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Yes, Government Can Take on Cheating Employers: By Going After Their Brand
It's all well and good that President Obama announced yesterday that his administration would crack down on the repugnant practice by employers of calling all sorts of front-line workers "managers" so they can evade overtime laws. Workers are being systematically cheated out of billions of dollars in pay and it's great that we have a president who wants to do something about that, and make good on the hallowed ideal of the 40 hour work week, one of the central pillars of labor law.
But let's not kid ourselves. The tougher rules that Obama has directed the Department of Labor to develop will likely just be more rules that employers brazenly flout, and with few consequences. Why? Because this nation's labor enforcement regime is a hollowed out joke, with too few labor inspectors to cover millions of workplaces -- even after the Obama administration greatly beefed up the number of investigators at DOL's Wage and Hour Division during its first years in office. You're more likely to see Elvis in most workplaces than a federal inspector, and so employers know they can do as they please. All the more so because even if they get caught, the penalties are insignificant. As DOL's website notes: "Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties of up to $1,100 per violation."
Yikes, scary. If you're a repeat offender you pay a thousand bucks! I'm sure that has mangers at multi-billionaire dollar retail and restaurant chains in quaking in fear.
True, the law also says that a second conviction for such violations can lead to imprisonment. But that supposes there's a first conviction, which supposes that an inspector shows up, and so on.
One reason the odds are so stacked against regulators is because the production of goods and services has become greatly decentralized, as companies outsource more functions to lean-and-mean vendors who compete with each for business. David Weil calls this the "fissured workplace," as I discussed here a few days ago. A Hilton hotel may not even realize that the maids who clean the rooms are being cheated out of wages because those maids don't work for Hilton, they work for the vendor Hilton hired.
In short, it's not your father's workplace, but the U.S. labor regulatory regime has yet to be updated for this new era.
What do we do about all this? David Weil -- who was recently nominated to run the Wage and Hour Division -- has some interesting new ideas for "reimagining enforcement." He wants to identify top brands engaged in violations and investigate them in a broad strategic fashion, including looking into how their subcontractors operate, and compile sweeping cases against them.
He also wants to harness the power of transparency, which has shown itself to be effective around food hygiene enforcement. It's one thing if restaurant inspectors slap a diner with a fine. It's quite another if they force that diner to post a grade letter of "F" in its window. The latter route uses government findings to empower consumers to inflict much more serious financial harm on a violator than the government is capable of doing.
Of course, attacking brands and harnessing transparency are longstanding tools of the anti-sweatshop movement. And it's notable that even as a government labor regulations have remain stuck in time, NGOs have pioneered a range of tactics to prod companies to behave better. So a key question is how the federal government, and state agencies, can learn from that work to bring domestic labor enforcement into the modern age.
A lot is possible if enforcement agencies understand, as activists do, that a company's brand is like it's jugular: the most vulnerable pressure point. Companies spend billions to build and protect their brands. If regulators can find ways to put that asset at risk, just maybe we'll start to see a new era of respect for workers.
