The buck starts here: Living wages and sustainable employment

The buck starts here: Living wages and sustainable employment

Large furniture warehouse

By Anne Richardson

The massive push toward subcontracting and supply chains I wrote about in my prior post didn’t happen overnight, and it certainly won’t be fixed overnight either. There are many pieces to this puzzle, all in the service of one big overarching principle: Lead companies must take their fair share of responsibility for the pain and misery that is generated when they squeeze too much from their suppliers and subcontractors. Here are some of the pieces:

1.  Challenge Payroll Fraud.  What used to be called “misclassification” of employees as independent contractors is really the practice of defrauding employees out of social security, overtime, worker’s compensation, health and safety protections, family and medical leave, unemployment insurance, protections against discrimination, and the right to bargain collectively, among other things. In addition to losing these protections, employees who become “independent contractors” have to cover their own costs.  

Cases challenging bogus “independent contractor” status have been multiplying as more and more businesses adopt this practice in order to cut their payroll costs. Last August, the Ninth Circuit held that thousands of FedEx truck drivers were employees, even though FedEx called them independent contractors.  Recently, the judge in a misclassification case against Uber ruled that a jury should decide whether the drivers employees of the company, and noted that “many of the factors in that test appear outmoded” in the “context of the new economy.” 

Former Secretary of Labor Robert Reich has proposed that, instead of waiting for the courts to decide these cases one-by-one, the IRS and Department of Labor adopt a new, simpler test: “Any corporation that accounts for at least 80 percent or more of the pay someone gets, or receives from that worker at least 20 percent of his or her earnings, should be presumed to be that person’s employer.”

2.  Treat Lead Companies as Joint Employers. Every federal circuit and many state courts have their own version of the “joint employer” test to determine when one company should be liable for the wage and hour violations of another – including subcontractors or franchisees. Some of these tests are being re-examined to take into account the ways in which “lead companies” maintain control.

In December 2014 the National Labor Relations Board issued complaints naming McDonald’s Corp. as a joint employer of workers at its franchises. In another case, the NLRB has proposed a “totality of the circumstances” test that would impose joint employer status on any company that wields sufficient influence over the working conditions of the other company’s employees, to make meaningful bargaining impossible in its absence. A similar rule in state and federal courts would recognize the significant power and control that is exerted from the top.

3.  Enforce Supply Chain Liability. Regulators and legislators are also coming to recognize the need to affix responsibility at the top of an industry.  California Labor Code Section 2810.3, which became effective January 1, 2015, provides that an employer must share responsibility for wages, taxes, and workers compensation with the middlemen who provide the labor to the employer. In a similar vein, a provision of the Fair Labor Standards Act known as the “hot goods” provision, prohibits the selling or transporting in commerce any goods produced in violation of the FLSA’s wage and overtime provisions.

Decent wages and safe working conditions are not just an idealistic goal. The lack of a healthy middle class hurts all of us. Public health researcher Richard Wilkinson has reported that the average well-being of modern societies — including health, lifespan, literacy levels, crime levels, and so on — is no longer correlated with national income or economic growth, but with the extent of income inequality. The Center for American Progress has just issued an exhaustive report on “inclusive prosperity,” concluding that nations succeed when their middle class is secure in the expectation that those willing to work are able to work and that standards of living will increase.

Clearly, more work needs to be done. It is time to invest in living wages and sustainable employment, instead of pioneering ever more ways to create dead-end jobs that benefit only those at the very top.

Anne Richardson

About Anne Richardson

Anne Richardson is the Associate Director of Public Counsel Opportunity Under Law, a project aimed at eliminating economic injustice on behalf of underrepresented workers, students, and families throughout California and nationwide. Previously she was a partner at Hadsell Stormer Richardson & Renick representing plaintiffs in all varieties of employment discrimination and civil rights matters for over twenty years. A graduate of Stanford Law School, she has been named to the Top 100 Lawyers in Southern California and has received numerous honors for her work.

The myth about sleeping on the job

The myth about sleeping on the job

24-Hour Shift Workers Entitled to Pay for All Hours Under the Employer’s Control

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By Hina B. Shah

When a receptionist has some down time at work, she surfs the internet or flips through a magazine.  Her employer still pays her for this time because she’s required to respond to calls or visitors.  It is a benefit to the employer.  However, when it comes to employees who work on-call hours or 24 hour shifts at the jobsite, employers and many lower courts have been reluctant to pay workers for this time.  No longer.  Earlier this month a unanimous California Supreme Court clarified that on-call employees required to spend time at their worksites and under the employer’s control are entitled to compensation for all hours, including sleep time.

