November 11, 2011: The War on Wage Theft

There’s a war on wage theft. The Wage and Hour Division currently has more than 1,000 investigators, an increase of 40% since 2008. According to Nancy Leppink, Deputy Wage and Hour Administrator, WHD will never have enough resources to address every complaint it receives or to investigate every employer who may not be complying with the law. Because of this, WHD is focusing its resources on industries with a prevalence of low wage and vulnerable workers, and targeting industries that have significant levels of non-compliance. Ms. Leppink believes that using directed enforcement initiatives, instead of relying heavily on the individual complaints the agency receives, is a more efficient use of resources that has a greater impact on compliance – both in the targeted industries and overall.

But is the enforcement path WHD has chosen optimal? Some think that this path restricts flexible employment opportunities, fails to provide for the most positive outcome for employers and employees, and focuses primarily on punishing employers. Others think that WHD’s shift in regulatory and enforcement tactics have made complying with the Fair Labor Standards Act increasingly difficult for employers. They argue that by focusing resources on extensive and often unnecessary enforcement actions, WHD is failing to help good faith employers comply with the law.

In this installment of The Proactive Employer Podcast, we talk about the war on wage theft and WHD. We recap the recent changes to the Agency’s enforcement strategy and talk about the increasing focus on employee misclassification and targeting of specific industries. We also discuss what good – and harm – the new enforcement strategy may be creating.