CPD Whistleblower Enforcement Report Full Nov 2023

MAKING RIGHTS REAL.

HOW THE WHISTLEBLOWER ENFORCEMENT MODEL CAN ADDRESS THE CRISIS IN LABOR RIGHTS ENFORCEMENT.

Making

Rights

REAL

How The Whistleblower

Enforcement Model Can

Address The Crisis In

Labor Rights Enforcement

ACKNOWLEDGEMENTS This report was written and researched by Evan Karl (Public Policy Fellow, CPD) with research support and review by Marc Rodrigues (CPD) and Francisco Diez (CPD). Graphic and visual design by Arom Gaang. We thank Hugh Baran of Kakalec Law LLC, Rachel Deutsch of the California Coalition for Worker Power, Terri Gerstein of the Harvard Law School Center for Labor and a Just Economy, Margaret Poydock of the Economic Policy Institute, and Paul Sonn of the National Employment Law Project for additional review of and input on this report. Thank you to the following CPD Network affiliates and their members who shared the stories and testimonies featured in this report: Comunidades Organizando el Poder y la Acción Latina Minnesota (COPAL MN); Make the Road New York; and Pineros y Campesinos Unidos del Noroeste (PCUN). THE CENTER FOR POPULAR DEMOCRACY (CPD) is a nonprofit organization that promotes equity, opportunity, and an inclusive, multiracial democracy in partnership with 48 affiliates in over 200 cities and 33 states, Puerto Rico, and Washington, DC. www.populardemocracy.org. ACKNOWLEDGEMENTS This report was written and researched by Evan Karl (Public Policy Fellow, CPD) with research support and review by Marc Rodrigues (CPD) and Francisco Diez (CPD). Graphic and visual design by Arom Gaang. We thank Hugh Baran of Kakalec Law LLC, Rachel Deutsch of the California Coalition for Worker Power, Terri Gerstein of the Harvard Law School Center for Labor and a Just Economy, Margaret Poydock of the Economic Policy Institute, and Paul Sonn of the National Employment Law Project for additional review of and input on this report. Thank you to the following CPD Network affiliates and their members who shared the stories and testimonies featured in this report: Comunidades Organizando el Poder y la Acción Latina Minnesota (COPAL MN); Make the Road New York; and Pineros y Campesinos Unidos del Noroeste (PCUN). THE CENTER FOR POPULAR DEMOCRACY (CPD) is a nonprofit organization that promotes equity, opportunity, and an inclusive, multiracial democracy in partnership with 48 affiliates in over 200 cities and 33 states, Puerto Rico, and Washington, DC. www.populardemocracy.org: ACKNOWLEDGEMENTS This report was written and researched by Evan Karl (Public Policy Fellow, CPD) with research support and review by Marc Rodrigues (CPD) and Francisco Diez (CPD). Graphic and visual design by Arom Gaang. We thank Hugh Baran of Kakalec Law LLC, Rachel Deutsch of the California Coalition for Worker Power, Terri Gerstein of the Harvard Law School Center for Labor and a Just Economy, Margaret Poydock of the Economic Policy Institute, and Paul Sonn of the National Employment Law Project for additional review of and input on this report. Thank you to the following CPD Network affiliates and their members who shared the stories and testimonies featured in this report: Comunidades Organizando el Poder y la Acción Latina Minnesota (COPAL MN); Make the Road New York; and Pineros y Campesinos Unidos del Noroeste (PCUN). THE CENTER FOR POPULAR DEMOCRACY (CPD) is a nonprofit organization that promotes equity, opportunity, and an inclusive, multiracial democracy in partnership with 48 affiliates in over 200 cities and 33 states, Puerto Rico, and Washington, DC. www.populardemocracy.org.

Acknowledgements

This report was written and researched by Evan Karl (Public Policy Fellow, CPD) with research support and review by Marc Rodrigues (CPD) and Francisco Diez (CPD). Graphic and visual design by Arom Gaang. We thank Hugh Baran of Kakalec Law LLC, Rachel Deutsch of the California Coalition for Worker Power, Terri Gerstein of the Harvard Law School Center for Labor and a Just Economy, Margaret Poydock of the Economic Policy Institute, and Paul Sonn of the National Employment Law Project for additional review of and input on this report.

Thank you to the following CPD Network affiliates and their members who shared the stories and testimonies featured in this report: Comunidades Organizando el Poder y la Acción Latina Minnesota (COPAL MN); Make the Road New York; and Pineros y Campesinos Unidos del Noroeste (PCUN). THE CENTER FOR POPULAR DEMOCRACY (CPD) is a nonprofit organization that promotes equity, opportunity, and an inclusive, multiracial democracy in partnership with 48 affiliates in over 200 cities and 33 states, Puerto Rico, and Washington, DC.

www.populardemocracy.org

TABLE OF CONTENTS 01 .............EXECUTIVE SUMMARY 02 ............Key Findings 04 .............INTRODUCTION: A Deepening Crisis in Labor Law Enforcement 06 .............Worker Rights and Public Labor Law Enforcement Under Attack 09 .............A TRIED AND TRUE SOLUTION: Whistleblower Enforcement 11 .............Whistleblower Enforcement Process: How It Works 13 .............Whistleblower Enforcement: 160 Years in U.S. Law 14 .............WHISTLEBLOWER ENFORCEMENT POLICIES Effectively Generate a Culture of Compliance for Labor Law and Grow the Public Sector 18 .............PROJECTING THE IMPACT OF THE MODEL: Revenue-Generating Power of Whistleblower Enforcement Policies 20 .............CONCLUSION 21 .............POLICY RECOMMENDATIONS i .................APPENDIX i ................Methodology iii ..............Endnotes.

Culture of Compliance for Labor Law and Grow the Public Sector Power of Whistleblower Enforcement Policies

EXECUTIVE SUMMARY THE WHISTLEBLOWER ENFORCEMENT (WBE) MODEL is a common-sense approach to expanding public labor law enforcement, fostering a culture of compliance among employers, and generating significant revenue for state and local enforcement agencies. This report advocates for the broad implementation of state and local WBE policies in labor law that expand the reach of public enforcement agencies and allow affected workers, whistleblowers, and community-based organizations to take legal action on behalf of the state against employers who violate the law. WBE policies augment the public enforcement of existing workplace standards, holding corporations accountable for labor law infringements and imposing substantial penalties on offenders. Critically, these penalties deter violations and serve as an untapped revenue source for enhancing the capacity of public sector enforcement agencies, including additional staffing and enforcement resources. Workplace rights violations remain rampant and pervasive in the United States, profoundly affecting workers, families, and the economy. Even though legislation exists to prevent and penalize these transgressions—from wage and hour laws to health and safety protections—the defunding and chronic understaffing of local and state labor law enforcement agencies has caused a devastating enforcement gap, which has led to persistent breaches of workers’ existing legal rights, including wage theft, safety violations, discrim- ination, and countless other abuses. BIPOC and immigrant workers MAKING RIGHTS REAL 01.

EXECUTIVE SUMMARY THE WHISTLEBLOWER ENFORCEMENT (WBE) MODEL is a common-sense approach to expanding public labor law enforcement, fostering a cult of compliance among employers, and generating significant revenue f state and local enforcement agencies. This report advocates for the broad implementation of state and local W policies in labor law that expand the reach of public enforcement agenc and allow affected workers, whistleblowers, and community-based organizations to take legal action on behalf of the state against employ who violate the law. WBE policies augment the public enforcement of existing workplace standards, holding corporations accountable for lab law infringements and imposing substantial penalties on offenders. Critically, these penalties deter violations and serve as an untapped revenue source for enhancing the capacity of public sector enforceme agencies, including additional staffing and enforcement resources. Workplace rights violations remain rampant and pervasive in the United States, profoundly affecting workers, families, and the economy Even though legislation exists to prevent and penalize these transgressions—from wage and hour laws to health and safety protections—the defunding and chronic understaffing of local and state labor law enforcement agencies has caused a devastating enforcement gap, which has led to persistent breaches of workers’ existing legal rights, including wage theft, safety violations, discrim- ination, and countless other abuses. BIPOC and immigrant workers MAKING RIGHTS.

Executive Summary

THE WHISTLEBLOWER ENFORCEMENT (WBE) MODEL is a common-sense approach to expanding public labor law enforcement, fostering a culture of compliance among employers, and generating significant revenue for state and local enforcement agencies. This report advocates for the broad implementation of state and local WBE policies in labor law that expand the reach of public enforcement agencies and allow affected workers, whistleblowers, and community-based organizations to take legal action on behalf of the state against employers who violate the law. WBE policies augment the public enforcement of existing workplace standards, holding corporations accountable for labor law infringements and imposing substantial penalties on offenders.

Critically, these penalties deter violations and serve as an untapped revenue source for enhancing the capacity of public sector enforcement agencies, including additional staffing and enforcement resources. Workplace rights violations remain rampant and pervasive in the United States, profoundly affecting workers, families, and the economy.

Even though legislation exists to prevent and penalize these transgressions—from wage and hour laws to health and safety protections—the defunding and chronic understaffing of local and state labor law enforcement agencies has caused a devastating enforcement gap, which has led to persistent breaches of workers’ existing legal rights, including wage theft, safety violations, discrim- ination, and countless other abuses. BIPOC and immigrant workers

(often marginalized by systemic racism and socioeconomic exclusions), low-wage workers, and those who labor under contingent, informal, or gig job arrangements see the brunt of these rights violations. These workers and the community and labor organizations they comprise are also uniquely situated to help defend and enforce their rights through the WBE model. This report highlights the potential revenues that a more robust enforce- ment of existing labor law could generate and how these revenue streams would create a significant funding mechanism for public enforcement agencies, against a backdrop of extensive labor law enforcement gaps and the critical role of public enforcement in mitigating these violations. This report also provides a comprehensive overview of the potential impact of WBE policies by drawing from various sources, including the long history of the False Claims Acts, labor law-specific state proposals, and existing legislation in California.1 KEY FINDINGS ‣ ‣ ‣ LABOR LAW ENFORCEMENT AGENCIES NEED MORE RESOURCES AND STAFFING TO ADEQUATELY ADDRESS THE NEEDS OF WORKERS. This resource gap is directly proportional to the scale of labor law violations, a widespread problem that affects workers across the country and suggests a vicious cycle between underfunding and non-compliance by employers. This underfunding ties directly to the substandard working conditions, grueling schedules, and relatively low pay often endured by the frontline public servants entrusted with investigating violations and enforcing labor law. MAKING RIGHTS REAL 02.

