- "Wage Theft" Laws: Coming Soon to a County Near You
- April 5, 2010
- Law Firm: Hunton & Williams LLP - Richmond Office
Employers striving to comply with federal and state wage laws may soon have one more thing to worry about -- local “wage theft” laws. In Florida, the Board of Commissioners for Miami-Dade County recently approved an ordinance that prohibits private sector employers from failing to pay employees all wages owed and gives the county authority to intervene and seek remedies on behalf of employees. San Francisco already has a wage theft ordinance, and Los Angeles and New Orleans are considering similar measures.
What is “wage theft”? The Miami-Dade ordinance defines it as a failure by the employer to pay any portion of the wages due to an employee, according to his or her wage rate, within a reasonable time from the date the work is performed. A reasonable time is defined as no later than 14 calendar days from the date the work is performed, but this term can be modified to as many as 30 days by an express agreement with the employee.
Miami-Dade County adopted the ordinance in the wake of a study released in 2009 by a group of researchers at the National Employment Law Project (NELP), the University of California-Los Angeles, University of Illinois-Chicago, Cornell University, and Rutgers University. The study, “Broken Laws, Unprotected Workers,” concluded that approximately 68% of the workers surveyed were routinely denied proper overtime pay and were often paid less than minimum wage. It also estimated that the average low-wage worker lost more than 15% of his or her yearly earnings due to pay violations. One of the study’s co-authors concluded that “the country’s work laws are simply not adequate for the 21st century, and . . . the laws we do have are not being adequately enforced.” Interestingly, the Government Accountability Office (GAO) recently reached a similar conclusion that the U.S. Department of Labor has not sufficiently protected workers or penalized employers in cases of minimum wage and other violations.
Miami-Dade County appears to agree with these conclusions. A report accompanying the ordinance opined that the opt-in requirement for collective action lawsuits under the federal Fair Labor Standards Act hampers employees’ ability to seek remedial action in courts. Thus, the report states, the Miami-Dade ordinance provides an alternative method of enforcement and “is intended to be a tool to root out violations of U.S. labor laws occurring in Miami-Dade County.”
Under the Miami-Dade ordinance, an aggrieved employee who alleges a violation of at least $60 (the threshold amount) may file a complaint with the county. The accused employer then must defend itself before a county-appointed hearing examiner. The procedure allows for discovery in accordance with the Florida Rules of Civil Procedure. An employer found to be in violation of the ordinance will be required to pay all wages found to be owed, liquidated damages in an equal amount, and administrative processing and hearing costs. The hearing examiner may award damages of up to three times the amount of unpaid wages.
With the advent of the Miami-Dade “wage theft” ordinance and others beginning to spring up around the country, employers may face expensive legal proceedings and potentially significant liability for simple oversights or misunderstandings regarding compensation. Accordingly, employers need to be more vigilant than ever to ensure that their employees are properly classified (exempt, non-exempt, contractor, etc.) and promptly paid for all compensable time (including actual work time, rest break time, waiting time, start-up time if integral to the work, training time in some circumstances, etc.). To help ensure they are fully compliant, employers should conduct stringent reviews of their current pay practices, preferably at the direction and under the supervision of experienced employment law counsel, and should implement appropriate controls with guidance of such counsel.
The Miami-Dade ordinance perhaps reflects a growing concern that existing federal and state laws are inadequate to ensure that workers receive all the pay they are entitled to receive. While this ordinance and similar measures being considered across the nation may be a product of difficult economic times, they may well signal a trend toward local enforcement of wage laws, which likely will increase expenses and distractions for employers. Although the Miami-Dade ordinance is among the first of its kind, it likely will not be the last.