- A new low-wage industry study by the Center for Urban
Economic Development, the National Employment Law Project, and the UCLA
Institute for Research on Labor and Employment exposes the dark side of
workforce exploitation in America's three largest cities - New York, Los
Angeles and Chicago.
- From January through August 2008, researchers conducted
90-minute interviews with 4,387 "front-line" workers, aged 18
or older, using "innovative, rigorous methodology" to reach vulnerable
people "often missed in standard surveys, such as (undocumented) immigrants
and those paid in cash." The goal was to be as statistically representative
of workplace violations as possible for a population of about 1.64 million
workers, or 15% of the total workforce studied.
- The report documented flagrant workplace violations,
core protections most Americans take for granted, including a guaranteed
minimum wage, overtime pay, regular meal and other breaks, worker compensation
for on-the-job injuries, and the right to bargain collectively for better
wages, benefits, and working conditions.
- Overall, the study found widespread labor law violations,
- -- below minimum wage pay;
- -- unpaid overtime;
- -- denial of meal and other breaks;
- -- illegal pay deductions;
- -- tip stealing for tipped workers;
- -- illegal employer retaliation against workers demanding
their rights or attempting to form a union; and
- -- some workers denied legal protection by being classified
as independent contractors.
- Workplace violations varied by industry and job type.
Abuses were most common in apparel and textile manufacturing, personal
and repair services, and private household employment. They were much lower
in residential construction, social assistance, education, and home health
care, and somewhat frequent at restaurants, retail and grocery stores,
- Workers getting a flat weekly wage or cash experienced
high violation rates compared to those paid a regular hourly rate or by
- Workers in firms with under 100 employees were more at
risk than those at larger companies, but not all employers were scofflaws.
- Immigrants, women, the foreign born, and others in vulnerable
categories were most at risk, but all workers (even the better educated)
face potential workplace abuses against which they can get little redress.
- Weekly wage theft affects over two-thirds of workers,
costing them an average 15% of their pay.
- The following industries were studied:
- -- restaurants and hotels;
- -- apparel and textile manufacturing;
- -- retail, grocery, and drug stores;
- -- food and furniture manufacturing, transportation,
- -- security, building and grounds services;
- -- social assistance;
- -- education;
- -- residential construction;
- -- personal and repair services;
- -- home health care;
- -- private households; and
- -- other categories, including finance and other health
- The following jobs were studied:
- -- cooks, food preparers, and dishwashers;
- -- sewing and garment workers;
- -- building services and grounds workers;
- -- factory and packaging workers;
- -- child care;
- -- general construction;
- -- home health care;
- -- retail sales and bank tellers;
- -- maids and housekeepers;
- -- cashiers;
- -- waiters, cafeteria workers, and bartenders;
- -- stock/office clerks and couriers;
- -- car washing, parking lot attendants, and drivers;
- -- beauty, dry cleaning, and general repair workers;
- -- security guards; and
- -- teachers' assistants.
- In February 2009, Amish Markets, a leading New York gourmet
grocery chain, agreed to pay nearly $1.5 million in unpaid wages to 550
workers. In the same month, the Los Angeles city attorney filed criminal
charges against the owners of four car washes for failure to pay minimum
wages and grant employees breaks. In Chicago, a large temporary staffing
agency settled a class action suit by paying over 3,300 employees nearly
half a million dollars.
- In 2008, Wal-Mart settled 63 "off-the-clock"
abuse cases in 42 states totaling $352 million in unpaid wages to hundreds
of thousands of current and former employees. More details below. In the
same year, a court-appointed official awarded more than 200 FedEx drivers
$14.4 million for being illegally classified as independent contractors.
- In large and small companies alike, these examples are
commonplace, disturbing, and deteriorating further during hard economic
times as recent reports suggest. Working Americans nationwide face increased
exploitation as layoffs and cost cutting force unacceptable demands on
them, unlikely to be easily reversed.
- Prevalence of Workplace Violations
- Labor laws since the New Deal aren't working. They're
not enforced, have been greatly weakened, are out of date, exempt some
industries and occupations partially or entirely, and leave the most vulnerable,
like immigrants, minorities and women, subject to exploitation.