The ruling surprised some observers despite the fact that California law plainly requires that employees must be paid “for all hours worked.”  In reporting on the 18-year conflict between security guards and CPS Security Solutions, Inc., some legal press described the workers as “idle” and “getting paid to sleep.” This is far from the truth.  CPS Security required the guards to spend their on-call time at the jobsite. The guards were required to investigate in uniform all alarm sounds, or any noise, motion or other activity they heard during their on-call time. They had to stay vigilant and not consume alcohol.  They were not allowed to have pets, children or adult visitors.  Most importantly, the guards had to ask their employer for permission to leave.

Despite these numerous restrictions, CPS Security Solutions, Inc. paid the guards only when they were responding to an alarm or had asked for permission to leave but were either waiting or had been denied relief.  Guards who were required to remain on the construction site during their on-call hours were not paid.

The most galling part of CPS’ practice, however, was the way in which the company profited from these rules. While the workers were required to remain on the premises and not paid for this time, CPS charged its clients for the round-the-clock presence of these guards.  In fact, the company admitted that these guards were an integral part of their business model.

CPS Security is not the only firm using this business model.  Employers of domestic workers, private correctional officers, environmental contractors and others refuse to pay for on-call time unless the worker is actively engaged in responding to calls or emergencies. It would be hard to imagine asking a firefighter to remain on alert at all times, but pay only for the time she responds to a fire, yet this is just what these companies have been doing.

The court’s ruling should be far-reaching. California has long recognized that long hours are harmful to employees’ health.  There is a growing body of evidence that links excessive work hours with substantial risks for occupational injury and illness.  And despite claims that “paying for sleep” will have a negative impact on business, in fact the decision may boost the economy. One obvious way to cut down on costs is to hire more employees, rather than one employee for a 24-hour shift.  Employers benefit when they have on-call workers at their job sites, and so do their clients. Now, more workers may benefit as well.

Hina Shah argued before the California Supreme Court for a number of organizations as amici curiae on behalf of the plaintiff. 

Hina Shah

About Hina Shah

Hina B. Shah is an Associate Professor of Law and Co-Director at the Women’s Employment Rights Clinic (WERC) of Golden Gate University School of Law, addressing employment and labor issues faced by low wage and immigrant workers.

The Top Five Wins for Workers’ Rights in 2014

The Top Five Wins for Workers' Rights in 2014

By Sharon Vinick

2014

As the year comes to a close, it’s time for a “Top Five” list.  Interest in “Top Ten” or “Top Five” lists is so immense that psychologists have even coined the term the “Top Ten Effect,” to describe the “bump” that items on such a list receive in terms of sales.  A list of the top developments in employment law may not cause a run on any stores, but policy makers and working people should take note (drum roll please) as we now count down the list of five developments that will change the landscape of employee rights as we enter the new year.

  • No. 5:  New California Law Says Proof of Sexual Desire is Not Required to Win Sexual Harassment Claim

 The California Legislature deserves recognition for a new law that strengthens protection against sexual harassment on the job. For years, employers have tried to defend against sexual harassment claims by arguing that the harassment, although boorish, was not illegal because it was not based upon sexual desire.  This “defense” goes something like this — The boss who “joked” with his female subordinate about hopping over to a motel for the night wasn’t actually attracted to her, so that couldn’t be sexual harassment.  Or as the employer claimed in one infamous case, the ironworkers who hazed a new guy on the crew with threats of sexual violence couldn’t have perpetrated sexual harassment since they were all straight.  Earlier this year, the California legislature took away this excuse when it amended the Fair Employment and Housing Act to specifically provide that “sexually harassing conduct need not be motivated by sexual desire.”  These few short words will provide powerful protection for victims of workplace sexual harassment.  As important, the change reminds employers and the courts that sexual harassment is about abuse of power, not sex.

The California Supreme Court took aim at the hypocrisy of employers who hire and exploit undocumented workers. It has often been noted that low wage workers, regardless of their immigration status, are frequent victims of workplace violations. Undocumented workers, fearful that any complaint regarding a violation of these rights might result in their deportation, are a particularly vulnerable group.  This year, in Salas v. Sierra Chemical Company, the California Supreme Court ruled that an employer who discriminates or retaliates against an undocumented worker can be held liable. While the case limits the damages available to these employees, it does provide that employers who violate the workplace rights of undocumented employees will be held accountable for their actions.

While the phrase “wage theft” has been around for years to describe employers who fail to pay overtime or other wages earned by their employees, a number of cases in 2014 have raised public awareness and built public outrage regarding the all-too-common practice of employers forcing employees to work without pay.  Studies suggest that employers are ripping their workers off to the tune of more than $50 billion annually.

