with violations. The U.S. DOL, which is responsible for enforcing federal wage, child labor and other laws has just over 1,000 investigators nationwide who are tasked with enforcing these laws in more than 7 million workplaces 8 41
42 In 2009, an investigative report issued by the U.S. Government Accountability Office (GAO)found that the WHD needed to improve the investigative and administrative processes Not adequately responding to wage violations and as a result were leaving low-wage workers vulnerable to wage theft and other labor law violations. 9 42
43 Following the release of the GAO report and the increasing awareness of rampant wage violations, Secretary of Labor, created a bipartisan national effort to educate workers of their labor rights known as the We Can Help Campaign 10 43
44 Florida s Department of Labor has been abolished for over a decade Minimum Wage Department-Short staffed/budget cuts Attorney General s Office may bring suit to enforce minimum wage-more theory than reality 44
45 Private enforcement Private Right of Action, is rarely an option for low-wage workers to recover the wages due to them. The limited damages they would recover, combined with the time and expense in filing a lawsuit, mean that these workers may seldom find lawyers able to take their case. 45
46 State Action Ordinances-MDC, Broward and Alachua Counties Small Claims Court Palm Beach County 46
47 State Legislature has attempted to enact statewide wage theft laws in past couple of years Defined wage theft Intent of the bill to provide uniformity and void all ordinances and regulations regarding wage theft except federal and state law/ or more recently to make exceptions for Miami Dade and Broward Counties 47
48 Applies only to employers with gross annual sales of less than $500, Claims governed by Small claims rules Authorize local government to establish administrative procedures to facilitate the collection of money owed to employees Limiting damages to actual compensation owed 48
49 Prohibiting attorney s fees or other awards Requiring the process to include the opportunity for the parties to negotiate Authorizing attorney general to seek injunctive relief against an accused employer Provides that regulation of wage theft is expressly preempted to the state. 49
50 February 2010 first of its kind Creates a private right of action Aggrieved employee files a written Complaint when employer fails to pay wages due within reasonable time. 1 year SOL $60 minimum County determines adequacy from face of Complaint and if sufficient, serves on the named respondent Employer, who has 20 days to respond 50
51 Conciliation is attempted and if it fails, Complaint referred to Hearing Officer. Either party can request hearing after within 15 days after Complaint is served on Employer Complainant must prove case by preponderance of evidence. If a wage theft violation is proven, then hearing officer awards treble damages to employee based on wages owed in addition to cost of hearing and administrative processing. Respondent may appeal to circuit court /certiorari review. 51
52 Faster Cheaper Treble Damages Provision Access Outreach 52
53 MDC Exemption Legal Authority of Hearing Examiner to award Treble Damages/Adjudicate Contract Disputes --Onslaught of spurious claims --Cost to the County --Cost to defend multiple suits-- No Protection via Res Judicata --Already covered by Federal and State Statutes Bad for Legit Businesses 53
54 PATCH WORK APPROACH Different rules for different Counties/ Employer operates in several counties Ordinance gives the County a financial stake in finding employers non-compliant since cost to administer the ordinance is offset in an amount directly related to the number of hearings in which the employee prevails No anti-retaliation provision 54
55 Filed suit in Miami-Dade County Circuit Court August Unconstitutional Represents over 9,000 retailers in FL Ordinance lacks objective criteria for selection of hearing examiner or to determine whether a wage theft violation has occurred 55
56 Contrary to Florida s minimum wage law or the federal labor law, no potential defenses for employers- e.g. No liquidated damages awarded under FLSA where employer shows good faith defense No pre-claim notice 56
57 No Due Process -- conduct not specified, entitling MDC to treble damages- Treble damages is a judicial exercise of power that violates Art 2, Sec 3, and Art 5, Sec 1 FL Constitution Ordinance, preempted by FL minimum wage laws that expressly reserve minimum wage violations to the courts 57
58 CIRCUIT COURT DISMISSED SUIT MARCH 2012 Ordinance not preempted since its authority is not confined to minimum wage claims but the larger universe of all wages negotiated by parties that are in dispute- not necessarily just minimum wage earners. Quasi-judicial hearings are expressly authorized by Florida Constitution 58
59 Florida Supreme Court has rejected the issue that back pay is judicial damages Opinion silent as to treble damages No appeal filed 59
60 PBC LEGAL AID PILOT PROGRAM Legal Aid Society of Palm Beach County from February 2011 thru November 2012 $116,000 Average $2, Between intake and payment 109 days The Wage Theft Project was managed by the Legal Aid staff already committed to existing projects. 60
61 BCC RESOLUTION AND CONTRACT WITH LEGAL AID ADMIN ORDER-CREATED DIVISION IN SMALL CLAIMS COURT-DEDICATED JUDGE AND MEDIATORS LEGAL AID REPRESENTATION SPEED OF ADJUDICATION FULL RANGE OF DAMAGES AVAILABLE 61
62 COMFORT LEVEL OF AGGRIEVED EMPLOYEES GOING TO LEGAL AID/undocumented aliens- 2 for 1 COST TO PBC NO APPEALS AS TO AUTHORITY OF SPECIAL MASTER ETC B.O.K CLAIMS, COMMON LAW COA 62
63 No concern regarding preemption by the legislature Community Outreach to educate employers and employees 63
64 64
65 NOT A ONE SIZE FITS ALL DEAL Educating Employers Educating Employees/outreach/different languageslegal aid staff/civic groups/pamphlets etc. Enforcement/State Legislation 65
66 66
67 References: 1 Greenhouse, Steven and Stephanie Rosenbloom Wal-Mart Settles 63 Lawsuits Over Wages. New York Times, December 23, 2008, Business section. Found at: 2 John Petro, The Road to Nowhere: How the Misclassification of Truck Drivers Hurts Workers, Job Quality, and New York State, Drum Major Institute, May 2012, Nowhere-Misclassification.pdf 3 Annual Report: Fraud Deterrence and Detection Activities, A Report to the California Legislature, Employment Development Department, State of California, June 2008, 4 Associated Press FedEx Drivers Win $14.4 Million in Labor Case. San Francisco Chronicle, October 20, Found at: 5 National Employment Law Project, Summary of Research on Wage and Hour Violations in the United States (January 2012), available at 6 Bernhardt, Annette, Heather Boushey, Laura Dresser and Chris Tilly, eds The Gloves-off Economy: Workplace Standards at the Bottom of America s Labor Market. Ithaca, NY: Cornell University Press. 7 Amy Traub and Andrew Friedman, Workers Deserved to be Paid, Albany Times Union, April 5, See FY 2011 Congressional Budget Justification from U.S. DOL Wage and Hour Div., available at (stating that for 2011, WHD expect to have 1,006 full time investigators); U.S. DOL Comprehensive FLSA Powerpoint, available at (stating that more than 130 million workers in more than 7 million workplaces are covered by the Fair Labor Standards Act). 9 GAO Government Accountability Office, Report to the Committee on Education and Labor, House of Representatives. June GAO United States Department of Labor website, 67
68 68
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