Equal Pay [for Teens] for Equal Work

Tyeshawn Clark,[1] is a 17-year-old high school student who lives with his mom and 2-year-old brother in Dorchester, MA. Every day after school Tyeshawn works at the Transformative Culture Project, a job placement he found through the Boston Private Industry Council, an employment program at his high school. This is the third job for Tyeshawn, who started working the summer after his freshman year of high school to gain experience. When Tyeshawn first started working he gave half his earnings to his mom to help around the house. Now his mom has a better-paying job and Tyeshawn gets to keep his earnings for things like back-to-school clothes and snacks. With school nearly out and summer quickly approaching, millions of teens will be entering the job market. Should these teens be paid the same wage as adult workers?

The debate about whether teens (16-19 year-olds) should be paid the same as adults has been going on for decades, but it has taken on new importance as more cities and states look to raise their own minimum wage above the federal level. Activists who support raising the minimum wage have, in some ways, undermined the importance of keeping teen wages on par with adult wages. Consider the messaging in Rhode Island: progressive activists argued for a higher minimum wage by focusing on the fact that minimum wage earners are older women trying to provide for their families. Advocates argued that the minimum wage supports adults and their families, not teens in the suburbs, reinforcing the idea that for teens, a high minimum wage is neither critical nor important – rather the most important part of a job for teens is the professional training. This messaging overlooks a number of arguments for why teens should receive the same minimum wage as adults. When states and cities raise the wage, they should do so without a teen wage carve out, and activists should not view a teen wage as a bargaining chip in the debate to raise the minimum wage. Trading away teen wages could hurt all workers in the long run.

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Today’s News & Commentary — May 5, 2017

Congress may be open to revisiting the classification of gig economy workers as employees or independent contractors under the Fair Labor Standards Act.  Per Bloomberg BNA, “the head of the House workforce committee May 3 told an audience of innovators that she would be open to updating the Great Depression-era Fair Labor Standards Act to better serve the on-demand workforce.”  Education and the Workforce Committee Chairwoman Virginia Foxx (R-N.C.) likened classifying gig economy workers as “trying to fit a square peg in a round hole.”  Rep. Foxx made the comments at Consumer Technology Association’s New American Jobs Summit.  Workforce Protections subcommittee ranking Democrat Rep. Mark Takano (Calif.) responded to Bloomberg BNA with concern, stating “When she talks about updating the laws, what I hear her say is we need to throw out protections instead of how these workers can get a fair deal.”

New data shows that the U.S. unemployment rate is near a record low – but productivity is dropping.  Reuters reports that “U.S. job growth rebounded sharply in April and the unemployment rate dropped to a near 10-year low of 4.4 percent, signs of a tightening labor market that could seal the case for an interest rate increase next month despite moderate wage growth.”  Reuters also notes, however, that “in another report, the Labor Department said productivity decreased at a 0.6 percent annualized rate in the first quarter, the weakest in a year, after rising at a 1.8 percent pace in the fourth quarter.  It increased at a 1.1 percent rate compared to the first quarter of 2016.”

State-sponsored retirement plans for low-income workers exempted from strict ERISA requirements under the Obama Administration will likely see that protection revoked.  According to CNBC, the Senate passed a resolution to repeal the exemption.  The resolution previously passed the House, and President Trump is expected to sign it into law.  Under the plans in question, “private-sector workers whose employers do not offer 401(k) or other retirement benefits, and who often have low incomes, are automatically enrolled in plans being launched in some states, such as Illinois.  States say the exemption would have let employers pass workers’ money into plans without footing ERISA compliance costs.”

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Today’s News & Commentary — May 4, 2017

The New York Times reports that Apple plans to create a $1 billion fund for the advancement of manufacturing jobs in the United States. In an interview with CNBC, Apple’s chief executive Timothy D. Cook noted, “Those manufacturing jobs create more jobs around them because you have a service industry that builds up around them.” The company hopes to announce its first investment from the new fund sometime this month.