The year began with a high profile wage-theft story from an unlikely quarter with the filing of a class action lawsuit against the Oakland Raiders by one of their cheerleaders, Oakland Raiderette Lacy T. The lawsuit sparked similar lawsuits at four other NFL franchises and, as important, a national conversation about wage theft.   In March, seven class action lawsuits were filed across the country against MacDonald’s on behalf of workers in the fast food franchise restaurants alleging its franchises did not pay employees for all hours worked and forced them to work through breaks. Challenges to wage theft kept rolling throughout the year.  In November, employees of Yank Sing, a high end San Francisco dim sum restaurant recovered a landmark settlement — $4 million in back pay and benefits for “blatant” wage theft in settlement of complaints before the California Labor Commissioner. These high profile lawsuits have increased public awareness of wage theft and their examples serve as a deterrent to future wage theft.

  • No. 2:  National Labor Relations Board Opens the Door for Retail Workers to Organize by Department

The federal administrative agency that oversees labor-management relations also took steps to level the playing field for workers in 2014.  In July, the NLRB issued a decision that makes it far easier for unions to get a foothold in large retailers, including Walmart.  In a case involving Macy’s department store, the NLRB ruled that the United Food and Commercial Workers could organize a subgroup of 41 cosmetic workers at a 150-employee store.  Before this change, unions faced huge challenges because they were required to win storewide votes.  As of 2013, only 4.6% of workers in the retail industry were members of unions, as reported by the Wall Street Journal.   That’s down from more than 6% in 2003.  The UFCW is campaigning to organize retail workers at stores like Bloomingdales, Macy’s, Target and, of course, Walmart.

  • No. 1:  Increases in Minimum Wage for Workers 

Without question, the movement that gained the most momentum this year for workers was the campaign to increase the minimum wage.    President Obama called upon Congress to raise the minimum wage from $7.25 an hour to $10.10 an hour, and signed an Executive Order to raise the minimum wage to $10.10 an hour for new federal contract workers.  Unfortunately, the gridlocked Congress did not act to increase the minimum wage that applies to all workers around the nation. However,  eleven states (California, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Michigan, Minnesota, Rhode Island, Vermont, and West Virginia) and the District of Columbia did raise their minimum wage.

As of January 1, 2015, twenty-nine states and the District of Columbia will have minimum wages that exceed the paltry $7.25 per hour that workers earn under the federal minimum wage.  The highest minimum wage in the nation is in the District of Columbia, where the minimum wage is $9.50 an hour.  And, by January 1st, six other states (California, Connecticut, Massachusetts, Rhode Island, Vermont and Washington) will have legally mandated minimum wages of at least $9.00 an hour. While significantly more work remains to be done in this area, increases in the minimum wages are a meaningful development for millions of low-wage workers in this country.

So, as the year 2014 comes to a close, let’s toast these advancements for workers and rededicate ourselves to improving the working lives of all employees in the new year.

Sharon Vinick

About Sharon Vinick

Sharon Vinick is the Managing Partner of Levy Vinick Burrell Hyam LLP, the largest women-owned law firm in the state that specializes in representing plaintiffs in employment cases. In more than two decades of representing employees, Sharon has enjoyed great success, securing numerous six and seven figure settlements and judgments for her clients. Sharon has been named by Northern California Super Lawyers for the past five years. Sharon is a graduate of Harvard Law School and UC Berkeley. In addition to being a talented attorney, Sharon is an darn good cook.

Despite losses in Congress, workers gain ground in state and local elections

Despite losses in Congress, workers gain ground in state and local elections

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By Mariko Yoshihara

Although the Republicans had a sizable victory in last night’s midterm elections, and even picked up a few seats in the California state legislature, workers in California and across the U.S. scored some major victories.  The Republican gains in Congress will surely spell doom for Democrat-led efforts to advance workers’ rights at the federal level, like banning forced arbitration, raising the federal minimum wage, and providing paid sick days to workers, but as we saw last night, states, cities, and counties are moving ahead on their own to serve the needs of workers.

For example, four states last night — Alaska, Arkansas, Nebraska and South Dakota — all voted to increase their state minimum wage.  Proving that the minimum wage is not a partisan issue, voters in these four deeply conservative states approved the measures by sizable margins.  Two-thirds of voters in Arkansas, Walmart’s home state, approved a $2.25 wage increase to set a $8.50 per hour minimum.  Alaska will increase its minimum wage to $9.75 over the next 14 months and Nebraska will raise its minimum wage to $9 by January 2016.  South Dakota approved a minimum wage increase to $8.50 next year that will increase annually to match inflation.  With Tuesday’s victories, 17 states have now opted to raise the minimum wage since just last year.

Two cities in California also voted to raise their local minimum wage.  Oakland will boost its minimum wage to $12.25 next year and San Francisco will gradually increase its minimum wage to $15 by 2018.  Eureka was the only minimum wage measure to fail in last night’s election.  Meanwhile, Illinois and several counties in Wisconsin pushed the issue forward by approving non-binding referendums calling for minimum wage boosts.  According to Economic Policy Institute, an estimated 680,000 low-wage workers will be getting a raise based on last night’s results.

