As McDonald’s workers across the country begin to take action against wage theft, one thing is clear: this is not a problem isolated to McDonald’s or the fast-food industry. Wage theft is rampant across low-wage industries – even in federal buildings.
You might assume that companies receiving taxpayer dollars wouldn’t get those dollars if they didn’t follow federal law, but recent studies show a persistent pattern of law-breaking by federal contractors. A U.S. Senate report revealed that 32 percent of the largest U.S. Department of Labor penalties for wage theft were brought against federal contractors. Similarly, a National Employment Law Project study found that nearly 40 percent of low-wage contract workers in the DC metro area reported stolen wages.
That’s why food court workers in two Washington D.C. federal buildings recently filed wage theft complaints with the U.S. Department of Labor alleging widespread law-breaking among federal contractors, including being paid below the minimum wage, being forced to work off the clock and not receiving time-and-a-half for overtime hours.
The complaint filed by restaurant workers at the Reagan Building, the largest civilian federal office complex, alleges that employees earned as little as $6.50 an hour and often worked 70-80 hours per week without overtime. Similarly, food court workers at Union Station also filed a wage theft claim with the Department of Labor. According to their complaint, workers earned as little as $5.83 an hour and also failed to receive overtime pay. These Union Station workers lost, on average, almost $10,000 per year or 28 percent of their legal pay as a result of wage theft. Combined, the Reagan and Union Station food court workers are demanding more than $4 million in back-pay and damages under the Fair Labor Standards Act.
The president’s executive order increasing the pay of these contract workers is a good first step to help low-income earners, but it doesn’t go far enough. Without stronger wage theft enforcement, a wage increase will be blocked through a de facto veto by federal contractors. Just this week, the President announced plans to issue a presidential memorandum to expand overtime pay. If federal contractors failed to comply with wage and hour laws and committed wage theft when the minimum wage was $7.25, there’s no reason to think they would suddenly comply with an increased minimum wage of $10.10 or with new overtime regulations. The president needs to enforce the law.
President Obama needs to strengthen his minimum wage executive order by ensuring the federal government only does business with companies that play by the rules and follow the law.
A “responsible contractor” enforcement mechanism should be added as a companion executive order to the $10.10 minimum wage for federally-contracted workers. This would address wage theft at its source. Contractors would be required to report all violations of employment laws, and the Department of Labor would have authority to investigate a contractor’s pervasive violations of employment laws. It would also require contracting agencies to consider labor law violations when determining whether or not a contractor has “a satisfactory record of integrity and business ethics” in dealings with its own employees.
By signing the $10.10 executive order, Obama demonstrated his commitment to lead by example and hold employers accountable for paying workers enough to support themselves and their families. He now has another important opportunity as CEO of the federal government to clean up illegal operations under his oversight and send a message to the CEOs of profitable corporations like McDonald’s that they can no longer get away with illegal and abusive practices like wage theft.
When workers are already making poverty wages, the last thing taxpayer-supported companies should be doing is holding back the wages workers have earned. Wage theft is not small, petty thievery. It involves hundreds of millions of dollars and tens of thousands of workers employed on federal contracts. Stopping wage theft is an important step to addressing income inequality and ensuring no one who works full time lives in poverty.
Obama can again lead by example and end wage theft now.
Bobo is the founder of Interfaith Worker Justice and author of the book "Wage Theft in America."