(often marginalized by systemic racism and socioeconomic exclusions), low-wage workers, and those who labor under contingent, informal, or gig job arrangements see the brunt of these rights violations. These workers and the community and labor organizations they comprise ar also uniquely situated to help defend and enforce their rights through the WBE model. This report highlights the potential revenues that a more robust enforce ment of existing labor law could generate and how these revenue strea would create a significant funding mechanism for public enforcement agencies, against a backdrop of extensive labor law enforcement gaps and the critical role of public enforcement in mitigating these violations. This report also provides a comprehensive overview of the potential impact of WBE policies by drawing from various sources, including the long history of the False Claims Acts, labor law-specific state proposals, and existing legislation in California.1 KEY FINDINGS ‣ ‣ ‣ LABOR LAW ENFORCEMENT AGENCIES NEED MORE RESOURCES AND STAFFING TO ADEQUATELY ADDRESS THE NEEDS OF WORKERS This resource gap is directly proportional to the scale of labor la violations, a widespread problem that affects workers across th country and suggests a vicious cycle between underfunding an non-compliance by employers. This underfunding ties directly to the substandard working conditions, grueling schedules, and relatively low pay often endured by the frontline public servants entrusted with investigating violations and enforcing labor law. MAKING RIGHTS.

low-wage workers, and those who labor under contingent, informal, or gig job arrangements see the brunt of these rights violations. These workers and the community and labor organizations they comprise are also uniquely situated to help defend and enforce their rights through the WBE model. This report highlights the potential revenues that a more robust enforce- ment of existing labor law could generate and how these revenue streams would create a significant funding mechanism for public enforcement agencies, against a backdrop of extensive labor law enforcement gaps and the critical role of public enforcement in mitigating these violations.

This report also provides a comprehensive overview of the potential impact of WBE policies by drawing from various sources, including the long history of the False Claims Acts, labor law-specific state proposals, and existing legislation in California.1

Key Findings

‣ ‣ ‣ Labor Law Enforcement Agencies Need More Resources

AND STAFFING TO ADEQUATELY ADDRESS THE NEEDS OF WORKERS. This resource gap is directly proportional to the scale of labor law violations, a widespread problem that affects workers across the country and suggests a vicious cycle between underfunding and non-compliance by employers. This underfunding ties directly to the substandard working conditions, grueling schedules, and relatively low pay often endured by the frontline public servants entrusted with investigating violations and enforcing labor law.

‣ ‣ ‣ THE BREADTH OF THIS GAP UNDERSCORES THE SIGNIFICANCE OF POTENTIAL REVENUES CAPTURED THROUGH BETTER ENFORCE- MENT. This report finds that Whistleblower Enforcement policies could generate hundreds of millions of dollars annually—funds that should be used to improve conditions for public servants, expand staffing at state agencies tasked with enforcement, and could support the community organ- izations that aid community and strategic enforcement. ‣ ‣ ‣ IMPLEMENTING WBE POLICIES HAS BEEN FOUND TO IMPROVE COMPLIANCE AND PROTECTION FOR WORKERS. WBE policies expand the public sector’s reach through grassroots worker involve- ment and worker initiative in a system that traditionally relied on complementary public and private enforcement, a regime weakened by underfunding public enforcement agencies and rising barriers to the rights of individual workers to seek justice. In summary, adopting whistleblower enforcement policies at the state level represents a significant part of the solution to the labor law enforcement crisis and ongoing defunding of the public sector. These policies can generate substantial revenue, bolster public enforcement agencies, and protect workers’ rights. MAKING RIGHTS REAL 03.

‣ ‣ ‣ THE BREADTH OF THIS GAP UNDERSCORES THE SIGNIFICANCE O POTENTIAL REVENUES CAPTURED THROUGH BETTER ENFORCE- MENT. This report finds that Whistleblower Enforcement policies could generate hundreds of millions of dollars annually—funds that should be used to improve conditions for public servants, expand staffing at state agencies tasked with enforcement, and could support the community organ- izations that aid community and strategic enforcement. ‣ ‣ ‣ IMPLEMENTING WBE POLICIES HAS BEEN FOUND TO IMPROVE COMPLIANCE AND PROTECTION FOR WORKERS. WBE policies expand the public sector’s reach through grassroots worker inv ment and worker initiative in a system that traditionally relied on complementary public and private enforcement, a regime weakened by underfunding public enforcement agencies and rising barriers to the rights of individual workers to seek justic In summary, adopting whistleblower enforcement policies at the state level represents a significant part of the solution to the labor law enforcement crisis and ongoing defunding of th public sector. These policies can generate substantial revenue bolster public enforcement agencies, and protect workers’ rig MAKING RIGHT.

Potential Revenues Captured Through Better Enforce-

MENT. This report finds that Whistleblower Enforcement policies could generate hundreds of millions of dollars annually—funds that should be used to improve conditions for public servants, expand staffing at state agencies tasked with enforcement, and could support the community organ- izations that aid community and strategic enforcement.

‣ ‣ ‣ Implementing Wbe Policies Has Been Found To Improve

COMPLIANCE AND PROTECTION FOR WORKERS. WBE policies expand the public sector’s reach through grassroots worker involve- ment and worker initiative in a system that traditionally relied on complementary public and private enforcement, a regime weakened by underfunding public enforcement agencies and rising barriers to the rights of individual workers to seek justice.

In summary, adopting whistleblower enforcement policies at the state level represents a significant part of the solution to the labor law enforcement crisis and ongoing defunding of the public sector. These policies can generate substantial revenue, bolster public enforcement agencies, and protect workers’ rights.

Introduction

A Deepening Crisis In Labor Law Enforcement

AS REPORTED BY THE CENTER FOR POPULAR $79 million in back wages owed to victims DEMOCRACY, the Economic Policy Institute, of wage theft in New York—or 63 percent and the National Employment Law Project of stolen wages—had yet to be collected, in 2019, basic workplace standards and pointing to chronic understaffing at the NYS long-standing protections remain at risk of Department of Labor among other causes.6 being hollowed out by underenforcement.2 In Philadelphia, workers have waited years Since then, this crisis has only deepened: to receive their back wages despite winning Chronic understaffing and underfunding their cases and despite the city’s “powerful of public labor law enforcement agencies wage theft law,” a trend reflected across the have resulted in a significant enforcement country.7 This lack of enforcement and conse- gap,3 leading to widespread labor law vio- quences, according to Jennifer Lee, Director of lations, perhaps most pernicious among the Social Justice Lawyering Clinic at Temple them wage theft, which “includes overtime University, “doesn’t send any kind of message violations, paying below minimum wage, to employers that what they’ve done is wrong misclassification of employees, and illegal . . . and it doesn’t stop them from rolling the deeply impacts workers from immigrant Public state and local investigators, the and low-income backgrounds. In particular, essential though chronically overburdened industries that predominantly hire low-wage pillar of labor law enforcement, are increas- or immigrant workers such as construction, ingly overwhelmed by the scale of the restaurants, salons and domestic work are problem. Testimonies from workers, labor more likely to be affected by wage theft.”4 rights organizations, former public servants, A recent ProPublica and Documented investi- and public enforcement agency staff highlight gation found that from 2017 to 2021, “more the lack of resources available to investigate than $203 million in wages had been stolen complaints, enforce laws, and collect compen- from about 127,000 workers” between 13,000 sation.9 Lack of resources has meant insuf- cases of wage theft in the state of New York ficient staffing and pay to attract and keep alone, with the total amount stolen from talented investigators, leaving investigators working people “almost certainly a significant with ever-expanding, untenable caseloads.

undercount.”5 The analysis also found that The COVID-19 pandemic exacerbated these

“THE VAST MAJORITY OF WORKERS WHO EXPERIENCE WAGE THEFT do not file claims to recover stolen wages . . . The impact, we all know, goes far beyond the direct- ly-impacted worker and extracts billions of dollars from workers, households, and our state’s economy. Employers who evade enforcement are also emboldened to cheat other workers in the future, fueling pervasive abuse. The current public enforcement scheme is simply insufficient. The DOL does not have enough resources to promptly investigate the complaints that come into the agency let alone enforce state employment laws in workplaces where workers are too scared to report violations. The pandemic has only also impacted this. Courts closing, DOL backlogs [and] delayed cases by months to years. In the past several years, New York has taken the lead in worker protections, including [increases] to the minimum wage, paid leave, and protections against gender-based pay discrimination. Constraints on enforcement, however, have blocked many working families from experiencing the real benefits of [these] policies. Through our work, we see that employers bet on the state having inade- quate enforcement capacity; they steal wages from their workers and allow toxic workplaces to fester with the expectation that it’s unlikely they will be caught. OUR LABOR LAWS ARE RENDERED MEANINGLESS WHEN WORKERS DO NOT HAVE A REASONABLE EXPECTATION THAT EMPLOYERS WHO VIOLATE THE LAW WILL BE HELD ACCOUNTABLE.” –Nathalia Varela Supervising Attorney for Worker Justice, Make the Road New York12 MAKING RIGHTS REAL 05.

issues, leading to court closures, backlogs As the enforcement crisis deepens and at state departments of labor (DOLs) and ongoing disinvestment causes the number their equivalents, and delayed cases.10 of enforcement staff to dwindle while more At workplaces nationwide, widespread and more people enter the workforce, non-compliance with labor laws has resulted states including Colorado, Illinois, and in workers losing their hard-earned wages New York have introduced whis- and facing unsafe working conditions. tleblower enforcement bills.11 to recover stolen wages . . . The impact, we all know, goes far beyond the direct- ly-impacted worker and extracts billions of dollars from workers, households, and our state’s economy. Employers who evade enforcement are also emboldened to cheat other workers in the future, fueling pervasive abuse.

The current public enforcement scheme is simply insufficient. The DOL does not have enough resources to promptly investigate the complaints that come into the agency let alone enforce state employment laws in workplaces where workers are too scared to report violations. The pandemic has only also impacted this. Courts closing, DOL backlogs [and] delayed cases by months to years.

In the past several years, New York has taken the lead in worker protections, including [increases] to the minimum wage, paid leave, and protections against gender-based pay discrimination. Constraints on enforcement, however, have blocked many working families from experiencing the real benefits of [these] policies. Through our work, we see that employers bet on the state having inade- quate enforcement capacity; they steal wages from their workers and allow toxic workplaces to fester with the expectation that it’s unlikely they will be caught.

Our Labor Laws Are Rendered Meaningless When Workers

Do Not Have A Reasonable Expectation That Employers Who

Violate The Law Will Be Held Accountable.”