Workers also scored major wins for paid sick days last night.  Voters in Massachusetts and the cities of Oakland, California and Montclair and Trenton, New Jersey approved measures to provide paid time off for workers who are sick or need to care for family members.  In Massachusetts, workers in companies with over 10 employees can earn up to to five paid sick days a year, and those who work for smaller companies will be eligible for unpaid sick days.  In Montclair and Trenton, New Jersey, workers who provide food service, child care or home health care, or who work for companies with 10 or more employees, can earn up to 5 days of paid sick leave each year. All other employees have access to three paid sick days.  In Oakland, California, workers in companies with more than 10 workers can take up to nine sick days a year, and, in smaller companies, up to five paid sick days.  Oakland’s new law will provide up to three times as many paid sick days as the new California law that was passed this year, which provides only 3 days of paid sick days.  After last night’s results, three U.S. states and sixteen cities have now passed paid sick days legislation, including two states and ten cities in this year alone.

The growing efforts by state and local governments to move this kind of legislation forward reflects the electorate’s dissatisfaction and frustration with a Congress that fails to act.  However, despite the widespread support of these efforts by voters on both sides of the aisle, as we saw last night, much of the country still sides with GOP candidates who are fundamentally opposed to these exact issues.  Will Republican lawmakers from Alaska, Arkansas, Nebraska and South Dakota, now support a national minimum wage increase?  Probably not.  Unfortunately, politics is much more than just casting votes based on the views and needs of your constituents.

Now that Republicans control both houses of Congress, it is almost certain that the national workers’ rights agenda will continue to go nowhere.  Until we see a change in power in Congress or the Republicans decide to listen to the majority of their constituents, we will have to count on state and local governments to work past partisan gridlock to address the needs of workers.

Low wages & unpredictable schedules: A toxic combination for part time employees

Low wages & unpredictable schedules: A toxic combination for part time employees

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By Charlotte Fishman

In a society that blurs the lines between corporations and people, perhaps it was inevitable that some employers would blur the lines between people and inanimate objects.  Even so, it is shocking to learn that in a growing number of low wage industries, employers  treat part time employees as fungible, disposable assets, instead of human beings worthy of  respect.

Part time workers who toil in retail, food service, and janitorial jobs often find that their time is treated like just another production cost to be sacrificed on the altar of “maximizing profitability.”  They may be kept “on-call” with no compensation, assigned shifts with short notice, or burdened with unpredictable, fluctuating hours.  Even if scheduled to work, they may be told “we don’t need you today,” and sent home empty-handed.

When the labor needs of a business increase, a part time employee’s request for increased hours or  full time work is often denied.  Why? It is more “cost effective” to hire an additional part time worker than to pay a current employee the statutorily mandated benefits that come with increased hours.  Job security is illusory.  Nothing stops an employer from firing a part time employee who refuses to come in on short notice, even if the cause is a sick child or inability to rearrange an established childcare schedule at the last moment.

In addition to being inhumane, these insecurity-inducing employment practices take a huge toll on the  nation’s economic and social health. Without a predictable schedule, how can a low skilled worker improve his or her employability through education? How can a working mother arrange for stable childcare? How can a low wage worker take on additional part time employment to raise the family income above poverty level?

Scheduling abuse of low wage part time workers is a serious social issue that is finally getting the attention it deserves.   On July 22, California Representative George Miller and Connecticut Representative Rosa DeLauro introduced  H.S. 5159, “The Schedules that Work Act” in the House of Representatives.   A companion bill sponsored by Senators Elizabeth Warren and Tom Harkin will be taken up by the Senate.

“The Schedules that Work Act” is characterized by its proponents as a conversation starter about the devastating effect of unreasonable scheduling demands – a practice that has become commonplace in industries as diverse as Big Box stores, fast food chains and multi-national banks.  If enacted, it would prevent retaliation against employees who ask for schedule adjustments;  create an interactive process for employees to obtain accommodation for caregiving responsibilities, classes, second jobs, and other needs;  require employers to provide at least two weeks advance notice of work schedules; and provide at least some compensation for last minute schedule changes, split shifts and early dismissals.

Unfortunately, the bill’s provisions, modest as they are, may be too controversial to pass the gridlock in Congress.  While employer-side representatives loudly proclaim the benefit of flexible part time schedules for both employers and employees, the Bureau of Labor Statistics reports  that roughly 7.5 million employees are working part time only because their hours were cut or they were unable to find full time work.

This is not to say that flexible part time scheduling can never be beneficial for employees.  A predictable flexible schedule — one that enables part time employees to take a second job, to enroll in a training course or to provide care for family members – would be highly desirable to many.

There are hopeful signs of change to come at the local level.  In San Francisco,  Supervisor Eric Mar is poised to introduce the aptly named “Retail Workers Bill of Rights” to the Board of Supervisors at its July 29 meeting.   The proposed ordinance targets “formula retail” businesses,  a designation that includes chain stores, fast food restaurants, and multi-national banks.   Among the rights granted to employees are the right to  four hours pay for “on call” time or shift cancellation on short notice and the right to be offered additional hours before  any new part time workers are hired. The bill is supported by Jobs with Justice, a broad coalition of labor, community and small business groups.

