Trump’s Labor Department walks away from wage theft

Once again, the Trump administration is showing workers in the United States the back of its hand. As if going AWOL on workplace safety in the face of a pandemic wasn’t enough, now the Trump administration’s Labor Department has decided to tell employers not to worry too much about paying their employees properly. It telegraphed that message a few days ago, when it stripped away an effective Obama-era enforcement tool designed to catalyze employers to comply with this country’s wage and hour laws.

Wage theft in the U.S. is not an imaginary problem. Yes, there are lots of law-abiding employers in this country. But studies have shown that workers — especially those on the lowest end of the pay scale — are annually cheated out of billions of dollars of pay they’re entitled to under federal law. It’s the Labor Department’s job to ensure that doesn’t happen. It’s a hard job, and the Trump administration just made it a lot harder.

The law that applies here is the Fair Labor Standards Act (“FLSA”). Passed in 1938, among other things it requires employers to pay their workers at least the prescribed federal minimum wage (currently, a meager $7.25 per hour), and time and a half the workers’ regular rate for all hours over forty in a week. It also provides that employers who fail to pay according to these basic mandates face consequences.

Specifically, an employer who fails to pay a worker their proper minimum wage or overtime “shall be liable” to the employee for the unpaid wages, “and an additional equal amount as liquidated damages.”  In other words, if you violate the law, you must pay the worker double the amount you shorted them.

Since a crucial goal of the statute is to induce employers to comply with its mandates, this makes a lot of sense. Employers who are inclined to cut corners and avoid the law’s requirements need a reason to comply. Knowing they’ll be obligated to pay double when they violate the law provides such an incentive. Conversely, being required to pay only the back wages owed provides no compliance motivation at all. In fact, if that’s the only consequence for employers who pay their workers improperly, they’ve effectively obtained an interest-free loan, on the backs of their employees.  

As of July 1, under the Trump team’s latest “deregulatory” act, that’s precisely the gift employers who cheat their workers out of the pay they’ve earned will receive.

We’re not talking here about employers who made a serious, good faith effort to comply with the law, reasonably thought they were complying, but made an innocent mistake. Those employers have never had to pay double. We’re talking about the unfortunately far too many employers who know about the law’s minimum wage and overtime requirements, or simply don’t bother to find out what they are — and then fail to pay their workers what they’re owed.

Beginning in 2011, employers like these, when found violating by the Labor Department, were given the choice of being sued for double back pay, or settling for the same amount without having to go to court. If that employer believed it shouldn’t have to pay double, or shouldn’t have to pay at all, no gun was pointed to their head. They could go to court and challenge the Department’s claims. But if they wanted to settle instead of litigating, they’d need to pay the workers the double back wages the law says they’re entitled to.

Under the new policy, the incentive to comply has been surgically removed. Even a willful violator who hasn’t been caught before gets a free pass. Employers who’ve short-changed their workers need to shell out only what they should have paid in the first place, months or years after those payments were due. No interest charged. No monetary compensation for the harm caused by the underpayments. Worker as zero-interest lender.

Apparently that’s how, in this moment, Trump’s Labor Department honors workers. 

Let’s not forget that it’s our low wage workers who are risking their lives to COVID-19 every day, and who are most often victims of wage theft by uncaring, or unscrupulous employers. They’re also disproportionately people of color. They deserve ever more effective government enforcement strategies designed to impel employers to do the right thing. Instead, this Administration has again turned its back and walked away.

Michael Felsen left federal service after 39 years as an attorney with the U.S. Labor Department’s Office of the Solicitor, concluding his career as New England regional solicitor from 2010-2018.  His office was charged with enforcing federal worker protection laws, including The Fair Labor Standards Act and the Occupational Safety and Health Act.