- Violations found in the week prior to the survey included:
- -- 26% got below minimum wage pay;
- -- 73% experiencing an overtime violation got only their
regular hourly rate;
- -- 19% were unpaid for overtime, and 8% were underpaid
or promised "comp time;"
- -- 17% weren't paid for off-the-clock work;
- -- 18% were denied meal breaks;
- -- 11% experienced meal break interruptions by employers
- -- 12% worked through their meal breaks;
- -- 43% got shorter than legally required meal breaks;
- -- 4% were paid late;
- -- 57% got no pay stub;
- -- 2% had illegal pay deductions;
- -- 2% had tips stolen;
- -- 6% of tipped workers were paid below their legal minimum
- -- 77% of Los Angeles workers were denied or got a shortened
- Violations in the previous 12-month period included:
- -- 28% worked off-the-clock without pay;
- -- 25% were paid late;
- -- 17% were paid less than owed;
- -- 6% weren't paid at all;
- -- 3% were subjected to repeated verbal abuses;
- -- 5% experienced employer retaliation for complaining
or attempting to organize a union;
- -- 5% were denied worker compensation for the most recent
on-the-job injury; and
- -- 6% of tipped workers were paid below their legal minimum
- Minimum Wage Violations
- Employers must pay all workers (full or part-time, documented
or undocumented) at or above federal or state minimum wages, whichever
is higher. Yet 26% of those surveyed were underpaid, and the amounts weren't
trivial as 60% lost on average $1.43 per hour.
- Overtime Violations
- The Fair Labor Standards Act (FLSA) mandates "time
and a half" pay for all covered employees for weekly hours worked
exceeding 40. Yet 73% of "at risk" workers weren't paid the legally
required rate, and 19% overall were unpaid or underpaid for overtime.
- "Off-the-Clock" Violations
- This is work taking place before or after regular shifts.
Employers are legally required to pay for all hours worked. Yet often they
take advantage and don't.
- Meal Break Violations
- By law, New York, California and Illinois require employers
to provide uninterrupted meal breaks for workers, although their length
varies by state. Yet violations were frequent and took a variety of forms,
including no break one or more times, shorter ones than mandated, employer
interruptions, and having to work part of the time.
- Other Pay Violations
- As outlined above, they included late payments, no pay
stubs, illegal deductions, and "tip stealing" from tipped workers.
- Illegal Employer Retaliation
- About 43% of workers complained about workplace abuses,
and those attempting to form a union experienced employer or supervisor
retaliation as follows:
- -- 62% got pay cuts, less work, or worse assignments;
- -- 47% experienced threats to be fired or to be reported
to immigration authorities;
- -- 35% were fired or suspended; and
- -- 21% were otherwise harassed, abused, or given increased
- Workers' Compensation
- Laws vary by state, but in most cases employers must
contribute to state worker compensation funds and carry insurance to cover
the costs of on-the-job injuries or illnesses. Yet only 8% of injured workers
during the previous three years filed a claim for their most recent injury,
a clear sign that the system is dysfunctional because of how employers
work it to their advantage.
- Around 43% of seriously injured workers said they were
required to work in spite of it. Another 30% said their employer refused
any help, 13% were fired shortly afterward, 10% were required to be at
work even if unable to perform their duties, and 3% were told not to file
- In the past three years, about 50% of respondents suffering
an on-the-job injury experienced a worker comp violation for their most
recent one. Only 55% of those seriously injured sought treatment, and only
40% of those said their employers paid all or part of their medical bills.
Only 6% of injured workers had company insurance cover their medical expenses
- Violations Vary by Job Category and Industry
- Minimum wage violations vary significantly - most flagrantly
in apparel and textile manufacturing, personal and repair services, and
private households; less often in residential construction, social assistance,
education, and home health care. Other industries fall somewhere in between.
- Violations also vary by job category. Faring worst are
child care workers, beauty, dry cleaning and general repair workers, and
those employed as sewing and garment workers. Best off are general construction
workers, waiters, cafeteria workers, bartenders, and teachers' assistants.
- Overall, 64% of workers got hourly wages. The rest received
either a flat weekly or daily amount. Non-hourly workers fared worst as
well as those paid in cash, not company checks, and "piece rate"
employees, subjected to unattainable productivity levels to earn minimum
wages. In addition, companies with less than 100 employees had almost double
the violations rate of larger firms.
- Overtime violations occur frequently as 76% of respondents
exceeding 40 hours work during the previous week were denied time-and-a-half
pay as required. Non-hourly workers fared worst, especially with jobs in
personal and repair services, private households, retail and drug stores,
and home health care. Best off were food and furniture manufacturing, transportation,
and warehousing employees. Again, companies with under 100 employees were
the most flagrant violators.
- Off-the-clock violations were also commonplace, affecting
70% of workers surveyed, unpaid for exceeding their regular shifts, especially
in private households, social assistance, and home health care jobs.