–Nathalia Varela Supervising Attorney for Worker Justice, Make the Road New York12

Worker Rights & Public Labor

Law Enforcement Under Attack

A CRISIS IN LABOR LAW ENFORCEMENT plagues practices. Part of the problem lies in the the US today, a troubling reality emerging modest size of the expected costs compared despite established legal frameworks to the amount of money businesses save by designed to protect workers from exploita- violating labor laws, making it economically tion. Its mark is pervasive wage theft (where rational for some employers to continue employers underpay or fail to pay their their violations even if they’re occasionally workers) and other labor law violations. caught, fined, and made to pay workers their There are two primary reasons: inadequate earned wages.16 The likelihood of detection deterrence against wage theft and insuffi- and prosecution remains low due to several cient capacity at enforcement agencies, par- reasons: the fear of retaliation keeps many ticularly state DOLs and their equivalents. workers from submitting complaints or bringing private legal action, other barriers to Wage theft is widespread in the US, affecting private litigation (including the expansion of millions of workers. According to a 2017 forced arbitration),17 and critically, the limited resources available for public enforcement in most populous states in the country, each the face of the enormous volume of potential year 2.4 million workers covered by state or violations. This situation fails to deter federal minimum wage laws report being employers who perceive the risk of being held paid less than the applicable minimum wage accountable as minimal and breaking the law in their state—approximately 17 percent of as a way to maximize profits.18 Consequently, the eligible low-wage workforce”— these inadequate penalties—coupled with amounting to 2.4 million workers losing $8 the low likelihood of getting caught by billion annually.13 On average, this works out public agencies or being held accountable to employees in these states being cheated through private litigation—create environ- out of $3,300 per person each year.14 After ments where wage theft and other labor extrapolating data from these ten states, the law violations can fester and multiply.

report estimates that workers throughout the country lose about $15 billion annually The enforcement of labor laws primarily from minimum wage violations alone.15 falls within the purview of Wage and Hour Divisions (WHDs) housed inside state DOLs Existing deterrents, in the form of fines, and their equivalents. However, a lack of penalties, and damages, have proven resources severely hinders these entities’ insufficient to curb these exploitative

Beatriz Tapia’S Story

In October 2020, during the height of the COVID pandemic, Beatriz Tapia worked as an agricultural laborer in Woodburn, Oregon. At the worksite, 4 bathrooms were shared between 20 workers and were typically unsanitary and uncleaned. The workplace lacked water and soap and other basic necessities to prevent the spread of illness. Beatriz took these concerns to the administrator at her job and was fired soon after. Beatriz then submitted a complaint with OSHA who initially investigated the wrong company before proceeding to contact the owner of the company Bea- triz had worked for and other employees of the company who all happened to be the owner’s family members. No other workers were interviewed. After some time, OSHA informed Beatriz that the case was closed. The employer was not forced to make any changes or improvements responsive to Beatriz’s complaint. When given an option to file a complaint with the state’s Bureau of Labor and Industries, Beat- riz declined to do so, convinced that filing further complaints wouldn’t get her the justice she was seeking.

Beatriz’s story speaks to why so many vulnerable workers don’t bother to bring formal complaints when wage and hour or safety violations happen, and high- lights the importance of the protections against retaliation in whistleblower enforcement policies, such as allowing trusted worker organizations to be named plaintiff. Beatriz emphasizes that organizations like PCUN understand the experi- ences of workers like her and are ideally situated to fight for their rights.

Source: PCUN capacity to perform their duties effectively. with enforcing policies against labor vio- Over the past several decades, the ratio of lations is responsible for tens to hundreds labor enforcement officers to workers has of thousands of workers—a trend likewise dramatically declined, with each officer occurring at the federal Department of now responsible for an increasingly large Labor.20 With rare exceptions, many states number of workers and employers. Staff have seen the number of WHD staff decline levels have suffered as pay for officials or stagnate relative to the size of their stagnates, which has led to high turnover— workforce. For instance, NY saw the deeply affecting the capacity to carry out workforce-to-investigator ratio increase from investigations. As outlined in the following 65,237 to 1 in 2018 to 72,884 to 1 in 2023.21 table,19 each state DOL investigator tasked

STATE WAGE AND HOUR INVESTIGATORS: Number of Workers and Businesses per Investigator* number of number of number of number of number of WORKERS BUSINESSES WORKERS PER BUSINESSES PER STATE INVESTIGATORS IN STATE IN STATE INVESTIGATOR INVESTIGATOR CALIFORNIA 838.922 17,991,136 1,742,069 21,446 2,077: *State-level investigator data were compiled through a CPD phone survey of state Departments of Labor and their equivalents, conducted in June–July of 2023. Where phone contact could not be made or information not divulged, we used publicly available budget/appropriation documents to ascertain the number of relevant positions for Fiscal Year 2022 or 2023 (whichever was the most recently available from each state)—these sources are included in the endnotes. State-level workforce data are from the Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), using averages from Q2 of 2022 through Q1 of 2023.29.

State Wage And Hour Investigators:

Number of Workers and Businesses per Investigator* number of number of number of number of number of WORKERS BUSINESSES WORKERS PER BUSINESSES PER

State Investigators In State In State Investigator Investigator

equivalents, conducted in June–July of 2023. Where phone contact could not be made or information not divulged, we used publicly available budget/appropriation documents to ascertain the number of relevant positions for Fiscal Year 2022 or 2023 (whichever was the most recently available from each state)—these sources are included in the endnotes.

State-level workforce data are from the Bureau of Labor Statistics, Quarterly Census of Employment and Wages (QCEW), using averages from Q2 of 2022 through Q1 of 2023.29 As the capacity of state DOLs shrinks due to understaffing, insufficient pay, and turnover, so does the number of investigations they can conduct. In addition, the complexity of many labor law cases, which often involve intricate corporate structures and global supply chains, further strains the limited resources of these agencies, reducing their ability to respond to violations effectively and promptly.

A Tried & True Solution:

Whistleblower Enforcement

In the face of this systemic crisis in labor law heightened probability of legal action and enforcement, several states have sought the associated financial penalties increase the effective solutions. Perhaps most notable expected cost of breaking labor laws, thus among these, the Whistleblower Enforcement creating a powerful incentive for employers (WBE) model uses a well-tested method so to adhere to labor laws. The WBE model gives workers, community and labor organiza- teeth to existing labor laws by generating tions, and public agencies can sustainably additional revenues that states can use to work together to hold corporate wrongdoers bolster their enforcement capacities. When accountable.30 The model’s core mechanism workers and labor organizations successfully allows whistleblowers, workers, and labor file civil actions for wage theft or other labor organizations to act on behalf of the state, law violations, part of the resulting fines and initiating legal proceedings against employers penalties reach affected workers, and a large who violate labor laws. At the same time, majority of revenue returns to the state’s state agencies critically gain greater oversight enforcement agency. These funds can then and can directly intervene in these enforce- bolster staffing through increased pay and ment actions. Worker-initiated lawsuits higher retention, increase agency capacity could incorporate both individual claims to directly investigate and hold law-break- and WBE-based public rights of action. ing employers to account, and expand resources available for public enforcement This approach not only allows workers to including through strategic collaborations recover civil penalties for labor law viola- with worker and community-based organi- tions, traditionally a power reserved for the zations. These latter partnerships can serve state, but also significantly increases the cost as a potent tool in extending the reach of of non-compliance for employers through state enforcement efforts, as these organi- the establishment of stiff default fines and zations often serve as a crucial link between penalties, thereby offering a more effective enforcement bodies and employees who deterrent against violations and discourag- are most susceptible to exploitation but ing dishonest employers. Furthermore, by who, without targeted outreach and assis- expanding the number of cases brought to tance, might be the least inclined to lodge court, WBE policies increase the likelihood formal grievances.31 In this way, WBE not only of law-breaking employers being caught increases enforcement capacity by generating and held accountable. This increased risk of revenue for the state but also ensures that detection serves as a potent deterrent, as the

SINUE ALEJANDRO IBARRA’S STORY In May 2023, Sinue Alejandro Ibarra Meza experienced wage theft over the course of two months while working as a painter in Minneapolis. Sinue confronted his employer demanding that he pay him what was owed but the employer failed to do so, instead responding with threats. During this time, Sinue’s daughter—who suffers from epilepsy—was hos- pitalized, and due to not being paid, Sinue lacked even the funds to pay for a taxi to transport his daughter back home. Sinue was then issued an eviction notice for failure to pay rent on time. As the sole bread- winner for his family and with finances stretched beyond the breaking point, Sinue filed a report with the Minnesota Department of Labor. Not only was there a delay of over a month to investigate Sunue’s case, but the agency was ultimately unable to recover Sinue’s wages. Sinue reports that he is not the only one whose wages were stolen by this employer, which makes this case a perfect example of the urgent need for qui tam enforcement actions. Sinue’s story illustrates why state agencies need sufficient staffing to resolve investigations quickly. For low-wage workers living paycheck-to-paycheck, even a couple weeks of missed wages can be disastrous. To this day, Sinue has not been paid and is still seeking justice for workers and accountability for employers who continue to get away with wage theft. Source: COPAL MN MAKING RIGHTS REAL 10.

existing labor laws are upheld across various employees to report abuses. For instance, by sectors and industries–even those that have allowing trusted community and labor organi- historically been difficult to reach and are most zations the ability to bring cases, whistleblow- vulnerable to employer exploitation. What’s ers and other vulnerable populations fearing more, WBE strengthens existing labor law retaliation can authorize a collective agent without creating or adding any new regulations to bring these complaints. This principle, in or burdens for businesses; these policies help addition to protecting vulnerable workers, to foster a level playing field where all busi- further bolsters public enforcement capacity.

nesses must meet the same basic standards. By enabling workers and their attorneys to aid enforcement, WBE policies leverage private Finally, WBE addresses the risk of employer resources to directly resource and grow the retaliation. By offering strong protections efforts of underfunded public agencies.

for workers who seek to assert their rights, such policies foster a safer environment for

Sinue Alejandro Ibarra’S Story

In May 2023, Sinue Alejandro Ibarra Meza experienced wage theft over the course of two months while working as a painter in Minneapolis. Sinue confronted his employer demanding that he pay him what was owed but the employer failed to do so, instead responding with threats. During this time, Sinue’s daughter—who suffers from epilepsy—was hos- pitalized, and due to not being paid, Sinue lacked even the funds to pay for a taxi to transport his daughter back home. Sinue was then issued an eviction notice for failure to pay rent on time. As the sole bread- winner for his family and with finances stretched beyond the breaking point, Sinue filed a report with the Minnesota Department of Labor.

Not only was there a delay of over a month to investigate Sunue’s case, but the agency was ultimately unable to recover Sinue’s wages. Sinue reports that he is not the only one whose wages were stolen by this employer, which makes this case a perfect example of the urgent need for qui tam enforcement actions. Sinue’s story illustrates why state agencies need sufficient staffing to resolve investigations quickly.

