Where to begin reining in wage theft? Regulate construction labor brokers

By D. Michael Dale of Cornelius, Oregon. Michael is executive director of the Northwest Workers’ Justice Project, a member of the Oregon Coalition to Stop Wage Theft

In recent years, many Oregonians have walked into my law office with a common story of hardship: Someone hired them to work in construction, promising decent pay. The work was tough, sometimes backbreaking. But when it came time to be paid, the person who hired them refused to pay or paid only a portion of the wages owed.

Often when we’ve tried to collect on behalf of these workers, the person who hired them — the labor broker —vanishes or lacks assets. The building contractor who used the labor broker and benefited from the work claims the workers were employees of the middle-man and denies responsibility.

Although wage theft occurs across industries, the construction industry gives rise to more than its share of wage theft complaints. An analysis of wage claims filed with the Oregon Bureau of Labor and Industries (BOLI) in recent years shows that the construction industry posted the highest share of claims relative to the size of its workforce. Specifically, construction had 18 percent of total claims over the period, although its workforce comprised just 4 percent of all workers. That’s why Oregon lawmakers must confront this new threat and stand against wage theft by enacting House Bill 2977. This bill will deter wage theft by requiring construction labor brokers to be licensed and bonded.

Why zero in on construction labor contractors? Because they are the source of many cases of wage theft. We say that not just because of the stories we’ve heard from clients, but also from stories coming out of communities across Oregon. We have a targeted, efficient and tested approach to addressing this serious problem for Oregon’s economy.

Of course the workers whose wages have gone unpaid suffer great hardship. They have families to feed and bills to pay.

However, workers are not alone in being harmed by wage theft. Honest employers also suffer, as they must compete with businesses that underbid by cheating their workers. Oregon communities can’t benefit from wages that workers don’t have to spend in local businesses. Government loses the taxes that are never collected on wages that are not paid.

How do we fix this problem? Enact HB 2977.

This bill — which will be the subject of a public hearing before the Joint Ways and Means Subcommittee on Transportation and Economic Development this Wednesday (May 15) — would require labor brokers in construction to be licensed by BOLI. The bill would require licensing of only those contractors who focus on supplying workers. Actual construction contractors who deal directly with property owners, file building permits or supply materials or heavy equipment are exempt from licensing. Construction labor brokers would be required to disclose in writing the wages and working conditions. And they would be required to post a bond, in order to ensure that those they hire ultimately get paid what they’re owed.

The bill would provide the means of easily finding out who is licensed and who is not. Responsible construction contractors who hire workers themselves or use a licensed labor broker would not be affected under this bill. However, construction businesses that intentionally use an unlicensed labor broker would be jointly liable to the workers for labor violations.

This approach to deterring wage theft by labor brokers is not new. Several decades ago, the agriculture and reforestation industries were rife with abuse. The legislature acted by requiring labor brokers in those industries to be licensed and to post a bond. The law worked. According to BOLI, the licensing requirement for farm labor brokers “has increased awareness of and compliance with our states’ wage and hour laws and employee protections.”

HB 2977 extends the law that currently applies to farm labor brokers to labor brokers in the construction industry. After all, what’s good for the goose is good for the gander.

It’s high time that the Oregon legislature confronted wage theft. It harms workers and their families. It harms low-income communities. It harms honest businesses.

And a great place to start is by enacting HB 2977.

May 14, 2013 Posted in guest column.