The families of part time low wage workers need and deserve help creating a path out of their current predicament.  The toxic combination of low wage employment and unpredictable schedules is a form of involuntary servitude that should have no place in 21st century America.

Charlotte Fishman

About Charlotte Fishman

Charlotte Fishman is a San Francisco attorney with over 30 years of experience handling employment discrimination cases on the plaintiff side. In 2005 she launched Pick Up the Pace, dedicated to overcoming barriers to women’s advancement in the workplace through legal advocacy and public education. She has authored amicus curiae briefs in major cases before the United States and California Supreme Court and writes and speaks to a wide audience on cutting edge employment issues affecting women.

Californians get a raise today, but we can do better!

Californians get a raise today, but we can do better!

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By Kevin Schwin

Today, California’s minimum wage increases to $9 per hour.  To many Californians, this comes as good news, but will still not be enough to lift them out of a life of poverty.  Other localities have taken more aggressive approaches to boost wages, like Seattle, Washington which recently decided to increase the city’s minimum wage to $15 per hour by 2018.  Since Congress has idled on increasing the minimum wage, efforts across the country are necessary to curb the exponential growth in income disparity that has occurred over the past few decades.

The first federal law establishing a minimum wage was passed in 1938.  At that time, minimum wage was set at $0.25 per hour.  Critics complained the law would have a devastating effect on the economy.  The opposite proved true as unemployment rates dropped significantly in the years following.

Following passage of the Fair Labor Standards Act in 1938, minimum wage continued to increase gradually.  In 1968, federal minimum wage was $1.60 per hour.  That may not sound like much, but adjusted for inflation, that was $10.69 per hour in 2013 dollars.

Since 1968, however, the federal minimum wage has been steadily declining in terms of buying power.  In other words, an employee earning minimum wage in 1968 could afford to live much more comfortably than an employee earning minimum wage today.  Not surprisingly, the income disparity between the richest 1% of Americans and the other 99% has steadily grown.

Many opponents of minimum wage increases claim that raising the minimum wage kills jobs and hurts the overall economy.  However, a number of studies over the past 14 years show that minimum wage increases have little to no effect on economic growth.  This makes sense.  People who earn more spend more.  When spending increases, businesses have to hire more workers to handle the increased demand for products.  Accordingly, any jobs lost from businesses that cannot afford to pay higher wages and still remain profitable are replaced by jobs created by businesses that need more staff to cover increased sales.

This day in age, full time employees earning minimum wage make $15,080 a year assuming a 40 hour workweek and no time off.  The federal poverty line for a 2 person household is currently $15,730 a year, and it increases to $19,790 for a 3 person household.  This is highly problematic, especially for single parents.  In order for a single parent making minimum wage to meet the basic necessities of life, s/he has to either take on more than full time work, go on government assistance, or, worst of all, turn to crime.  On the other hand, if minimum wage is increased to just $10 per hour, a full time minimum wage earning employee will make $20,800 per year, which amount is sufficient for a single parent with 2 children to stay above the poverty line.

In conclusion, we need to increase the minimum wage.  It will reduce the rising income disparity.  It will have no effect on the economy.  And, most importantly, it will keep millions of single parents and children out of poverty.

Kevin Schwin

About Kevin Schwin

Kevin Schwin graduated from the Cleveland-Marshall College of Law cum laude with a J.D. Concentration in Labor and Employment Law. While in law school, Mr. Schwin served as President of his law school’s Employment and Labor Law Association. Mr. Schwin received his B.B.S. from Miami University in Oxford, Ohio, majoring in Human Resource Management. Mr. Schwin enjoys sports and traveling in his free time. He traveled to Italy as a foreign exchange student while in high school. He speaks fluent Italian and is proficient in French.

It’s time to clean up the Los Angeles garment industry’s dirty secret 3

It’s time to clean up the Los Angeles garment industry’s dirty secret

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On March 25, 1911, 146 garment workers died in the Triangle Shirtwaist Factory fire in Manhattan. Today, we know our clothes are still often sewn in lethal conditions in foreign factories.  Last year’s disastrous Rana Plaza collapse and a series of deadly factory fires resulted in much hand-wringing over how to improve safety in Bangladesh’s garment industry. But 103 years after the Triangle Shirtwaist fire, we still have our own dirty garment secret, much closer to home.

There are some 5,000 garment manufacturers registered in Los Angeles County where an estimated 50,000 workers make clothes. The true numbers are almost certainly higher since many businesses do not report their employees, pay taxes, or carry insurance. Some L.A. garment factories are safe and decent workplaces where skilled employees make high-end denim, swimwear, and other products for elite brands. But in many others, where clothes are sewn for the “fast fashion” industry, the conditions are similar to those in New York sweatshops over a century ago or to those in Bangladesh today.

