Those Job Crushing Regulations

Andrew Strom

Andrew Strom is an Associate General Counsel of Service Employees International Union, Local 32BJ in New York, NY.

Donald Trump and the Republicans in Congress love to refer to regulations as “job crushing.”  When Trump spoke recently at the Conservative Political Action Conference he not only said that companies can’t hire because of regulations, but he also said that “we’re going to put the regulation industry out of work and out of business.”  Trump has already taken steps to make it much harder for government agencies to do their jobs.  When he came into office, he imposed a hiring freeze, and he issued an executive order decreeing that the cost of all new regulations issued by each department or agency for fiscal year 2017 can’t be greater than zero regardless of the benefits to be gained from the regulations.  Now, Trump has proposed a budget that would dramatically slash the budgets of most federal agencies.  Government “regulators” do a great deal of important work to help sand some of the harshest edges off of our capitalist economy.  I’ll leave it to others to talk about the importance of environmental and food safety regulations, but workers desperately need a vigilant Occupational Safety and Health Administration (OSHA) to protect them from injuries and chemical exposure on the job.  To take just one example, in the last days of the Obama Administration, OSHA issued citations to a manufacturing company after two workers suffered severe hand injuries within ten days due to the company’s failure to install proper safety guards on its machines. While the consequences of inadequate wage and hour regulation are less dramatic, a recent Tenth Circuit case illustrates why there is such a pressing need for the government to monitor workplaces.

Perez v. El Tequila, LLC, involved a series of all-too-common wage and hour violations by a restaurant with four locations in Tulsa, Oklahoma.  When a worker filed a complaint with the federal Department of Labor, an investigator went to the restaurant, interviewed workers, and examined payroll documents.  The investigator found some recordkeeping violations, but payroll records showed that workers were paid the minimum wage, they worked only about 40 hours per week, and they received overtime when required.  The interviews with the owner, Carlos Aguirre, and some employees confirmed these facts.  But, after the investigator closed the first case, more workers complained.  This time an investigator went to the restaurant unannounced, and discovered that during the first investigation, Aguirre had provided false summaries of each employee’s hours and had withheld time sheets that showed actual clock-in and clock-out times.  The second investigator also learned that the owner had instructed the workers to lie during their interviews with the first investigator.  In fact, workers had been working 60 to 70 hours per week and had not received time-and-a-half when they worked more than 40 hours per week.  When confronted, Aguirre admitted that the time sheets he provided originally were not accurate, and he further admitted that he told his workers what to say to the investigator.

The Department of Labor ultimately determined that the wage and hour violations were occurring at all four restaurants.  Unfortunately, the restaurant refused to pay the workers the money they were owed, and in fact, continued to pay workers for fewer hours than they actually worked.  To vindicate the workers’ rights, the Department of Labor had to go to trial, and then withstand the employer’s appeal.  As a result, even though the first worker complained about the restaurant’s practices in December 2010, it took until last month for the court of appeals to issue its ruling, finding that El Tequila owes its workers over $2.1 million.

We need government regulations and dedicated staff at government agencies for the same reasons that we need criminal laws and dedicated police officers – because if no one is looking some people will do bad things at the expense of others.  And when employers cheat their workers, the workers aren’t the only victims.  Another set of victims are the employers who play by the rules.  By underpaying his workers, Aguirre would have been able to charge lower prices, taking customers away from businesses that followed the law.  We don’t know how many honest restaurateurs in Tulsa had to close their doors due to this unfair competition.  The El Tequila case is also a reminder of how much power bosses hold over their workers, particularly where the workers earn only subsistence wages, and thus, have little or no savings.  Why did the workers initially go along with Aguirre’s lie regarding their hours?  No doubt they were afraid they would be fired if they didn’t, and they all had bills to pay.  That’s why so many wage and hour violations go unreported.  If Trump and the Republicans in Congress start dismantling regulations and cutting staff at government agencies, the result will be a lot more instances where bosses like Carlos Aguirre pocket millions that rightfully belong to their low-wage workers.

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