For low-wage workers living paycheck-to-paycheck, even a couple weeks of missed wages can be disastrous. To this day, Sinue has not been paid and is still seeking justice for workers and accountability for employers who continue to get away with wage theft. Source: COPAL MN

WHISTLEBLOWER ENFORCEMENT PROCESS HOW IT WORKS The agency investigates Employer is required and resolves the case to pay workers and come into compliance Worker sues on Judge requires employer Worker informs behalf of the state to pay stiff fines and agency of violations and all coworkers come into compliance Worker keeps Agency keeps 30% of penalties 70% of penalties.

Whistleblower

Enforcement Process:

How It Works

These tenets underpinning WBE—expanding 2. If the agency opts out of resolving the the reach of public sector enforcement, the claim or does not respond to the complaint, the whistleblower may bring a lawsuit to deterrence of future violations through civil collect penalties on behalf of the state and penalties, and the provision of remedies all affected workers. Whistleblowers who for injured workers and revenues for fear retaliation can authorize a union or the state—would work as follows:

nonprofit organization to represent them. 1. First, a worker files a complaint with the 3. If a judge finds that the company broke state enforcement agency. The agency can the law and imposes a penalty, most of the investigate the claims before a suit is filed penalty revenues generated go to the agency, in court and can decide to resolve the claim with a portion going to the whistleblower and through administrative mechanisms.

the other workers injured by the violation(s). Throughout these steps, public agencies maintain oversight over the litigation process and retain the ability to intervene in and take over a given case.

Whistleblower Enforcement Process

How It Works

The agency investigates Employer is required and resolves the case to pay workers and come into compliance Worker sues on Judge requires employer Worker informs behalf of the state to pay stiff fines and agency of violations and all coworkers come into compliance Worker keeps Agency keeps 30% of penalties 70% of penalties

While the step outlined in the final bullet their employment rights, including outreach, point above is essentially uniform across community-based education events, training actually-existing WBE policy (proposed materials, technical assistance, counseling, and passed), in some versions, a portion and research and referral activities.33 In of the penalty may also be earmarked for some states, such as Connecticut, the community outreach and education grants, proposed bill prioritizes funding for projects otherwise known as co-enforcement grant that service especially vulnerable workers— funding. In practice, these funds take the including low-wage, immigrant, refugee, and form of a community outreach or labor contingent workers; women, lesbian, gay, education account, which can then be drawn bisexual, or transgender workers; workers from by worker or community-based organ- with disabilities and injured workers.34 izations to support workers in enforcing New York Communities for Change and the EmPIRE Coalition rallies in Albany, New York for the EmPIRE Worker Protection Act

Whistleblower Enforcement:

160 Years In U.S. Law

THE WBE’S APPLICATION IN STATE LABOR LAW The FCA has enjoyed success over the course TRACES ITS ROOTS TO THE FALSE CLAIMS ACT of its 160-year lifespan in large part because (FCA), legislation with a long history of bipar- of the law’s bipartisan appeal. Amended in tisan support. Enacted during the Civil War 1986 by Republican Senator Chuck Grassley in 1863, the FCA was designed to combat to expand whistleblowers’ role in the law’s fraud by suppliers to the Union Army.35 It enforcement (an amendment that would be introduced the concept of “qui tam” actions signed into law by then-President Ronald in US law, meaning that private citizens may Reagan),38 the FCA has been recognized as sue on behalf of the government and share an effective tool in combating fraud and in the recovery of funds.36 This approach has recovering funds for the government regard- been highly effective in recovering billions less of political affiliation. Some 32 states, of dollars in fraudulent claims against the Washington, D.C., and several municipalities government. In 2017, the US Department of have adopted their own versions of the FCA Justice collected $3.7 billion in FCA cases from covering different types of fraud.39 perpetrators of fraud, of which 92 percent Such bipartisan support came from cases brought by qui tam; in 2022, suggests that there could be a $2.2 billion was collected under the FCA, of which the vast majority—over $1.9 billion— strong foundation for the arose from qui tam.37 adoption of WBE policies in WBE policies described here adopt this qui labor law.

tam approach to labor law, empowering directly-impacted workers and their organ- izations to act on behalf of the state and initiate legal proceedings against employers who violate labor laws. Employing the qui tam approach has also significantly increased the cost of non-compliance for employers through the use of fines and penalties (which are inflation-adjusted on the federal level), deterring violations.

Whistleblower Enforcement Policies Effectively

Generate A Culture Of Compliance For

Labor Law & Grow The Public Sector

Inspired by the False Claims Acts’ ‣ ‣ ILLINOIS: A recent law applicable to temporary work agencies in Illinois track records in expanding public includes a whistleblower provision. civil enforcement, WBE policies This provision allows interested parties, have proven to be effective tools in including organizations monitoring mitigating labor law violations. compliance with public safety and wage requirements, to bring actions The Private Attorneys General Act (PAGA) for civil penalties.43 of California, enacted in 2004, created a mechanism similar to qui tam in California THE EFFECTIVENESS OF LAWS LIKE THOSE labor law, testing and comprehensively PASSED IN CALIFORNIA, COLORADO, AND proving some of the impacts of WBE.40 ILLINOIS IS EVIDENT IN SEVERAL WAYS.

Since its inception, PAGA has facilitated First, WBE allows affected workers to bring the recovery of hundreds of millions of cases against their employers, thereby dollars from corporations violating labor increasing the cost of non-compliance and laws, reduced the prevalence of wage serving as a deterrent against violations. This theft, and increased state enforcement provision has drastically altered the enforce- capacity, all while fostering job growth ment landscape in California by significantly higher than the national average.41 increasing the likelihood that an employer faces serious consequences for exploiting Other states have also recognized the value its workforce.44 Indeed, the most signifi- of such policies and have taken steps to cant PAGA judgments and settlements have implement them at least as enforcement been those addressing systemic violations mechanisms to new substantive labor rights:

by large, low-wage employers, including ‣ ‣ COLORADO: The state has introduced a Bank of America and Walmart — setting whistleblower’s right of action related to an example throughout various industries workplace safety violations during public that the state will not tolerate labor law health emergencies. This law allows infractions and that violations could prove whistleblowers to claim attorneys’ fees and 25% of the recovery.42 costly.45 According to attorneys in this field,

Decreasing Ratios of Workers per Investigator are Driven by Staffing Increases CA DLSE Hired Staff Number of Workers per Hired Investigator 60,000 600 Number srekroW rotagitsevnI 50,000 400 of fo Staff rebmuN 40,000 rep Hired 200 30,000 20,000 0 FY-2015 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 Fiscal Year Fiscal Year.

the mere threat of a PAGA lawsuit has had a of DLSE positions nearly doubling from 435.5 dramatic impact on prompting employers to positions to 838.9.47 These staffing improve- address labor law violations proactively.46 ments stem from several sources. For a majority of funds, dedicated assessments of Second, the revenue generated through PAGA Worker’s Compensation premiums ensure has bolstered California’s labor agency and a dedicated and increasing revenue stream enforcement efforts. Between Fiscal Years to the DLSE and other divisions under the 2016 and 2023, the California DOL’s Division state’s labor agency, the Labor and Workforce of Labor Standards Enforcement (DLSE) Development Agency (LWDA).48 At the same experienced a remarkable staffing budget time, PAGA-generated revenues provided increase that more than kept up with the funds for staffing to be further supplemented.

growth in the workforce, with the number CA DLSE Hired Staff Number of Workers per Hired Investigator Fiscal Year srekroW fo rebmuN rotagitsevnI rep Number of Staff Hired Decreasing Ratios of Workers per Investigator are Driven by Staffing Increases 60,000 600 50,000 40,000 30,000 20,000 0

Fy-2015 Fy-2016 Fy-2017 Fy-2018 Fy-2019 Fy-2020 Fy-2021 Fy-2022

California Annual Revenues from PAGA Penalties $$220099,,334422,,445566 $200,000,000 $$115577,,448877,,440044 )$( $150.000.000 euneveR $$111122,,885577,,441155 $$110099,,883388,,888855 $100,000,000 $$4422,,445500,,229966 $50,000,000 $$3344,,664400,,005599 $20,946,994 $0 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 Fiscal Year Fiscal Year. California Annual Revenues from PAGA Penalties $$220099,,334422,,445566 $200,000,000 $$115577,,448877,,440044 )$( $150.000.000 euneveR $$111122,,885577,,441155 $$110099,,883388,,888855 $100,000,000 $$4422,,445500,,229966 $50,000,000 $$3344,,664400,,005599 $20,946,994 $0 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 Fiscal Year Fiscal Year: California Annual Revenues from PAGA Penalties $$220099,,334422,,445566 $200,000,000 $$115577,,448877,,440044 )$( $150.000.000 euneveR $$111122,,885577,,441155 $$110099,,883388,,888855 $100,000,000 $$4422,,445500,,229966 $50,000,000 $$3344,,664400,,005599 $20,946,994 $0 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 FY-2016 FY-2017 FY-2018 FY-2019 FY-2020 FY-2021 FY-2022 Fiscal Year Fiscal Year.

$$220099,,334422,,445566: $$115577,,448877,,440044.

$$220099,,334422,,445566: $$111122,,885577,,441155 $$110099,,883388,,888855.

$$220099,,334422,,445566: $$4422,,445500,,229966 $$3344,,664400,,005599.

$$220099,,334422,,445566: $20,946,994.

In addition to putting money back into the law compliance and worker protection. For hands of the state’s most vulnerable workers, instance, these revenues have been used to California’s PAGA has resulted in more than conduct independent investigations, launch $98 million in average annual revenue flowing public education campaigns encouraging to the state between FY 2016 and 2022.49 workers to report Labor Code violations, As evidenced in multiple Budget Change and develop a program that disqualifies Proposals,50 the fund established through employers violating state wage laws from PAGA penalty revenues enabled multiple bidding on public contracts.53 Such programs increases in DLSE staffing as new policies include the California Workplace Outreach took effect.51 As illustrated in the graph, all Project (expanded in the 2023 budget) and these increases in staffing have decreased the Domestic Worker and Employer Education & the number of workers per enforcement Outreach Project. Despite a deficit in the state agency staff over time.52 PAGA revenues, budget, these programs remain in place—or primarily derived from civil penalties and were even expanded—precisely due to PAGA administrative fees similar to those proposed revenue earmarked into a fund dedicated to WBE bills in other states, have been allocated informing workers and employers about to various initiatives aimed at enhancing labor their rights and obligations.

