Congress Takes Steps To Stop Wage Theft By Federal Contractors

Of all the thefts that happen in the United States, one type is greatly outpacing the rest. With billions of dollars stolen annually—greater than all burglaries, robberies, larcenies, and motor vehicle thefts combined—wage theft has become an epidemic. And wage theft’s victims tend to be those who can least afford it and who lack the power to stop it: low-wage and immigrant workers. When victims do speak out, they often face severe economic retribution, like cuts in their hours or the possibility of losing their job.

The federal government is not just failing to do enough to stop wage theft—it’s an active participant in it. Federally-contracted workers are victimized at an alarming rate. According to a Senate Heath, Education, Labor, and Pensions Committee report, 35 of the Department of Labor’s 100 largest wage theft penalties from 2007-2012 (32 companies, with three repeat violations) were levied against federal contractors. In total, these firms had to repay employees $82.1 million in back wages, but only six faced civil penalties, which totaled just $640,385. Moreover, this did not prevent these firms from getting future government contracts—in FY 2012, these same 32 companies received a whopping $73.1 billion in federal contracts. If this doesn’t send a clear message to contractors, I’m not sure what does. Rip off your employees and you may get a slap on the wrist, but don’t worry, the contracts will keep coming.

In fact, the federal bidding process even provides a certain incentive for these illegal labor cost reductions. With contracts going to the lowest bidder, some firms try to shave costs in whatever ways possible, including illegally denying employees the wages they deserve.

Last February, President Obama issued an executive order requiring that employees of federal contractors be paid at least $10.10 an hour. This will only be effective in raising the minimum wage if employers actually pay the legally required amount to begin with. That’s why on Thursday, the Congressional Progressive Caucus (CPC) urged the President to take further action and issue a “Good Jobs Executive Order” that would prevent employers that commit wage theft from receiving federal contracts and would provide a preference in the bidding process to employers that pay a living wage, offer full benefits, and allow collective bargaining.

Meanwhile, the CPC is starting to make headway fighting wage theft in federal contracting through the appropriations process. Members have been offering amendments with provisions stipulating that appropriated funds may not be spent on contractors that have had FLSA wage-theft violations in the past five years (they define violation as a criminal conviction or civil penalty). Since failing to pass an amendment to the Commerce, Justice, Science, and Related Agencies Appropriations Act last May, they’ve successfully amended the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, the Department of Defense Appropriations Act, the Energy and Water Development and Related Agencies Appropriations Act, and most recently the Financial Services and General Government Appropriations Act. However, these measures would still have to pass the Senate to take effect, and even then they would leave large areas of federal contracting uncovered, not to mention workers in the private sector.

Nevertheless, it’s encouraging that Congress, at long last, is taking up the fight to ensure that corporations that depend on taxpayer dollars pay their workers the wages they’ve lawfully earned. The CPC should be applauded for its leadership and persistence.