The House Rules Committee will meet this week to discuss an amendment to the FLSA. The Working Families Flexibility Act is a Republican-sponsored bill that would create the option for employers to offer one-and-a-half hours of paid time off in lieu of one hour’s worth of time-and-a-half overtime wages. The bill recommends capping the paid time off hours available at 160. A blog post notes that the House Education and Workforce Committee approved the bill last week.

The Circuit Court for the District of Columbia reversed an NLRB decision last week in the case of Bellagio LLC v. National Labor Relations Board, finding that the Bellagio Hotel and Casino did not interfere with a bellhop’s “Weingarten rights” under the NLRA. Weingarten rights assert that employees have the right under the NLRA to have union representation during any investigatory interviews. This right must be affirmatively requested by the employee, after which an employer may (1) grant the request, (2) end the interview, or (3) offer the employee the option between holding an interview without representation or not having an interview.

Following a complaint from a hotel guest about the bellhop, Bellagio management attempted to interview the bellhop, Gabor Garner, who requested union representation. Bellagio suggest Garner contact a union representative on his own, but he refused. The hotel then attempted to find a representative, but was unsuccessful. Upon returning to the interview room where Garner was waiting, management asked Garner if he would like to make a written statement instead, which he also refused. Management then ceased the interview and placed Garner on paid suspension pending investigation until Garner returned the following day with his union representative to conduct the interview. Continue reading

Where Tips End and Wages Begin

One year ago, this blog featured a post that outlined various reasons why the restaurant industry’s use of tips in lieu of guaranteed wages had come to provoke, in the author’s words, “a firestorm of criticism”: that reliance on tips as a significant component of server take-home pay 1) destined many servers to earning a sub-minimum wage; 2) encouraged female servers to tolerate sexual harassment by their customers; and 3) resulted in pay discrimination unrelated to the quality of servers’ work, a consequence of customer biases and their impacts on the amounts tipped.

Since the post’s publication, this firestorm has continued unabated. In fact, Uber even pointed to customer bias as a reason not to add a tipping function to its ride-sharing app, as its competitor Lyft has done. Moreover, recent modeling by FiveThirtyEight illustrates the volatility of tip-based incomes in the restaurant industry, as well as divisions between different classes of restaurants vis-à-vis the tipped amounts that their servers typically earn, which further underscores the question whether tipping can serve as a reliable substitute for set pay.

In this vein, a recent opinion out of the U.S. Court of Appeals for the Tenth Circuit sheds new light on the shortcomings of tipping as a reliable form of compensation, highlighting the dangers posed to employees by the liminal space between “tips” and “wages” under the Fair Labor Standards Act (FLSA).

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The Current State of Overtime

The New Rule

In May 2016, the Department of Labor, under the direction of President Obama, issued a final rule updating the overtime provisions of the Fair Labor Standards Act.  The Department raised the minimum annual salary for employees exempt from overtime pay from $23,660 to $47,476.  The Department set December 1, 2016 as the effective date for the new rule, implementation of which would have affected over 4 million employees.

Underlying the new overtime rule is the desire to protect workers from being over-worked and under-paid.  As the United Food and Commercial Workers union stated in 2015, the previous threshold of $23,660 is below the poverty line, and reflects only one salary threshold increase since 1975.  As long as employers could classify their workers as “managers,” they could avoid paying them overtime.  The new rule would have required employers to either raise the salaries of low-level managers to meet the $47,476 threshold, or reclassify them as hourly employees entitled to overtime pay.  It was intended to encourage employers to spread employment, and hire multiple workers to perform a job rather than forcing a single worker to work 70 hours a week.  Critics argue the rule would hurt small businesses and reduce jobs.

As many employers were making changes to come into compliance with the new rule by the approaching December 1 deadline, a federal judge in Texas ordered a preliminary injunction barring nationwide enforcement of the rule.  A number of private business groups and 21 states had challenged the rule as an overreach of executive power.  The district judge agreed, claiming Congress, not the Department of Labor, should be responsible for making changes to the minimum salary requirement.