Fy-2016 Fy-2017 Fy-2018 Fy-2019 Fy-2020 Fy-2021 Fy-2022

Fiscal Year euneveR California Annual Revenues from PAGA Penalties $200,000,000 $150.000.000 $$111122,,885577,,441155 $$110099,,883388,,888855 $100,000,000 $$4422,,445500,,229966 $50,000,000 $$3344,,664400,,005599

Fy-2016 Fy-2017 Fy-2018 Fy-2019 Fy-2020 Fy-2021 Fy-2022

STATE LATEST LAW/BILL BILL NUMBER YEAR Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted) An Act Concerning the Expansion of Protections for Colorado General Assem- 2022 Colorado Workers who Raise Workplace Health & Safety Concerns bly Senate Bill 22-097 (Passed & Enacted) 2022 Connecticut An Act Concerning Forced Arbitration Agreements sHB-5245 (Proposed) 2023 Illinois A Bill Concerning Regulation IL House Bill 2862 (Passed & Enacted) LD 1711 2021 Maine Whistleblower Enforcement Act SP 525 (Governor veto) S.1158 2023 Massachusetts Wage Theft Act H.1868 (Proposed) A1893a 2023 New York EmPIRE Worker Protection Act S541a (Proposed) 2021 Oregon Just Enforcement Act House Bill 2205 (Proposed) 2020 Vermont Vermont Private Attorneys General Act VT H0483 (Proposed) 2021/2022 Washington Worker Protection Act House Bill 1076 (Proposed). STATE LATEST LAW/BILL BILL NUMBER YEAR Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted) An Act Concerning the Expansion of Protections for Colorado General Assem- 2022 Colorado Workers who Raise Workplace Health & Safety Concerns bly Senate Bill 22-097 (Passed & Enacted) 2022 Connecticut An Act Concerning Forced Arbitration Agreements sHB-5245 (Proposed) 2023 Illinois A Bill Concerning Regulation IL House Bill 2862 (Passed & Enacted) LD 1711 2021 Maine Whistleblower Enforcement Act SP 525 (Governor veto) S.1158 2023 Massachusetts Wage Theft Act H.1868 (Proposed) A1893a 2023 New York EmPIRE Worker Protection Act S541a (Proposed) 2021 Oregon Just Enforcement Act House Bill 2205 (Proposed) 2020 Vermont Vermont Private Attorneys General Act VT H0483 (Proposed) 2021/2022 Washington Worker Protection Act House Bill 1076 (Proposed): STATE LATEST LAW/BILL BILL NUMBER YEAR Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted) An Act Concerning the Expansion of Protections for Colorado General Assem- 2022 Colorado Workers who Raise Workplace Health & Safety Concerns bly Senate Bill 22-097 (Passed & Enacted) 2022 Connecticut An Act Concerning Forced Arbitration Agreements sHB-5245 (Proposed) 2023 Illinois A Bill Concerning Regulation IL House Bill 2862 (Passed & Enacted) LD 1711 2021 Maine Whistleblower Enforcement Act SP 525 (Governor veto) S.1158 2023 Massachusetts Wage Theft Act H.1868 (Proposed) A1893a 2023 New York EmPIRE Worker Protection Act S541a (Proposed) 2021 Oregon Just Enforcement Act House Bill 2205 (Proposed) 2020 Vermont Vermont Private Attorneys General Act VT H0483 (Proposed) 2021/2022 Washington Worker Protection Act House Bill 1076 (Proposed).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): An Act Concerning the Expansion of Protections for Colorado General Assem- 2022 Colorado Workers who Raise Workplace Health & Safety Concerns bly Senate Bill 22-097 (Passed & Enacted).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): 2022 Connecticut An Act Concerning Forced Arbitration Agreements sHB-5245 (Proposed).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): 2023 Illinois A Bill Concerning Regulation IL House Bill 2862 (Passed & Enacted).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): LD 1711 2021 Maine Whistleblower Enforcement Act SP 525 (Governor veto) S.1158 2023 Massachusetts Wage Theft Act H.1868 (Proposed).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): A1893a 2023 New York EmPIRE Worker Protection Act S541a (Proposed).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): 2021 Oregon Just Enforcement Act House Bill 2205 (Proposed).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): 2020 Vermont Vermont Private Attorneys General Act VT H0483 (Proposed).

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted): 2021/2022 Washington Worker Protection Act House Bill 1076 (Proposed).

The additional staffing facilitated by PAGA field between employers and workers. They revenues has also enabled strategic enforcement discourage unscrupulous employers from cases against large employers. For example, the violating the law and generate additional first “suitable seating”54 case against Bank of revenues that can be used to bolster staffing America resulted in a settlement that generated and enforcement efforts. Worker-initiated, $10 million for the state’s LWDA—a substantial grassroots enforcement of existing labor law sum used to hire nine additional personnel, has the potential to transform the lives of increasing the state’s enforcement capacity.55 workers, especially those from historically mar- Dedicated funding sources and PAGA revenues ginalized communities, low-wage workers, and have enabled California’s steady expansion of those in the informal economy. As such, WBE public sector enforcement staff. Similar reforms policies hold immense potential for broader in which WBE generated revenues supplement implementation and impact, and policymakers existing funding could help expand staffing and should welcome conversations about how the improve pay for enforcement agency officials. qui tam model might apply in other contexts.

WBE policies like PAGA have proven effective in Already, at least ten states have enacted or deterring violations of labor law, expanding introduced for consideration whistleblower enforcement capacity, and leveling the playing enforcement legislation (as of July 2023):

State Latest Law/Bill Bill Number Year

Cal. Lab. Code § 2698 2004 California Private Attorneys General Act et seq. (Passed & Enacted) Colorado Workers who Raise Workplace Health & Safety Concerns bly Senate Bill 22-097 (Passed & Enacted) Connecticut An Act Concerning Forced Arbitration Agreements sHB-5245 (Proposed) Illinois A Bill Concerning Regulation IL House Bill 2862 (Passed & Enacted)

Ld 1711 2021

Maine Whistleblower Enforcement Act SP 525 (Governor veto)

S.1158 2023

Massachusetts Wage Theft Act H.1868 (Proposed) A1893a 2023 New York EmPIRE Worker Protection Act S541a (Proposed) Oregon Just Enforcement Act House Bill 2205 (Proposed) Vermont Vermont Private Attorneys General Act VT H0483 (Proposed) 2021/2022 Washington Worker Protection Act House Bill 1076 (Proposed)

Projecting The Impact Of The Model:

Revenue-Generating Power Of

Whistleblower Enforcement Policies

allows the responsible state official to move As discussed, the WBE model represents a to dismiss public enforcement actions, comprehensive mechanism for strengthening intervene in these proceedings, and request labor law enforcement in large part through copies of all pleadings. These protective its potential to fully fund public agency measures facilitate the government agency’s budgets to ensure staffing and pay levels are continuous oversight, active participation in, and ultimate control of the process.56 sufficient to sustain, retain, and attract public servants. Given the success California has ‣ ‣ EXPANDING THE REACH OF THE PUBLIC enjoyed, adopting a whistleblower enforce- SECTOR by allowing a larger set of whis- tleblowers—such as unions and commu- ment model in other states has the potential nity-based organizations with a vested to result in significant revenue generation interest in employees’ claims—to bring for public labor law enforcement across cases on behalf of workers as well. Such the country. As in California, should similar inclusion is incredibly important since it laws gain passage, those revenues could be is precisely these types of organizations– worker centers, unions, and organizations used to bolster public enforcement staffing, rooted in vulnerable communities – that expand capacity, and advance worker pro- can engage low-wage workers, those tections–creating a positive feedback loop working in the informal or fissured or gig in which the mere act of enforcing existing economy, and workers confronted with labor further reinforces the state’s ability to the legacy of systemic racism because they are the best positioned to do so.57 hold corporate wrongdoers accountable.

Furthermore, organizations connected to Note that while each of these proposed laws immigrant communities are more likely to takes inspiration from PAGA by allowing have linguistic competency, understand workers to initiate public enforcement cultural barriers that impede workers from actions on behalf of the state, they also contacting enforcement agencies, and can include meaningful differences, includ- address fears that discourage undocu- ing provisions that have the potential mented workers from reporting violations.58 to increase revenues vastly, such as:

For instance, these organizations can protect vulnerable workers’ identities by being the ‣ ‣ IMPROVEMENTS IN PROCEDURE, such named plaintiff. States can choose whether as safeguards that allow for ongoing those organizations deserve further support control and involvement from government enforcement agencies that protect against by establishing special co-enforcement potential misuse. The Just Enforcement Act grant funding.

(JEA) introduced in Oregon, for example,

PROPOSED WBE POLICIES & E STIMATED ANNUAL REVENUES ANNUAL EXPECTED REVENUES WHEN POLICY IS FULLY STATE LATEST LAW/BILL YEAR OPERATIONAL FOR 7 YEARS59 2023 Massachusetts Wage Theft Act $46,345,263 (Introduced) 2023 New York EmPIRE Worker Protection Act (Introduced) $103,613,840 An Act Concerning Forced 2022 Connecticut $23,147,334 Arbitration Agreements (Introduced) 2021/2022 Washington Worker Protection Act $40,192,588 (Introduced) 2021 Maine Whistleblower Enforcement Act $4,329,877 (Governor veto) 2021 Oregon Just Enforcement Act $12,905,638 (Introduced) Vermont Private 2020 Vermont $1,402,960 Attorneys General Act (Introduced) No General Law Introduced Colorado N/A $34,948,100 as of August 2023 No General Law Introduced Illinois N/A $74,227,207 as of August 2023 No Law Introduced Minnesota N/A $35,166,890 as of August 2023 No Law Introduced Michigan N/A $55,407,250 as of August 2023 No Law Introduced Nevada N/A $16,956,421 as of August 2023 No Law Introduced New Jersey N/A $52,657,138 as of August 2023 No Law Introduced Pennsylvania N/A $73,898,903 as of August 2023 No Law Introduced Texas N/A $160,241,600 as of August 2023 The chart represents a breakdown of estimated revenue on a state-by-state basis—revenues accruing to local DOLs and their equivalents by virtue of the fines and penalties imposed on corporate lawbreak- ers—with states chosen on the basis of existing or proposed WBE legislation and/or where CPD network affiliates that have raised issues of labor law violations and are currently organizing around workplace justice issues. For more, see Appendix: Methodology..

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): 2023 New York EmPIRE Worker Protection Act (Introduced) $103,613,840.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): An Act Concerning Forced 2022 Connecticut $23,147,334 Arbitration Agreements (Introduced).

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): 2021/2022 Washington Worker Protection Act $40,192,588 (Introduced).

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): 2021 Maine Whistleblower Enforcement Act $4,329,877 (Governor veto).

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): 2021 Oregon Just Enforcement Act $12,905,638 (Introduced).

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): Vermont Private 2020 Vermont $1,402,960 Attorneys General Act (Introduced).

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No General Law Introduced Colorado N/A $34,948,100 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No General Law Introduced Illinois N/A $74,227,207 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No Law Introduced Minnesota N/A $35,166,890 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No Law Introduced Michigan N/A $55,407,250 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No Law Introduced Nevada N/A $16,956,421 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No Law Introduced New Jersey N/A $52,657,138 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No Law Introduced Pennsylvania N/A $73,898,903 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): No Law Introduced Texas N/A $160,241,600 as of August 2023.

