Amid Federal Pullback from Labor Standards Enforcement, States Are Using Innovative Strategies to Identify Violators in Immigrant-Dense Industries
WASHINGTON – Systemic wage underpayment, payroll fraud and misclassification of employees as independent contractors to avoid paying workers’ compensation, unemployment insurance and payroll taxes are among the labor standard violations more likely to be found in low-wage industries that employ significant numbers of immigrants.
Immigrants, who represent 17 percent of the U.S. labor force, are twice as likely as native-born workers to be employed in industries where violations of core labor standards are widespread—construction, transportation, cleaning and food preparation among them. Underpayment, informal work and unsafe working conditions hurt U.S.-born and immigrant workers alike, deprive states of tax revenue and disadvantage law-abiding employers.
Against a backdrop of deep cuts in resources for labor standards enforcement and a federal deregulatory agenda that favors employer self-regulation, the issue of how to regulate low-wage, immigrant-dense workplaces is receiving greater attention.
A new Migration Policy Institute (MPI) report, Strategic Leverage: Use of State and Local Laws to Enforce Labor Standards in Immigrant-Dense Occupations, examines a range of innovative strategies that states, both liberal and conservative, are deploying to strategically use limited resources on higher-yielding, targeted enforcement approaches.
States with a long history of labor-protection regimes—such as California, Connecticut, Illinois, Massachusetts, New York and Washington—are increasingly being joined in the development of creative strategies by states with less history in this area, including Florida, North Carolina and Tennessee, the report finds.
“State and local governments are a natural fit to step into this regulatory vacuum,” said report co-author Muzaffar Chishti, who directs MPI’s office in New York, based at NYU School of Law. “They have a large, direct financial stake in deterring underpayments to workers and payroll fraud. Moreover, states have unique enforcement powers and often surpass federal agencies in their ability to access data to target and impose civil orders, and criminally prosecute companies that egregiously violate workplace laws.”
Beyond civil investigations, litigation and criminal prosecutions, some states are using data to drive decisions on which employers to prioritize for investigation and prosecution. Others are partnering with private organizations, such as worker advocacy groups, and government agencies at different levels to enhance their enforcement.
“State and local governments that purely react to complaints on a first-come, first-served basis should consider measures to build a directed-enforcement strategy for high-impact enforcement in low-compliance sectors of the economy,” Chishti and co-author Andrew Elmore conclude.