- Meal break violations affected 69% of workers, denied
breaks or having them shortened or interrupted. Overall, study findings
revealed "routine violations of labor and employment laws across the
wide range of industries, occupations and workplaces....But the low-wage
labor market is not monolithic (as) 49% (of workers said) their employers
offered them health insurance, provided paid vacation days, paid sick days,
or had given them a raise in the past year."
- Workplace Violations Related to Race, Ethnicity, Gender
and Other Worker Characteristics
- Not surprisingly, US-born workers and those best educated
fared best, undocumented foreign-born ones (especially Latinos) worst,
and women experienced more violations than men over minimum wages. In contrast,
overtime, off-the-clock, and meal break violations varied much less demographically.
- Wage Theft
- As noted above, it steals 15% of worker wages amounting
to $2,634 annually on an average $17,616 total earnings. Also in a given
week, over 1.1 million workers in the three cities studied experienced
at least one pay-related violation costing them over $56 million in total
- mostly over unpaid minimum wages but also the above cited abuses.
- Protecting American Workers - What Can Be Done
- The problem is endemic in key industries throughout the
country, and has a profound effect on workers, their families and communities.
The cities studied aren't unique as evidence nationwide suggests. Low-wage
worker rights are compromised in jobs ranging from agriculture, meat and
poultry processing, hotels, nursing homes, day care centers, retailing,
and residential construction in every city where exploitive day labor hiring
- Ending employer abuses depends on strengthening labor
laws and having federal and local governments enforce them. However, since
passage of the landmark 1935 National Labor Relations (Wagner) Act, workers
have been disadvantaged ever since, more than ever today at a time of weak
unions, empowered companies, and an economic crisis letting employers cut
jobs, wages and benefits freely, and have government turn a blind eye to
their most egregious violations.
- Fixing these problems needs new leadership in charge
of mass organizing, building unity and strength of numbers, and educating
workers on what they've lost and how to win it back. In a globalized corporate
world and hostile governments, workers must go on the offensive, take to
the streets, go on strike, hold boycotts, demand more from elected officials,
replace unresponsive ones, and battle the old-fashioned way for fair labor
laws and government officials they can count on for enforcement. Short
of that, labor rights will keep deteriorating until workers across the
board are totally at the mercy of unscrupulous employers, while government
remains indifferent to their plight. Conditions are well eroded already,
and nothing short of total mass-commitment has a chance to reverse it.
- Addendum on Wal-Mart
- With over $400 billion in sales and about 2.1 million
employees, the company ranks third globally in the 2009 Fortune 500 rankings
behind Royal Dutch Shell and Exxon Mobil.
- In 2008, Wal-Mart's average full-time Associate, its
most common position, earned $10.84 an hour (for a 34-hour week) or an
annual income of $19,165, $2,000 below the federal poverty line for a family
of four. According to the US Bureau of Labor Statistics (May 2, 2008),
the average full-time Wal-Mart Associate last year earned 16% less than
the average retail wage. At the same time, its CEO Lee Scott (January 2000
- January 2009) earned $29.7 million in total compensation.
- On December 23, 2008, the company announced that it settled
63 wage and hour class action lawsuits, representing about 86% of the 73
total pending. Through evidence obtained and employee testimonies, these
cases revealed company ruthlessness in keeping labor costs down and unions
- Legal documents showed that managers are rewarded for
forcing employees to work off-the-clock, skip meal and rest breaks, then
manipulate time and wage records to cut costs. They also overwork minors
and keep them during school hours. An internal July 2000 company audit
revealed that these violations were longstanding. Company executives engaged
in illegal activity and hid the evidence to avoid liability.
- Under terms of the settlement, Wal-Mart agreed pay at
least $352 million and perhaps as much as $640 million to present and former
employees. According to Professor Paul Secunda of Marquette's School of
Law, the company settled to avoid an even worse defeat, including what
unionization might cost.
- On October 23, 2003 in a 21-state raid, Immigration and
Customs Enforcement (ICE) agents arrested more than 250 undocumented workers
at 61 Wal-Mart stores. As cleaning crews and janitors, they were forced
to work seven days a week under harsh conditions at below minimum wage
rates, no overtime, and according to one employee "no benefits, no
health insurance, no nothing."
- Stephen Lendman is a Research Associate of the Centre
for Research on Globalization. He lives in Chicago and can be reached at
- Also visit his blog site at sjlendman.blogspot.com and
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