2023 Massachusetts Wage Theft Act $46,345,263 (Introduced): The chart represents a breakdown of estimated revenue on a state-by-state basis—revenues accruing to local DOLs and their equivalents by virtue of the fines and penalties imposed on corporate lawbreak- ers—with states chosen on the basis of existing or proposed WBE legislation and/or where CPD network affiliates that have raised issues of labor law violations and are currently organizing around workplace justice issues. For more, see Appendix: Methodology..

Proposed Wbe Policies &

E Stimated Annual Revenues

Annual Expected Revenues

When Policy Is Fully

State Latest Law/Bill Year Operational For 7 Years59

Massachusetts Wage Theft Act $46,345,263 (Introduced) New York EmPIRE Worker Protection Act (Introduced) $103,613,840 An Act Concerning Forced 2022 Connecticut $23,147,334 Arbitration Agreements (Introduced) 2021/2022 Washington Worker Protection Act $40,192,588 (Introduced) Maine Whistleblower Enforcement Act $4,329,877 (Governor veto) Oregon Just Enforcement Act $12,905,638 (Introduced) Vermont Private 2020 Vermont $1,402,960 Attorneys General Act (Introduced) No General Law Introduced Colorado N/A $34,948,100 as of August 2023 No General Law Introduced Illinois N/A $74,227,207 as of August 2023 No Law Introduced Minnesota N/A $35,166,890 as of August 2023 No Law Introduced Michigan N/A $55,407,250 as of August 2023 No Law Introduced Nevada N/A $16,956,421 as of August 2023 No Law Introduced New Jersey N/A $52,657,138 as of August 2023 No Law Introduced Pennsylvania N/A $73,898,903 as of August 2023 No Law Introduced Texas N/A $160,241,600 as of August 2023 to local DOLs and their equivalents by virtue of the fines and penalties imposed on corporate lawbreak- ers—with states chosen on the basis of existing or proposed WBE legislation and/or where CPD network affiliates that have raised issues of labor law violations and are currently organizing around workplace justice issues. For more, see Appendix: Methodology.

CONCLUSION IN A TIME OF RAMPANT WORKPLACE RIGHTS VIOLATIONS, the Whistleblower Enforcement model has emerged as a promising approach to addressing the crisis. When put into practice, WBE policies allow workers and labor organizations to initiate legal proceedings against employers who violate labor laws and extend the reach of the state. This approach has not only increased the cost of non-compli- ance for employers but has also generated significant revenue for the state, creating a virtuous cycle in which those funds can then be used to increase enforcement capacity and further strengthen labor law enforce- ment more generally. These policies are not only beneficial for workers but also for the state, safeguarding the rule of law and fostering economic growth. If these benefits are to be fully realized, however, more focus will be needed from governors, policymakers, and community-based stake- holders in states across the country fighting for their passage and prior- itizing their implementation as a key component of their work. MAKING RIGHTS REAL 20.

CONCLUSION IN A TIME OF RAMPANT WORKPLACE RIGHTS VIOLATIONS, the Whistleblower Enforcement model has emerged as a promising approach to addressing the crisis. When put into practice, WBE policies allow workers and labor organizations to initiate legal proceedings against employers who violate labor laws and extend the reach of the state. This approach has not only increased the cost of non-compli- ance for employers but has also generated significant revenue for the state, creating a virtuous cycle in which those funds can then be used t increase enforcement capacity and further strengthen labor law enforc ment more generally. These policies are not only beneficial for workers but also for the state, safeguarding the rule of law and fostering econo growth. If these benefits are to be fully realized, however, more focus w be needed from governors, policymakers, and community-based stake holders in states across the country fighting for their passage and prior itizing their implementation as a key component of their work. MAKING RIGHTS.

Conclusion

IN A TIME OF RAMPANT WORKPLACE RIGHTS VIOLATIONS, the Whistleblower Enforcement model has emerged as a promising approach to addressing the crisis. When put into practice, WBE policies allow workers and labor organizations to initiate legal proceedings against employers who violate labor laws and extend the reach of the state. This approach has not only increased the cost of non-compli- ance for employers but has also generated significant revenue for the state, creating a virtuous cycle in which those funds can then be used to increase enforcement capacity and further strengthen labor law enforce- ment more generally. These policies are not only beneficial for workers but also for the state, safeguarding the rule of law and fostering economic growth. If these benefits are to be fully realized, however, more focus will be needed from governors, policymakers, and community-based stake- holders in states across the country fighting for their passage and prior- itizing their implementation as a key component of their work.

POLICY RECOMMENDATIONS In light of the findings and discussions presented in this report, we propose the following policy recommendations to strengthen labor law enforcement: ‣ ‣ ‣ APPROPRIATE MORE FUNDS FROM ANNUAL BUDGET PROCESSES TO FURTHER BOLSTER ENFORCEMENT CAPACITY: Recognizing public servants as the lynchpin of labor law enforcement, states should appro- priate more funds from annual budget processes to expand staffing, increase pay, improve retention, and extend overall capacity for those doing the work. This funding should be independent of the revenues generated through WBE policies, ensuring a comprehensive approach to strengthening labor law enforcement. By investing in those on the front lines of enforcing labor laws, states can create a more robust and effective system that protects workers’ rights and holds employers accountable. ‣ ‣ ‣ ADOPT ROBUST STATE WHISTLEBLOWER ENFORCEMENT POLICIES: States should consider adopting WBE policies that allow workers, whistleblowers, and labor organizations to initiate legal proceed- ings on behalf of the state for all workers at a given workplace in which violations have occurred. These include the EmPIRE Worker Protection Act in New York, the Wage Theft Act in Massachusetts, as well as labor bills that institute new rights and include WBE mech- anisms like the Predictable Scheduling Act in Connecticut. ‣ ‣ ‣ INSTITUTE STRICT PENALTIES FOR LABOR LAW VIOLATIONS: To deter potential violators, states should institute strict penalties for labor law violations. These penalties should adjust for inflation to account for business costs and maintain their deterrent effect over time. ‣ ‣ ‣ ALLOCATE WHISTLEBLOWER ENFORCEMENT REVENUES TO ENFORCEMENT AGENCIES: A significant portion of the revenues generated through penalties for labor law violations should be allocated to special funds to resource enforcement agencies, such as state DOLs or their equivalents. Such revenue would provide these agencies with the resources to improve pay and working con- ditions, expand staffing, and thus effectively enforce labor laws. MAKING RIGHTS REAL 21.

POLICY RECOMMENDATIONS In light of the findings and discussions presented in this report, we propose the following policy recommendations to strengthen labor law enforcement: ‣ ‣ ‣ APPROPRIATE MORE FUNDS FROM ANNUAL BUDGET PROCESSES TO FURTHER BOLSTER ENFORCEMENT CAPACITY: Recognizing public servants as the lynchpin of labor law enforcement, states should appro- priate more funds from annual budget processes to expand staffing, increase pay, improve retention, and extend overall capacity for those doing the work. This funding should be independent of the revenues generated through WBE policies, ensuring a comprehensive approach to strengthening labor law enforcement. By investing in those on the front lines of enforcing labor laws, states can create a more robust and effective system that protects workers’ rights and holds employers accountable. ‣ ‣ ‣ ADOPT ROBUST STATE WHISTLEBLOWER ENFORCEMENT POLICIES: States should consider adopting WBE policies that allow workers, whistleblowers, and labor organizations to initiate legal proceed- ings on behalf of the state for all workers at a given workplace in which violations have occurred. These include the EmPIRE Worker Protection Act in New York, the Wage Theft Act in Massachusetts, as well as labor bills that institute new rights and include WBE mech- anisms like the Predictable Scheduling Act in Connecticut. ‣ ‣ ‣ INSTITUTE STRICT PENALTIES FOR LABOR LAW VIOLATIONS: To deter potential violators, states should institute strict penalties for labor law violations. These penalties should adjust for inflation to accoun for business costs and maintain their deterrent effect over time. ‣ ‣ ‣ ALLOCATE WHISTLEBLOWER ENFORCEMENT REVENUES TO ENFORCEMENT AGENCIES: A significant portion of the revenues generated through penalties for labor law violations should be allocated to special funds to resource enforcement agencies, such as state DOLs or their equivalents. Such revenue would provide these agencies with the resources to improve pay and working con- ditions, expand staffing, and thus effectively enforce labor laws. MAKING RIGHTS.

Policy Recommendations

In light of the findings and discussions presented in this report, we propose the following policy recommendations to strengthen labor law enforcement:

‣ ‣ ‣ Appropriate More Funds From Annual Budget Processes

TO FURTHER BOLSTER ENFORCEMENT CAPACITY: Recognizing public servants as the lynchpin of labor law enforcement, states should appro- priate more funds from annual budget processes to expand staffing, increase pay, improve retention, and extend overall capacity for those doing the work. This funding should be independent of the revenues generated through WBE policies, ensuring a comprehensive approach to strengthening labor law enforcement. By investing in those on the front lines of enforcing labor laws, states can create a more robust and effective system that protects workers’ rights and holds employers accountable.

‣ ‣ ‣ Adopt Robust State Whistleblower Enforcement Policies:

States should consider adopting WBE policies that allow workers, whistleblowers, and labor organizations to initiate legal proceed- ings on behalf of the state for all workers at a given workplace in which violations have occurred. These include the EmPIRE Worker Protection Act in New York, the Wage Theft Act in Massachusetts, as well as labor bills that institute new rights and include WBE mech- anisms like the Predictable Scheduling Act in Connecticut.

‣ ‣ ‣ Institute Strict Penalties For Labor Law Violations:

To deter potential violators, states should institute strict penalties for labor law violations. These penalties should adjust for inflation to account for business costs and maintain their deterrent effect over time.

‣ ‣ ‣ Allocate Whistleblower Enforcement Revenues To

ENFORCEMENT AGENCIES: A significant portion of the revenues generated through penalties for labor law violations should be allocated to special funds to resource enforcement agencies, such as state DOLs or their equivalents. Such revenue would provide these agencies with the resources to improve pay and working con- ditions, expand staffing, and thus effectively enforce labor laws.