Bet Tzedek, the public-interest law firm where I practice, has represented hundreds of L.A. garment workers over the past decade, and their stories are sobering. Workers earn as little as two cents per completed garment. The pay, predictably, falls far below minimum wage, sometimes less than $200 for workweeks of 65 hours or more. Even in factories where breaks are permitted, piece-rate pay encourages workers to stay at their sewing machines for unbroken stretches. Musculoskeletal pain and related health problems are common. Over 100 years after workers were unable to escape the Triangle Shirtwaist Factory because the doors were locked, some of our clients have worked in factories without access to fresh water or functioning bathrooms, where bales of fabric block fire exits, and where owners lock workers in the building during overnight shifts.

Statistics bear out our clients’ testimony. According to research conducted by UCLA, over 90% of garment workers in L.A. experience overtime violations, and more than 60% are not paid minimum wage. The federal Department of Labor (DOL) found violations in 93% of the 1,500 inspections of garment factories it has conducted since 2008.

It wasn’t supposed to be this way. In January 2000, a landmark law went into effect in California with the intention of eradicating garment sweatshop labor. Before passage of the law, known as AB633, factories that often had no assets other than a few sewing machines would close, move, or reorganize under a different name in response to legal claims, leaving workers empty handed. AB633 established an administrative process in which companies that contract with sweatshops can also be liable for a share of workers’ unpaid wages.

In response, the industry reorganized. Over the past decade, thousands of middleman companies sprang into existence to funnel orders from retailers to factories. These subcontractors create a buffer between workers and the fashion houses that profit from sweatshop conditions. Not coincidentally, this is the same subcontracting structure that now prevails in the garment industry around the world, surprising brands like Walmart and Sears when their production documents are recovered from places like the rubble of Rana Plaza or the ashes of the Tazreen factory.

While we assume that U.S. garment factories are well-regulated, my clients know better: their bosses simply lock the doors to workrooms when potential inspectors are seen approaching. And paying citations is a relatively minor cost of doing business in an industry where the vast majority of workers, many of whom are Asian or Latina immigrant women, are too afraid to file a complaint.

In response to the tragedies in Bangladesh, some companies have entered agreements to inspect and monitor the factories there. Here at home, there is no such movement. When the DOL found garments allegedly destined for Forever 21 stores being sewn by workers in L.A. making less than minimum wage, Forever 21 fought the agency’s subpoena in federal court, arguing that it shouldn’t be forced to disclose sensitive information such as where it makes clothes or what systems it has in place to monitor compliance with the law.

There is little incentive for the law-abiding sector of the industry to get involved. Fashion houses paying fair wages for domestic labor are not competing for the same customers as the companies using sweatshop labor. And organizing a low-wage, immigrant workforce on an industry-wide scale requires investments of time and money that have not been forthcoming.

What else can be done? Paying workers less than minimum wage is theft, and criminal prosecutions of factory owners could cause many to rethink their business models. Aggressive investigations by government agencies could begin to unpeel the layers of subcontracting that protect the reputations of retailers and keep the sweatshop system humming.

The simplest solution would be a law clarifying that retailers are liable to workers who prove they sewed garments sold in stores, regardless of who signed the contract with the factory or how many subcontractors were involved. Such a law would swiftly clean up supply chains. But it would also likely mean fewer inexpensive clothes for shoppers and could send more garment jobs overseas if we aren’t willing to pay more.

The question is whether we want sweatshops in our backyard. It took more than 1200 dead bodies for the Bangladesh agreements to be proposed. What will it take here?

 

Kevin Kish

About Kevin Kish

Kevin Kish is the Director of the Employment Rights Project at Bet Tzedek Legal Services in Los Angeles. He leads Bet Tzedek’s employment litigation, policy and outreach initiatives, focusing on combating illegal retaliation against low-wage workers and litigating cases involving human trafficking for forced labor.

Robert Reich: The Real Job Killers 1

Robert Reich: The Real Job Killers

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By Robert Reich

House Speaker John Boehner says raising the minimum wage is “bad policy” because it will cause job losses.

The U.S. Chamber of Commerce says a minimum wage increase would be a job killer. Republicans and the Chamber also say unions are job killers, workplace safety regulations are job killers, environmental regulations are job killers, and the Affordable Care Act is a job killer. The California Chamber of Commerce even publishes an annual list of “job killers,” including almost any measures that lift wages or protect workers and the environment.

Most of this is bunk.

When in 1996 I recommended the minimum wage be raised, Republicans and the Chamber screamed it would “kill jobs.” In fact, in the four years after it was raised, the U.S. economy created more jobs than were ever created in any four-year period.

