What if we lived in a world in which organizations were held accountable for wages owed to their employees? Look no further than Cook County, Ill., whose board of commissioners recently approved a wage theft ordinance. The new ordinance was passed on behalf of low-income employees who increasingly have been plagued by businesses taking advantage of their hard work and abusing labor requirements.
According to a recent University of Illinois study, low-income employees lose an estimated $7.3 million per week over employment and labor violations in Cook County alone. However, this is not the only place where wage theft is prevalent.
A similar, three-city study of New York, Chicago and Los Angeles revealed figures that rival those of Cook County. Over the course of a year, low-wage employees in those cities lost almost $3 billion to labor law violations. These studies and others suggest that wage theft has become a national issue. Until companies take additional steps to protect their employees, government regulations will be passed to hold organizations accountable.
Beginning on May 1, the ordinance will take effect throughout Illinois’ largest county and seek to curb these repeated violations by pressuring businesses to remain in compliance with federal labor regulations.
The ordinance will apply to any business that has “admitted guilt or liability or has been found guilty or liable in any judicial or administrative proceedings of committing a repeated or willfully” violated any state or federal wage-payment laws in the previous five years. Some of these laws include the Illinois Wage Payment and Collection Act, the Illinois Worker Adjustment and Retraining Notification Act and the Fair Labor Standards Act.
Therefore, it is imperative for organizations to utilize all their tools and technology effectively in order to handle potential retroactive inspections and avoid financial obstacles. Does your organization have the capability to track employee records going back five years? If not, your business could be put in a difficult position. More questions like this will be brought to the forefront as the wage theft ordinance takes effect, putting company records under the microscope.
Qualified employers will be found in violation of the ordinance by exploiting their employees in any of the following ways in order to increase profit:
- refusing to pay employees overtime wages for hours worked,
- modifying employee job status by classifying legal employees as independent contractors,
- requiring employees to work for payment below the federal minimum-wage level or
- refusing to pay employees for hours worked.
Fines and the Future
Even if the employees lived or worked outside the county, employers in violation can be denied or lose their existing contracts with the county, have their business license revoked and even lose valuable property-tax incentives. Businesses that violate compensation laws will be held accountable.
The ordinance also affects new businesses seeking to operate in the county. Under oath, future business owners in the county must sign affidavits of compliance confirming they have never knowingly violated any employment laws. If the company breaks the affidavit, the county chief procurement officer can issue a notice of default on its existing licenses.
Two Cents Adds Up
With wage theft, dishonest employers not only cause immediate problems within their own workforce, but also disrupt the growth of the economy as a whole. Such exploitative business practices stunt growth by causing employee loyalty issues, imbalanced competition with responsible employers and eventually lower tax revenues from payroll deductions. These are only a few side effects of wage theft that can cheapen a state’s workforce and plague economic prosperity. As a result, it is important for all organizations to support their employees through transparent business practices and regulations, only then can wage theft stop on a dime.