Labor law enforcement in the United States faces a crisis. Workplace rights violations are rampant. Wage theft dwarfs most other types of theft. Minimum wage violations alone, estimated to be $15 billion annually, account for more theft than all offenses such as robbery, burglary, and motor vehicle theft combined. A recent ProPublica and Documented investigation found that from 2017 to 2021, “more than $203 million in wages had been stolen from about 127,000 workers” in 13,000 cases of wage theft in the state of New York alone with most of the money still owed and yet to be collected. The total amount stolen from working people is “almost certainly a significant undercount.”
Why do workers live in this dire reality, despite the existence of legislation to prevent and punish these transgressions? Decades of disinvestment in public enforcement of labor law has meant that investigators and staff at state Departments of Labor are overburdened and underpaid to fully investigate workplace complaints, enforce laws, and collect compensation. Lack of resources has meant insufficient staffing and pay to attract and keep talented investigators, leaving investigators with ever-expanding, untenable caseloads. The State of New York, for example, saw the ratio of workers to investigators increase from roughly 65,000-to-one in 2018 to roughly 73,000-to-one in 2023 according to a new analysis by the Center for Popular Democracy (CPD). Meanwhile, workers face barriers to justice such as the threat of retaliation from their employers if they bring private lawsuits.
Under these conditions, unscrupulous employers calculate that the penalties for wage theft and other workplace violations are so low, and the likelihood of getting caught is so small, that violating workers’ rights is a safe bet to pad profits. BIPOC and immigrant workers (often marginalized by systemic racism and socioeconomic exclusions), low-wage workers, and those who work under contingent, informal, or gig job arrangements bear the brunt of these rights violations. But, as explored in a recent report from CPD, the Whistleblower Enforcement (WBE) Model stands as a clear solution to the crisis in labor law enforcement.
Whistleblower Enforcement policies use a centuries-old legal mechanism (called “qui tam”) to expand the reach of public enforcement agencies and allow affected workers, whistleblowers, and labor organizations to begin legal action on behalf of the state against employers who violate the law. This mechanism puts power directly in the hands of workers who “stand in the shoes” of the state – making each worker a potential enforcement agent of collective labor rights. Resulting penalties discourage potential lawbreakers, help compensate impacted workers, and – critically – serve as an untapped funding source for enhancing the capacity of public sector enforcement agencies, including through additional staffing and enforcement resources.
New analysis by CPD shows that recently proposed whistleblower enforcement policies could generate hundreds of millions of dollars annually across the country. The adoption of the EmPIRE Worker Protection Act in New York, for instance, could raise over $103 million in annual revenues to help fund public enforcement of labor law; the Wage Theft Act proposed in Massachusetts could raise over $46 million annually to do the same. Since 2004, California’s Private Attorneys General Act (PAGA) – an example of WBE policy – has allowed workers to bring labor law enforcement actions on behalf of the state, generating more than $209 million in penalties in 2022 alone. These funds are deposited into a dedicated state fund—the Labor and Workforce Development Fund (“LWDF” or “PAGA Fund”)—for labor and employment education and enforcement purposes. These funds have been used to help boost investigative and enforcement staffing at the CA Division of Labor Standards Enforcement and to fund a program that disqualifies employers violating state wage laws from bidding on public contracts as well as the Domestic Worker and Employer Education & Outreach Project.
For a closer look at how the WBE model would function, we can examine the proposed EmPIRE Act in New York. Under the act, workers whose rights have been violated (called “relators”) first give notice of violations to the Department of Labor and the state attorney general. Either agency can then step in to investigate the claims. They can also take over the case at any time. If the agencies cannot prosecute, the relator can move forward with a lawsuit to collect penalties on behalf of the state and all affected workers. Whistleblowers who fear retaliation can authorize a union to represent them. If a judge finds that the employer broke the law and imposes a penalty, most of the penalty revenues generated go to the agency, buttressing its enforcement capabilities against these very violations, with a portion (40% if the relator takes the case; 30% if the state takes over) going to the whistleblower and the other workers affected by the violation(s). (Penalties imposed under the WBE model are meant to primarily serve as a deterrent against lawbreaking in the first place. If the state chooses to take up the investigation, a larger portion of the penalty may or may not go directly to the worker.) Since relators must notify the Department of Labor and state attorney general of their claims, EmPIRE will bring a wider scope of potential labor law violations to the government’s attention. The result is a better-funded, better-informed public enforcement apparatus; the resulting penalties and increased scrutiny and enforcement create a virtuous cycle that bolsters the reach of public enforcement of labor law.
Crucially, the WBE model puts power back in the hands of marginalized and vulnerable workers and the community and labor organizations they comprise – who are uniquely situated to help defend and enforce their rights through this model. WBE could be the key to raising pay, adding staffing, and providing other enforcement resources to public agencies and creating a culture of compliance with the law among employers.
In some proposed versions of WBE policies in some states, a portion of the penalty may also be earmarked for community outreach and education grants, otherwise known as co-enforcement grant funding. In practice, these funds take the form of a community outreach or labor education account, which can then be drawn from by worker or community-based organizations to support workers in enforcing their employment rights, including outreach, community-based education events, training materials, technical assistance, counseling, and research and referral activities. In Connecticut, for example, the proposed bill prioritizes funding for projects that service especially vulnerable workers— including low-wage, immigrant, refugee, and contingent workers; women, lesbian, gay, bisexual, or transgender workers; workers with disabilities and injured workers.
It’s clear: for unscrupulous employers, the expected cost of breaking the law is smaller than the profit made from trying to get away with it. To stop this wave of employer abuses and to support the public servants who are the frontline defenders of our rights, we need a solution we know will work: whistleblower enforcement in labor law.
The report Making Rights Real: How the Whistleblower Enforcement Model Can Address The Crisis in Labor Rights Enforcement is available as a free download here.