For one thing, a higher minimum wage doesn’t necessarily increase business costs. It draws more job applicants into the labor market, giving employers more choice of whom to hire. As a result, employers often get more reliable workers who remain longer – thereby saving employers at least as much money as they spend on higher wages.

A higher wage can also help build employee morale, resulting in better performance. Gap, America’s largest clothing retailer, recently announced it would boost its hourly wage to $10. Wall Street approved. “You treat people well, they’ll treat your customers well,” said Dorothy Lakner, a Wall Street analyst. “Gap had a strong year last year compared to a lot of their peers. That sends a pretty strong message to employees that, ‘we had a good year, but you’re going to be rewarded too.’”

Even when raising the minimum wage — or bargaining for higher wages and better working conditions, or requiring businesses to provide safer workplaces or a cleaner environment — increases  the cost of business, this doesn’t necessarily kill jobs.

Most companies today can easily absorb such costs without reducing payrolls. Corporate profits now account for the largest percentage of the economy on record.  Large companies are sitting on more than $1.5 trillion in cash they don’t even know what to do with. Many are using their cash to buy back their own shares of stock – artificially increasing share value by reducing the number of shares traded on the market.

Walmart spent $7.6 billion last year buying back shares of its own stock — a move that papered over its falling profits. Had it used that money on wages instead, it could have given its workers a raise from around $9 an hour to almost $15. Arguably, that would have been a better use of the money over the long-term – not only improving worker loyalty and morale but also giving workers enough to buy more goods from Walmart (reminiscent of Henry Ford’s pay strategy a century ago).

There’s also a deeper issue here.  Even assuming some of these measures might cause some job losses, does that mean we shouldn’t proceed with them?

Americans need jobs, but we also need minimally decent jobs. The nation could create millions of jobs tomorrow if we eliminated the minimum wage altogether and allowed employers to pay workers $1 an hour or less. But do we really want to do that?

Likewise, America could create lots of jobs if all health and safety regulations were repealed, but that would subject millions of workers to severe illness and injury.

Lots of jobs could be added if all environmental rules were eliminated, but that would result in the kind of air and water pollution that many people in poor nations have to contend with daily.

If the Affordable Care Act were repealed, hundreds of thousands of Americans would have to go back to working at jobs they don’t want but feel compelled to do in order to get health insurance.

We’d create jobs, but not progress. Progress requires creating more jobs that pay well, are safe, sustain the environment, and provide a modicum of security. If seeking to achieve a minimum level of decency ends up “killing” some jobs, then maybe those aren’t the kind of jobs we ought to try to preserve in the first place.

Finally, it’s important to remember the real source of job creation. Businesses hire more workers only when they have more customers. When they have fewer customers, they lay off workers. So the real job creators are consumers with enough money to buy.

Even Walmart may be starting to understand this. The company is “looking at” whether to support a minimum wage increase. David Tovar, a Walmart spokesman, noted that such a move would increase the company’s payroll costs but would also put more money in the pockets of some of Walmart’s customers.

In other words, forget what you’re hearing from the Republicans and the Chamber of Commerce. The real job killers in America are lousy jobs at lousy wages.

A special thank you to Robert Reich for letting us repost this compelling piece, which originally appeared on his blog, www.robertreich.org

ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest, “Beyond Outrage,” is now out in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause. His new film, “Inequality for All,” is now available on Netflix, iTunes, DVD, and On Demand.

Let’s drink to the hard working people 3

Let's drink to the hard working people

shutterstock_85799449

I fell under the influence of the Rolling Stones as an early teenager and never left.  The other day I was listening to Keith Richards grinding out his raspy lyrics to the song “Salt of the Earth,” which begins with the guiding line, “Let’s drink to the hard working people.”  The Stones understood back in 1968 (and probably earlier) that workers should be appreciated and recognized, and it’s time the rest of us follow suit.

Workers, especially low wage workers, are much worse off today than they were 46 years ago when “Salt of the Earth” was released.  According to a recent study from the Center for Economic and Policy Research, 40% of Americans now make less than the 1968 minimum wage.  Had the federal minimum wage kept pace with gains in the country’s productivity since 1968, it would be $16.54 per hour as opposed to its current abysmal rate of $7.25 per hour.  Put another way, the current federal minimum wage is 32% less in 2013 dollars than it was in 1968.

Corporate America’s concerted attack on unions coupled with anti-union legislation has also hurt workers.  On average, unionized employees earn roughly $200 more per week than non-union employees.  Today, unions represent a meager 7% of employees in corporate America, which is one-quarter the level in the 1960s.  In 2013, the union membership rate was 11.3% compared to 20.1% in 1983.  A 2011 study argues that the decline of organized labor accounts for about one-third of the rise in income inequality for men and one-fifth for women — even for people who never belonged to unions.