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Today’s News & Commentary — February 22, 2017

The influx of refugees into upstate New York has helped revitalize previously-suffering communities.  As the New York Times reports, “[t]he impact has been both low-budget and high-tech”: refugees have provided local businesses with inexpensive, willing labor; foreign-born students have enrolled — paying tuition and fees — at upstate schools; and street-level entrepreneurs have opened new shops.  Somewhat ironically, the cities’ struggles made them popular locations to settle refugees.  Because people left, housing prices dropped, and refugees came in and were willing “to put in the sweat equity that a lot of people weren’t anymore.”  That, in turn, “put properties back on the tax rolls.”

The Wall Street Journal also weighs in on the benefits that refugees bring to the economy. In addition to providing a key source of labor, many refugees “bring a resilience and level of expertise that makes them well-suited for learning on the job.”  According to a study from the Migration Policy Institute, roughly 28% of the refugees over the age of 25 who settle in the U.S. arrive with at least a bachelor’s degree.  The Wall Street Journal notes that skills from abroad may not always translate, and some employers have found that refugees need help with translation services, resume writing, American-style management techniques, and tips for navigating their new lives.  Despite potential training challenges, however, refugees can provide companies with  “a strong competitive advantage,” enabling them to better understand, for example, the needs of clients in key markets across Asia, Africa, and the Middle East.

Chief Judge Patricia Elaine Campbell-Smith of the U.S. Court of Federal Claims recently held that the government had violated the FLSA by failing to examine whether it was required to pay employees who continued to work during the partial government shutdown in 2013.  That those workers were later paid for their time was irrelevant. The Washington Post explains that the decision entitles workers to minimum wage pay for the hours they worked between October 1 and October 5, 2013.  Judge Campbell-Smith ordered the government and the plaintiffs to calculate amounts due and report back by April 7.

The New York Times editorial board posits that blaming robots for job loss, “while not as dangerous as protectionism and xenophobia, is also a distraction from real problems and real solutions.”  The Times points out that if automation were rapidly accelerating, labor productivity and capital investment would be increasing as well.  But the data shows the opposite: in the 2000s, labor productivity and capital investment decelerated.  The problem lies instead with “politicians, who have failed for decades to support policies that let workers share the wealth from technology-led growth.”

Today’s News & Commentary — November 7, 2016

The week-long strike by transit workers in Philadelphia, which shut down the city’s transit system and could have reduced voter turnout, has ended.  According to The Philadelphia Inquirer, the four-year contract between Transportation Workers Union Local 234 and the Southeastern Pennsylvania Transportation Authority covering 4,738 workers must still be formally approved, but SEPTA will resume some operations today and full operations tomorrow, Election Day.  Details of the agreement have yet to be released.  SEPTA had considered pursuing an injunction to enjoin the strike on Election Day, and eventually unsuccessfully sought a court order to enjoin the strike completely.

A federal court has ruled that the EEOC correctly interprets Title VII of the Civil Rights Act of 1964 to prohibit LGBT workplace discrimination, in one of the first cases brought by the agency under its interpretation of the law.  Buzzfeed notes that Judge Cathy Bissoon of the Western District of Pennsylvania found in denying a Motion to Dismiss in EEOC v. Scott Medical Health Center, P.C. that “there is no more obvious form of sex stereotyping than making a determination that a person should conform to heterosexuality.”  She further wrote that “forcing an employee to fit into a gendered expectation — whether that expectation involves physical traits, clothing, mannerisms or sexual attraction — constitutes sex stereotyping and, under Price Waterhouse, violates Title VII.”  The case will now move forward.

Chicago may be the “Second City,” but its federal court fielded the fifth-most wage-and-hour lawsuit filings in America last year.  Per Crain’s Chicago Business, in the Northern District of Illinois “542 lawsuits were filed in 2015 alleging an employer violated the Fair Labor Standards Act.”  The number of filings was exceeded only by courts in New York, Miami, Orlando and Tampa.  Furthermore, “wage and hour lawsuits rose 117 percent in Chicago between 2011 and 2015, mirroring a national uptick.”

In other news, NPR reports on how poverty-level wages for US child care workers may explain high industry worker turnover, while The New York Post features a program which assists autistic workers with job placements.