Reforms to combat wage theft passed overwhelmingly by Massachusetts Senate

FOR IMMEDIATE RELEASE
WEDNESDAY, JULY 13, 2016, 7:00 P.M. EST
Contact: Darlene Lombos, Executive Director, Community Labor United
Darlene@MassCLU.org, 617-723-2639, 617-910-6208

Reforms to combat wage theft passed overwhelmingly by Massachusetts Senate

Advocates say bill represents critical step towards combatting $700,000,000 estimated annual statewide wage theft

BOSTON, MA – Early this evening, An Act to Prevent Wage Theft and Promote Employer Accountability (S.2416), was passed overwhelmingly (38-2) by the Massachusetts Senate. This bill will put new restrictions on businesses who have been subject to criminal or civil actions resulting from a failure to comply with the Massachusetts Fair Labor Standards Act.

Workers and advocates backing the bill hailed the passage by the Senate as progress in their efforts to promote statewide reforms, and vowed to ramp up advocacy efforts to see the corresponding House legislation passed into law before the current legislative session concludes at the end of July.

“The wage theft epidemic has overwhelmed the capacity of our existing labor laws,” said Darlene Lombos, Executive Director of Community Labor United and Vice President of the Greater Boston Labor Council. “Today’s action by the Senate marks a strong commitment to hold employers accountable for this practice and to ensure basic fairness for working people in our communities.”

“The fact that today so many workers in this Commonwealth are being cheated out of wages is just simply unacceptable,” said Steven Tolman, President, Massachusetts AFL-CIO. “This legislation takes a very important step towards stopping the illegal practice of wage theft in Massachusetts and towards leveling the playing field for honest businesses.”

Approximately $700 million(1) in wages are stolen from workers in Massachusetts each year by employers who break the law by eschewing overtime, minimum wage, and other existing regulations. Meanwhile, according to multiple studies based on US Census Bureau data, Massachusetts ranks as having one of the highest overall levels of income inequality amongst all U.S. states. Boston has repeatedly been ranked as the most inequitable city in the nation.

On June 23, 2016, Community Labor United unveiled the “Massachusetts Wage Theft Counter.” Looming over highways across the state in the form of digital billboards, the counters displayed a running tally of the estimated amount of wages stolen from workers in Massachusetts thus far in 2016. The counter continues to update on StopMassWageTheft.org, a website recently launched by advocates in support of the legislation.

ADDITIONAL BACKGROUND:

Sen. Sal DiDomenico was the lead sponsor of the legislation, which passed the Senate earlier today. Reps. Aaron Michelwitz and Kate Hogan are lead sponsors of the corresponding House legislation. Advocates say they hope to see the bill passed into law before the current legislative session concludes at the end of July. The campaign has gained momentum recently, passing similar measures on a municipal level in Boston, Cambridge, and Chelsea.

In Massachusetts and across the country, employers are subcontracting and outsourcing their work and distancing themselves from their responsibilities to their employees. While sometimes these practices reflect more efficient ways of producing goods and services, they are too often the result of explicit employer strategies to evade labor laws and erode worker protections.

Advocates say that the penalties and regulations on the books in most cities and in the state are too weak to prevent employers from misclassifying and stealing from employees, particularly lower-wage employees. Community Labor United recently released a hard-hitting report describing the wage theft crisis in Massachusetts, entitled “Gaming the System – How Employers Short-Change Workers and Get Away With It.”

According to data cited in the report, misclassification costs the state as much as $259 million annually in payroll taxes and $87 million annually in unemployment insurance taxes.

Wage theft is estimated to cost workers in the United States billions each year, only a fraction of which is currently recovered through state and private litigation.

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Community Labor United (CLU) is the convener of the Good Jobs, Strong Communities Campaign. CLU and its partners work to protect and promote the interests of working class families in Massachusetts. Through coalition building, research and policy development, public education and grassroots mobilization, CLU moves policies that promote quality jobs and sustainable neighborhoods.

1.) Bernhardt et al. (2009) performed a statistical survey of 4,387 low-wage workers across three cities and found 68% of low-wage workers experienced wage theft averaging $51/week or $2,634/year assuming a full-time schedule. We identified a universe of 513,611 low-wage Massachusetts workers building on figures reported by the Massachusetts Budget and Policy Center (2013). We applied the 68% prevalence rate to this universe to get 349,256 workers experiencing wage theft, and then applied a more conservative $2,000/year stolen per worker to get $698,512,000 wages stolen annually.

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