Our country’s historically high poverty rate, which currently exceeds 15% of the U.S. population, is due at least in part to the failure to recognize and support labor.  Four out of every five Americans will experience near-poverty, unemployment or reliance on welfare programs at some point in their lives.  In 2013, the poverty wage level for a single full-time worker with one child was $8.11, which is almost a dollar more than the current federal minimum wage.

I call on all of us to raise our glass to hard working people and take action to reverse these devastating trends.  An increase of the federal minimum wage to $10.10 per hour would raise the incomes for 17 million Americans.  Federal law should follow California’s lead by imposing significant penalties against employers who fail to pay the requisite minimum wage or who fail to pay wages at all.  Finally, unions should be lauded instead of vilified, especially in the burgeoning high tech industry which has always been hostile to unions.

Workers ARE the salt of the earth, and it’s time for the country to show them the respect and appreciation they deserve.

Scott Ames

About Scott Ames

Scott Ames has been litigating wrongful termination, discrimination, harassment, family and medical leave, breach of contract, wage and hour violations, unfair competition and trade secret matters, and other employee rights cases for over two decades. Mr. Ames’ demonstrated record of success has resulted in him being named among the Top 100 Attorneys in Southern California in 2012 and 2013, a “Southern California Super Lawyer” by Los Angeles Magazine from 2007 through 2014, and a “Best Lawyer in America” from 2006 through 2014. Mr. Ames is also active in his community, and has served on a number of committees and boards of non-profit organizations which seek to improve the lives of the disenfranchised or working poor.

5 New Year’s resolutions for California employers

5 New Year’s resolutions for California employers

2014

By Joan Herrington

It’s the time of year when we think about making a fresh start for the new year.  Since I spend my days witnessing the consequences of workplace problems, I thought I would offer a few New Year’s resolutions I would like to see California employers make.

1.  Communicate with your employees.  Make sure they know what is expected of them and how they can succeed at their jobs.  Uncertainty creates anxiety and anxiety creates inefficiency. Whenever practicable, consult with employees about the things that will affect them.  Few things are more demoralizing than feeling ignored and unable to control your future.

2.  Pay them a living wage.  Your employees will be better able to focus on their work and productivity if they aren’t worrying about paying their bills.  So how about increasing the wages your lowest-level employees earn to something livable?  Some cities are demanding that employers do just that through their living wage ordinances.  And, at the state level, California is raising the minimum wage this year.  Although California’s minimum wage is not due to increase until July 1, 2014, some cities will increase their minimum wage rates as of January 1, 2014.  For example, San Francisco’s minimum wage is increasing from $10.55 to $10.74 an hour and in San Jose the rate will go up from $10 to $10.15 an hour.  Check your city’s ordinances to see if it will also increase the minimum wage rate in 2014.  By bridging the wage gap, we can get the economy back on track for working people.  In fact, studies by renowned economists show that such minimum wage increases can “serve to stimulate the economy as low-wage workers spend their additional earnings potentially raising demand and job growth.”

3.  Don’t underestimate the contributions of older workers.  Older workers are an experienced, dedicated, under-utilized resource.  Studies show that older workers are skillful, reliable, focused, and loyal employees.

4.  Welcome veterans into your workforce.  Our armed forces have had a hard enough time fighting for us in foreign lands.  Don’t make our workplaces another battlefield for them.  Be sure to update your discrimination policies to prohibit discrimination and harassment based on military or veteran status.  Assembly Bill 556 amended the Fair Employment and Housing Act to add military or veteran status as a protected characteristic.  Train hiring officers so that they may inquire into an applicant’s military or veteran status in order to provide a preference in hiring, but make sure they know to keep this information confidential.  And train managers to assist veterans with re-entry into the civilian workforce.

5.  Don’t let a discrimination or harassment complaint become a trigger for retaliation.  Every employee complaint of unfairness deserves a prompt, thorough investigation.  The EEOC provides guidelines on conducting investigations.  If you find that someone engaged in harassment or discrimination, don’t make excuses for them.  Take action to stop the wrong-doing and punish the wrong-doer.  Even if your investigation exonerates an accused supervisor, take affirmative steps to prevent retaliation.  It’s hard for someone accused not to bear a grudge.  Remember that how you handle complaints and prevent retaliation speaks volumes to all of your employees about your quality as an employer.

May 2014 be a productive and fulfilling year for you and the people who work so hard to make your business a success!

 

Joan Herrington

About Joan Herrington

As a former Administrative Law Judge with the California Fair Employment and Housing Commission, Joan focuses on protecting employment rights. Joan helps the Department of Fair Employment and Housing enforce the Fair Employment and Housing Act by representing employees in lawsuits, such as discrimination and harassment based on race, national origin, color, pregnancy, sex, sexual orientation, disability, medical condition, age, and religion. Joan also focuses on protecting employees and whistleblowers from unlawful retaliation. As a qualified and experienced mediator, Joan also helps resolve employment disputes.

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