Is your boss trimming your wages?
Is your boss trimming your wages? ZORAN ZEREMSKI/GETTY IMAGES

Every once in a while the fact that Americans lose three times more money to wage theft than they do to all other forms of theft shocks me out of an afternoon stupor and prompts me to reach for my pitchfork. But now that farm-tool-wielding mobs are a bit passé again, employees vulnerable to wage-thieving bosses will have to settle for the opportunity to rally behind the Workers Protection Act, a bill from Democratic State House Rep. Drew Hansen that would allow workers to sue on behalf of the state and their-coworkers when their bosses violate labor laws.

The bill almost made it to the State House floor when Hansen introduced it last year, but this year is different. Increasingly risky working conditions during the pandemic and the rise of forced arbitration clauses in contracts have created a greater sense of urgency around the need to give employees these whistleblower protections.

Though Washington is lucky enough to have a bunch of good labor laws and competent-enough agencies to enforce them, outreach is limited, so a lot of workers don't know their rights, and those who do take a pretty big risk when they attempt to assert them.

If a boss violates labor laws—e.g. a boss fires someone for being gay, fires someone for taking sick leave or family leave, repeatedly fails to provide personal protective equipment in a pandemic, fails to pay overtime, fails to pay the correct wage, etc. etc. etc.—then you have to file an individual complaint with the appropriate enforcement agency. But filing individual complaints makes it difficult for employees to protect their identity. A few farmworkers, food processors, nurses, and servers who testified in support of the bill last week said the process makes their co-workers fear retaliation for narcing on the boss, which has a chilling effect and, of course, an immiserating effect on the whole workforce.

Women and minorities end up losing the most

Washington has rules against bosses retaliating against employees for filing labor complaints, but making sure employers don't do that requires another layer of enforcement, and now we have a vicious cycle on our hands.

Meanwhile, "the risk to employers for violating labor laws is almost nil," Sage Wilson of Working Washington argues. "Almost never does the state charge interest or penalties against employers for wage theft, for instance, which makes wage theft sort of like an interest-free loan from workers that employers can take. The worst-case scenario is [employers] have to pay it back."

Moreover, Wilson notes, the rise of mandatory arbitration agreements—which is a clause in a contract between you and your employer barring you from taking your boss to court and forcing you into an arbitration process that heavily favors employers—further reduces the risk to employers.

Specific data on how much money bosses steal from employees in Washington is thin on the ground, but a 2017 study from the Economic Policy Institute looked at minimum wage theft alone in the top 10 most populous states in the country and found that companies steal an average of "$3,300 per year for year-round workers" in those states, amounting to a loss of "nearly a quarter of their earned wages."

Based on that study, Working Washington estimates that bosses steal $1.2 billion "if we account for Washington’s share of the national population."

A 2019 audit of Seattle's minimum wage enforcement found that companies who "tend to hire non-unionized low-wage workers" violate labor laws at higher rates than others. Women and minorities work these jobs at disproportionally high rates, so they end up losing the most.

Unless it's Amazon's bottom line, the pandemic doesn't seem to have helped much in the world, and labor law enforcement is no exception. Kasi Perreira, director of racial and gender justice for the Washington State Labor Council, pointed out that the Washington State Human Rights Commission, which handles discrimination claims, "currently has a several month backlog of cases waiting to be assigned to an investigator," according to a red-letter disclaimer on its website.

And though pre-pandemic Department of Labor and Industries seemed to work through its stack of complaints at a pretty decent clip—in 2019 the agency fielded about 6,400 wage complaints and ended up with a backlog of 140—they still maintained a backlog, and they can't get to everything. (If you work in the service industry, for instance, chances are you've seen a health inspector come by, but you haven't seen anyone from L&I stop by and ask around about the checks.)

If Washington passes the Worker Protection Act, many of these problems diminish. Under the law, a worker could file a claim on behalf of a group of workers, which would solve the identity-protection issue. Any aggrieved worker could file the claim, which would ultimately expand the state's labor law enforcement regime by...a lot. (We're all labor enforcement officers now!) The claim would first go through the appropriate agency, which could choose to intervene or not. If the agency doesn't intervene and the employees win the court battle, 40% of the penalty amounts recovered go to the employees and 60% go to the state. If the agency does intervene and wins, then 20% of the penalty amounts recovered go to the employees and 80% go to the state. And of course, "any damages recovered must be distributed to the aggrieved employees," according to the language of the bill.

Returning stolen wages while patching budget holes

Workers in California have enjoyed similar protections under the Private Attorneys General Act (PAGA) since 2004. A recent report on the law from the UCLA Labor Center found that PAGA "has had a considerable and positive impact for workers by deterring violations through a relatively small number of high-impact suits."

In 2019, the law brought in "over $88 million in civil penalties" to the state, and over the last four years averaged "$42 million in civil penalties and filing fees," all in the service of returning millions in stolen wages to employees.

Washington has a similar whistleblower law but only for cases of Medicaid fraud, and it works great, too. In 2015, the state's Joint Legislative Audit and Review Committee found that the state had recovered $2.8 million from Medicaid fraud cases between 2012 and 2015 and only spent $963,000 in the process, resulting in "a return on investment of $2.96 for every state dollar spent."

During testimony last week, advocates said Washington passing a similar bill would boost the state's ability to tamp down on bosses stealing wages via improperly classifying workers, failing to pay for mandated breaks and overtime, and failing to pay family or sick leave. Workers could also act on behalf of themselves or co-workers to flag discrimination violations and failures to observe health and safety laws.

The opposition essentially argued that the bill offers too few loopholes for corporations and gives workers too much power. Bob Battles at the Association of Washington Business said the bill would amount to a windfall for labor lawyers (so what?), and Kevin Levine with Alaska Airlines warned of increased exposure to "frivolous and unnecessary lawsuits" that would leave companies "vulnerable to multimillion dollar lawsuits for technical violations that do not harm our employees."

The sorts of lawsuits corporations deem frivolous.
The sorts of lawsuits corporations deem frivolous. UCLA LABOR CENTER

Levine cited one lawsuit where a judge ordered the company to pay $25 million because the "formatting of flight attendant pay statements didn’t meet the rules under California laws." According to Bloomberg Law, the case was a little more involved than that: "The attendants weren’t paid for all of their hours and were denied overtime pay, meal and rest breaks, and accurate wage statements that are required under California law, the U.S. District Court for the Northern District of California ruled July 9." The airline company is appealing the ruling.

As for the charge of the WPA leading to a tsunami of lawsuits, Stanford law professor David Engstrom held up his extensive study of a similar federal regime, which found that claims filed under the law eventually stabilized and led to about "2 to 3 billion in savings."

In all, the WPA would help more employees get money back that was stolen from them, and help the state patch up some budget holes in the process. The only people who stand to lose out are those who violate labor laws.