‣ ‣ ‣ DEVELOP ACCESSIBLE REPORTING PROCESSES: States should develop accessible and straightforward processes for employees to report labor law violations. This action would encourage more workers to come forward with evidence of violations. ‣ ‣ ‣ PROMOTE PUBLIC AWARENESS OF LABOR RIGHTS: States should launch public education campaigns to raise awareness about labor rights and the avenues available for workers to report violations. ‣ ‣ ‣ ENCOURAGE INTER-STATE COLLABORATION: States should collaborate and exchange knowledge about whistleblower enforcement policies. This cooperation would allow states to learn from each other’s experiences and adopt best practices. Adopting and implementing these policy recommendations would go a long way in strengthening labor law enforcement, creating a culture of compliance, and protecting the rights of the nation’s most vulnerable workers. By harnessing the resilience of workers advocating for transformation and the guidance of their elected officials, WBE policies provide a meaningful opportunity to expand public labor law enforcement, empower workers to hold employers accountable for their transgressions, and ensure that established workplace standards have a tangible impact on households nationwide. MAKING RIGHTS REAL 22.

‣ ‣ ‣ DEVELOP ACCESSIBLE REPORTING PROCESSES: States should develop accessible and straightforward processes for employees to report labor law violations. This action would encourage more workers to come forward with evidence of violations. ‣ ‣ ‣ PROMOTE PUBLIC AWARENESS OF LABOR RIGHTS: States should launch public education campaigns to raise awareness about labor rights and the avenues available for workers to report violations. ‣ ‣ ‣ ENCOURAGE INTER-STATE COLLABORATION: States should collaborate and exchange knowledge about whistleblower enforcement policies. This cooperation would allow states to learn from each other’s experiences and adopt best practices. Adopting and implementing these policy recommendations would go a long way in strengthening labor law enforcemen creating a culture of compliance, and protecting the rights of the nation’s most vulnerable workers. By harnessing the resilience of workers advocating for transformation and the guidance of their elected officials, WBE policies provide a meaningful opportunity to expand public labor law enforcement, empower workers to hold employers accounta for their transgressions, and ensure that established workpla standards have a tangible impact on households nationwide MAKING RIGHTS.

develop accessible and straightforward processes for employees to report labor law violations. This action would encourage more workers to come forward with evidence of violations. ‣ ‣ ‣ PROMOTE PUBLIC AWARENESS OF LABOR RIGHTS: States should launch public education campaigns to raise awareness about labor rights and the avenues available for workers to report violations.

‣ ‣ ‣ ENCOURAGE INTER-STATE COLLABORATION: States should collaborate and exchange knowledge about whistleblower enforcement policies. This cooperation would allow states to learn from each other’s experiences and adopt best practices. Adopting and implementing these policy recommendations would go a long way in strengthening labor law enforcement, creating a culture of compliance, and protecting the rights of the nation’s most vulnerable workers. By harnessing the resilience of workers advocating for transformation and the guidance of their elected officials, WBE policies provide a meaningful opportunity to expand public labor law enforcement, empower workers to hold employers accountable for their transgressions, and ensure that established workplace standards have a tangible impact on households nationwide.

Appendix

Methodology

The projected revenues provided in this report are based on the revenues gener- ated in California by PAGA from 2016 to 2022, information provided by California’s Labor and Workforce Development Agency through a Public Records Act request in July of 2023. Each state’s projected average revenue amount is an estimate that incorporates different factors, such as the size of a state’s total workforce, the default civil penalty provided by the policy, and the percentage of revenue going to the state. While state-level workforce data was pulled from the U.S. Bureau of Labor Statistics State and County Quarterly Census of Employment and Wages,60 the default civil penalty and remittance percentage allotted to the state were drawn from each state’s policy text. (For states without proposed policies, we assume 65% of penalties go to the state and a default penalty of $500 per viola- tion per worker per pay period.) While many of these figures are easily accessible, others, like the total rate of employer violations of state labor law, were less so.

As with all models, we employ a set of assumptions concerning these figures as described below. Generally, these assumptions are meant to provide a conservative estimate. Default Penalties and Total Revenues. The model assumes total revenues are pro- portional to the default civil penalty amount. Similarly, because a significant portion of revenue under PAGA policies comes from legal settlements, we assume (for the purposes of simplicity) that these settlement awards, along with court-mandated total penalties, are directly proportional to each state’s default civil penalty amount.

Some violations of labor law incur a variety of penalties, but many do not. For the estimate, we assume that all litigation using PAGA and hypothetical WBE laws is based on the civil penalties that exist due to those policies. California’s default civil penalty amount varies based on whether the violation in question is a first-time or repeated infraction (with penalties of $100 per worker per violation per pay period for first-time infractions and $200 for repeat offenses). As such, we assume the average default penalty amount in California to be $166.67 or that two-thirds of the violators are repeat violators. It should be noted that this assumption likely results in a comparatively conservative estimate, as many employers facing litigation often secure a settlement, potentially preventing them from potentially being identified as repeat violators. Furthermore, data from California has shown that most settle- ments are made in response to systemic violations by large, low-wage employers.61 MAKING RIGHTS REAL i

Violation Rates. Given the lack of data on the employer labor violation rates in states without WBE policies, we assume that the rate of violations in states with pending legislation is consistent with that of California and is directly pro- portional to the amount of revenue. This assumption is also likely to have a downplaying effect on the revenue estimates made for each state since, fol- lowing the enactment of PAGA in 2004, the expansion of enforcement staffing, the high ratio of enforcement staff per worker, and the increased compliance observed in that state on behalf of employers, it is reasonable to assume that infraction rates in California are lower than that of the national average.

Inclusion of New Types of Relators. As previously stated, it is assumed for the purposes of simplicity that violation rates in states with pending WBE legislation are consistent with that of California. However, it should be noted that even with this already conservative assumption in place, proposed legislation in states since the passage of PAGA further expand the reach of public sector enforcement by including whistleblowers, unions, and/or community-based organizations as relators (i.e., plain- tiffs litigating on behalf of the state). Our model does not adjust for changes in the rate of enforcement with the addition of these new types of relators, which we believe would allow for the litigation of new cases that would not have otherwise occurred.

Implementation of Policy. We only apply estimates to WBE policies that cover signifi- cant portions of the labor law. We do not apply them to individual policies that include WBE mechanisms. We assume that the revenues generated from 2016 to 2022 in CA are the equivalent of the eventual full implementation of the laws. We assume that the institutional learning curve would be much shorter for newer laws that would be passed, given the fact that many experienced litigators in qui tam and WBE-related mechanisms would facilitate the rapid adoption of such policies around the country.

MAKING RIGHTS REAL ii

Endnotes

1. Deutsch, Rachel, Ray Fuentes, and Tia Koon. “California’s Hero Labor Law: The Private Attorneys General Act Fights Wage Theft and Recovers Millions from Lawbreaking Corpora- tions.” 2020, https://www.populardemocracy.org/sites/default/files/PAGA%20Report_WEB.pdf; Deutsch, Rachel. “Whistleblower Enforcement: Holding Corporations Accountable for Breaking the Law,” https://www.populardemocracy.org/sites/default/files/CPD%20Whistleblower%20 Enforcement%20%281%29.pdf; Gerstein, Terri. “The Oregon Just Enforcement Act Could Mean- ingfully Improve Employer Compliance with Workplace Laws.” Economic Policy Institute, 2021, https://www.epi.org/publication/the-oregon-just-enforcement-act-could-meaningfully-im- prove-employer-compliance-with-workplace-laws/; Center for Popular Democracy and Make the Road New York. “Coming Up Short: The State of Wage Theft Enforcement in New York.” 2019, https://maketheroadny.org/wp-content/ uploads/2019/04/Coming-Up-Short_-The-State-of-Wage-Theft-Enforcement-in-NY-4_8_19.pdf; Hamaji, Kate, Rachel Deutsch, Elizabeth Nicolas, Celine McNicholas, Heidi Shierholz, and Margaret Poydock. “Unchecked Corporate Power: Forced Arbitration, the Enforcement Crisis, and How Workers Are Fighting Back.” 2019, populardemocracy.org/sites/default/files/ Unchecked-Corporate-Power-web.pdf 2. Hamaji, Kate, et al. 2019 3. See table on page 8, “State Wage and Hour Investigators: Number of Workers and Businesses per Investigator” 4. Testimony of Jumaane D. Williams, Public Advocate for the City of New York, read by Elizabeth Kennedy, Deputy Public Advocate. New York State Senate Joint Public Hearing: “To collect public feedback on S1977 and understand the scale of the issue of wage theft in New York,” May 25, 2023, https://www.nysenate.gov/calendar/public_hearings/may-25-2023/joint- public-hearing-collect-public-feedback-s1977-and. Testimony available at https://youtu.be/ Jzuipz869C8: 25:18 to 26:10.

5. Siegelbaum, Max. “127,000 New York Workers Have Been Victims of Wage Theft.” ProPublica, 2023, https://www.propublica.org/article/thousands-of-new-york-workers-have-been-victims- of-wage-theft 6. Baram, Marcus. “New York Workers Are Waiting on $79 Million in Back Wages.” ProPublica, 2023, https://www.propublica.org/article/new-york-workers-are-waiting-on-79-million-in- back-wages 7. Feliciano Reyes, Juliana. “After they won their wage theft cases, they waited years to get paid.

Some still wait.” Philadelphia Inquirer, February 23, 2023, https://www.inquirer.com/news/ philadelphia/wage-theft-philadelphia-enforcement-judgments-20230223.html 8. Ibid. MAKING RIGHTS REAL iii

9. New York State Senate Joint Public Hearing: “To collect public feedback on S1977 and under- stand the scale of the issue of wage theft in New York,” May 25, 2023. Testimony available at https://youtu.be/Jzuipz869C8 10. Testimony of Nathalia Varela, Supervising Attorney for Worker Justice, Make the Road New York. New York State Senate Joint Public Hearing: “To collect public feedback on S1977 and understand the scale of the issue of wage theft in New York,” May 25, 2023, https://www.

nysenate.gov/calendar/public_hearings/may-25-2023/joint-public-hearing-collect-public-feed- back-s1977-and. Testimony available at https://youtu.be/Jzuipz869C8: 2:21:33 to 2:21:52. See also, St. John, Paige, “Labor unions’ objections delay California investigation into wage theft system,” Los Angeles Times, March 22, 2023, https://www.latimes.com/california/story/2023- 03-22/labor-unions-seek-to-block-investigation-into-californias-wage-theft-failures 11. See table on page 17, “Enacted and Proposed WBE Labor Policies (as of July 2023)” 12. Testimony of Nathalia Varela. New York State Senate Joint Public Hearing: “To collect public feedback on S1977 and understand the scale of the issue of wage theft in New York,” May 25, 2023. Testimony available at https://youtu.be/Jzuipz869C8: 2:20:30 to 2:22:29.

