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Tuesday, September 23, 2008

Addressing Wage Theft and Other Illegalities

In his post, Public Responsibility for Stopping the Big Squeeze, Noah Zatz had some smart and kind comments about my book, and I very much appreciate that.

While I wholeheartedly concur with Professor Zatz's call for more law enforcement to stop labor law violations, I nonetheless dissent in part from this statement of his: "Unfortunately, I worry that the overall thrust of Greenhouse's argument leaves us ill-prepared to make the case for government action.  Almost every story has the same basic structure:  big corporation stomps on noble worker, or in more complex cases, big corporation forces small corporation (or middle manager) to do the stomping.  This way of telling the story lets almost all real people off the hook:  either we are fellow sufferers, or we are innocent bystanders.  That's great for focusing anger on the corporate miscreants, but I fear that it falls short, both morally and politically, when the solutions require all of us to put skin in the game."

If anything, I believe, my book should leave us better prepared to make the case for government action. One reason I wrote The Big Squeeze was to help make sure that the public sees  -- and that the nation's lawmakers see -- how common it is for corporate managers to break workplace laws. These practices are disconcertingly widespread, whether it's failing to pay time-and-a-half for overtime or making employees work off the clock or shaving hours from employee time cards or brazenly flouting safety regulations or hiring undocumented workers to skimp on wages and benefits or illegally firing union supporters. I'm not suggesting that these illegal practices are universal, but I did hope to make the case that these practices are far more prevalent that many people realize.

In the many tales I tell of companies and managers breaking workplace laws, in no way did I intend to leave companies or their managers off the hook. I write of senior corporate executives who assign unrealistically low payrolls to store managers or restaurant managers, knowing full well that those managers will feel pressured to break the law-- by, for instance, demanding off the clock work -- if they hope not to exceed their assigned payroll.  By writing about this, I'm not letting these senior executives off the hook. Rather I'm hoping that I might help persuade or even pressure senior executives to assign middle managers and line managers more realistic payrolls so those managers don't feel the need or temptation to break the law. I also hope that senior executives will alter some incentives for lower-level managers because those managers often feel tempted to cheat their employees when they know that their bonuses are tied to how low they keep payroll.

Nor do I let the line managers off the hook. I recognize that these managers are often assigned unrealistically low payrolls and often face huge pressures on the job, shouldn't these managers -- before breaking the law -- question their superiors about the unrealistically low payroll levels they've been assigned. Too often they too blithely flout the law.

And I like to think that my book puts shareholders on the hook. By serving notice  that many large, well-known companies are engaging in wage theft and violating safety laws, I would hope that some enlightened shareholders would push to make sure that their companies have firm policies (and realistic payrolls) to help discourage and prevent such lawbreaking.

My hope is that my book will spur reader, be they workers, union members, concerned professors, concerned lawyers or concerned clergy, to urge workplace regulators to regulate more vigorously and to urge lawmakers to enact stronger penalities to create disincentives to wage theft. Here's one law that needs strengthening: the federal penalty for falsifying wage documents (i.e. shaving hours) is just $1,000.

In my chapter of recommendations, I say it would be smart for federal and state lawmakers to allocate more money for workplace investigators. Some lawmakers and taxpayers might hesitate to spend more money on hiring more investigators. But I can imagine a way to increase the size of investigative staffs without raising the cost to taxpayers. I would think that good investigators could unearth enough workplace wrongdoing and mete out enough fines that they would more than pay for themselves.

Posted by Steven Greenhouse on September 23, 2008 at 11:25 PM in Books | Permalink


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Although his name and his accomplishments are sadly besmirched, Eliot Spitzer was masterful in leveraging a small budget and staff into much stronger enforcement policies. His Wall Street investigations did what the SEC didn't, and his labor and employment group also used innovative techniques such as the Greengrocer agreement. Perhaps more public-private partnerships to monitor workplace conditions will be one answer to the enforcement problems.

There's also private enforcement. Do you think the wage-and-hour suits are having any effect on policies? Or are they too limited to change behaviors?

Posted by: Matt Bodie | Sep 24, 2008 11:08:03 AM

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