13. Cooper, David and Teresa Kroeger. “Employers Steal Billions from Workers’ Paychecks Each Year.” Economic Policy Institute, 2017, https://www.epi.org/publication/employers-steal-bil- lions-from-workers-paychecks-each-year/ 14. Ibid. 15. Ibid. 16. Hamaji, Kate, et al. 2019: 12; The expected cost is the product of the fines, penalties, and damages multiplied by the probability of being caught. See Gary Becker, “Crime and Punish- 17. Ibid. It is also worth noting that recent legal decisions have affirmed the use of the Private Attorneys General Act of California as a method of public enforcement for worksite wide viola- tions. The California plaintiff does not lose standing to bring a PAGA case even if their individ- ual claims are compelled into arbitration. The plaintiff is still able to litigate on behalf of other employees. Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) and Adolph v. Uber Tech., Inc. (2023) 14 Cal.5th 1104 19. The sample of states chosen for analysis is based on states that have introduced or passed WBE legislation and/or where CPD network affiliates have raised issues of labor law violations and are currently organizing around related workplace justice issues.

20. Hamaji, Kate, et al. 2019: 7; Mangundayao, Ihna et al., “More than $3 Billion in Stolen Wages Recovered for Workers between 2017 and 2020.” Economic Policy Institute, https://www.epi. org/publication/wage-theft-2021/ MAKING RIGHTS REAL iv

21. Hamaji, Kate, et al. 2019: 5; See table and methodology note for 2023 ratio. Number of Labor Standards positions identified in State of New York 2023 Executive Budget compared to number of workers obtained via US Bureau of Labor Statistics, Quarterly Census of Employ- ment and Wages (QCEW), using QCEW averages from Q2 of 2022 through Q1 of 2023.

22. 2023-24 Governor’s Budget, Labor and Workforce Development, https://ebudget.ca.gov/2023- 23. Joint Budget Committee, Staff Budget Briefing, Department of Labor and Employment, https:// leg.colorado.gov/sites/default/files/fy2023-24_labbrf.pdf: A-15 24. Governor’s Recommended FY 2024-25 Budget - Program Addendum, https://portal.

ct.gov/-/media/OPM/Budget/2024_2025_Biennial_Budget/Budget_WebPage/Program_ 25. Illinois State Budget, Fiscal Year 2024, https://budget.illinois.gov/content/dam/soi/en/web/ budget/documents/budget-book/fy2024-budget-book/Fiscal-Year-2024-Operating-Budget. pdf: page 349 26. Count of Wage and Hour Compliance positions from the State of New Jersey, NJOIT Open Data Center, Agency Payroll Explorer dataset, https://data.nj.gov/payroll_results?year_start=2022&- year_end=2022&lastname=&firstname=&dept-agency=LABOR&title=&erg=&salary_low=&sal- ary_high=&ot=. Accessed September 1, 2023.

27. State of New York, FY 2023 Executive Budget, Agency Appropriations, Department of Labor, https://www.budget.ny.gov/pubs/archive/fy23/ex/agencies/appropdata/LaborDepartmentof. pdf: 2 28. Investigator Staff Count, Bureau of Labor Law Compliance, listed in “Administration And Enforcement Of The Construction Workplace Misclassification Act,” March 1, 2023, https://www.dli.pa.gov/Individuals/Labor-Management-Relations/llc/act72/Docu- 29. US Bureau of Labor Statistics, QCEW State and County Map, https://data.bls.gov/maps/cew/us 30. Hamaji, Kate, et al. 2019: 14-19 31. Ibid: 18 32. Ibid: 14 33. Community outreach and labor education accounts have been included in legislation proposed in Connecticut, Maine, Massachusetts, Oregon, Vermont and Washington.

34. An Act Concerning Forced Arbitration Agreements and Allowing Certain Court Actions to Be Brought on Behalf of the State. Raised Bill No. 5245. https://www.cga.ct.gov/2022/TOB/H/ 35. US Department of Justice, “The False Claims Act,” https://www.justice.gov/civil/false-claims-act MAKING RIGHTS REAL v

36. The whistleblower enforcement approach is based on qui tam, from a Latin phrase that trans- lates to “he who sues in this matter for the king as well as for himself.” See https://www.law. cornell.edu/wex/qui_tam_action 37. Hamaji, Kate, et al. 2019: 15; Whistleblower Network News, “Whistleblowers Save Taxpayers $3.4 Billion,” https://whistleblowersblog.org/corporate-whistleblowers/whistleblowers-save-taxpay- ers-3-4-billion/; US Department of Justice, “False Claims Act Settlements and Judgments Exceed $2 Billion in Fiscal Year 2022,” https://www.justice.gov/opa/pr/false-claims-act-settlements-and- judgments-exceed-2-billion-fiscal-year-2022 38. False Claims Amendments Act of 1986, 31 U.S.C.A. § 3729, https://uscode.house.gov/view.xhtm- l?req=granuleid:USC-prelim-title31-section3729&num=0&edition=prelim#amendment-note; Patrick Burns And R. Scott Oswald, “Freeing the False Claims Act,” The Hill, October 25, 2016, https://thehill.com/opinion/op-ed/302784-freeing-the-false-claims-act/ 39. “State False Claims Act,” https://www.falseclaimsact.com/states-municipalities-fcas/ 41. Ibid.

42. An Act Concerning The Expansion Of Protections For Workers Who Raise Workplace Health And Safety Concerns, Senate Bill 22-097, https://leg.colorado.gov/sites/default/files/docu- ments/2022A/bills/2022a_097_enr.pdf; “Colorado Law Offers Rewards for Whistleblowers Reporting Workplace Health and Safety Violations,” https://constantinecannon.com/whistle- blower/colorado-phew-act-offers-whistleblower-rewards-workplace-health-and-safety/ 43. An Act Concerning Regulation, Illinois General Assembly HB 2862, https://www.ilga.gov/legisla- tion/fulltexasp?DocName=&SessionId=112&GA=103&DocTypeId=HB&DocNum=2862&GAID=17 45. Ibid.

47. 2017-18 Governor’s Budget, Labor and Workforce Development, https://ebudget.ca.gov/2017- 18/pdf/GovernorsBudget/7000.pdf: LWD 22; 2023-24 Governor’s Budget, Labor and Workforce 48. California Code of Regulations, Title 8, Division 1, Chapter 8, Subchapter 2.06 - Workers’ Com- pensation-Administration Revolving Fund Assessment, Uninsured Employers Benefits Trust Fund Assessment, Subsequent Injuries Benefits Trust Fund Assessments, Labor Enforcement and Compliance Fund Assessment, Occupational Safety and Health Fund Assessment, and Fraud Surcharge, https://www.law.cornell.edu/regulations/california/title-8/division-1/chapter-8/ subchapter-2.06; see also, https://www.dir.ca.gov/dwc/DWC_RevolvingFundAssessment/22U- Fund.pdf MAKING RIGHTS REAL vi

49. Information provided by California’s Labor and Workforce Development Agency through a Public Records Act request in July of 2023. See Appendix: Methodology. 50. “A Budget Change Proposal (BCP) is a proposal to change the level of service or funding sources for activities authorized by the Legislature, or to propose new program activities not currently authorized.” State of California, Department of Finance, https://dof.ca.gov/budget/budget-de- tails/ 51. See, for example, https://esd.dof.ca.gov/Documents/bcp/1920/FY1920_ORG7350_BCP3230.pdf and https://esd.dof.ca.gov/Documents/bcp/2021/FY2021_ORG0559_BCP3796.pdf 52. Despite high levels of budgeted staffing in the budgets passed by the CA State Legislature, widely reported public claims backlogs indicate significant vacancies. For the purposes of this report, the data used builds in a 32% vacancy rate (the rate for May 2022, reported by Paige St. John in the Los Angeles Times on March 22, 2023, “Labor unions’ objections delay California investigation into wage theft system,” https://www.latimes.com/california/story/2023-03-22/ labor-unions-seek-to-block-investigation-into-californias-wage-theft-failures.) Even with such a rate, CA has the lowest ratios of workers per hired investigator in the country.

53. Deutsch, Rachel, et al. 2020: 8-9 54. “Suitable seating” refers to the right to sit at work in California. PAGA established a default penalty and a method of enforcement. 55. Deutsch, Rachel, et al. 2020: 7-8 56. Gerstein, Terri. 2021 58. Ibid. 59. The seven year hypothetical is based on the most recently available seven year period of revenues from California’s PAGA legislation. See Appendix: Methodology.

60. US Bureau of Labor Statistics, “QCEW State and County Map,” https://data.bls.gov/maps/cew/us MAKING RIGHTS REAL vii

CPD Whistleblower Enforcement Report Full Nov 2023

Making

Rights

How The Whistleblower

Enforcement Model Can

Address The Crisis In

Labor Rights Enforcement

Acknowledgements

Table Of Contents

Executive Summary

Key Findings

‣ ‣ ‣ Labor Law Enforcement Agencies Need More Resources

Potential Revenues Captured Through Better Enforce-

‣ ‣ ‣ Implementing Wbe Policies Has Been Found To Improve

Introduction

A Deepening Crisis In Labor Law Enforcement

Our Labor Laws Are Rendered Meaningless When Workers

Do Not Have A Reasonable Expectation That Employers Who

Violate The Law Will Be Held Accountable.”

Worker Rights & Public Labor

Law Enforcement Under Attack

Beatriz Tapia’S Story

State Wage And Hour Investigators:

State Investigators In State In State Investigator Investigator

A Tried & True Solution:

Whistleblower Enforcement

Sinue Alejandro Ibarra’S Story

Whistleblower

Enforcement Process:

How It Works

Whistleblower Enforcement Process

How It Works

Whistleblower Enforcement:

160 Years In U.S. Law

Whistleblower Enforcement Policies Effectively

Generate A Culture Of Compliance For

Labor Law & Grow The Public Sector

Fy-2015 Fy-2016 Fy-2017 Fy-2018 Fy-2019 Fy-2020 Fy-2021 Fy-2022

Fy-2016 Fy-2017 Fy-2018 Fy-2019 Fy-2020 Fy-2021 Fy-2022

Fy-2016 Fy-2017 Fy-2018 Fy-2019 Fy-2020 Fy-2021 Fy-2022

State Latest Law/Bill Bill Number Year

Ld 1711 2021

S.1158 2023

Projecting The Impact Of The Model:

Revenue-Generating Power Of

Whistleblower Enforcement Policies

Proposed Wbe Policies &

E Stimated Annual Revenues

Annual Expected Revenues

When Policy Is Fully

State Latest Law/Bill Year Operational For 7 Years59

Conclusion

Policy Recommendations

‣ ‣ ‣ Appropriate More Funds From Annual Budget Processes

‣ ‣ ‣ Adopt Robust State Whistleblower Enforcement Policies:

‣ ‣ ‣ Institute Strict Penalties For Labor Law Violations:

‣ ‣ ‣ Allocate Whistleblower Enforcement Revenues To

Appendix

Methodology

Endnotes