Industry Opponents Have Kept Bill Bottled Up In Past Sessions
Colin A. Young
3/28/22
Organized labor groups are optimistic that the unanimous support in a committee for legislation to ratchet up enforcement against wage theft could signal that the issue, addressed twice by the Senate in recent years but not by the House, could get the attention of lawmakers before this session ends.
All 17 members of the Joint Committee on Labor and Workforce Development, chaired by Rep. Josh Cutler and Sen. Patricia Jehlen, voted unanimously Friday to give a favorable report to the committee's redrafted version of wage theft bills (H 1959 / S 1179) initially filed by Rep. Dan Donahue and Sen. Sal DiDomenico.
The redrafted version of legislation to provide the attorney general's office with the ability to file directly in court to pursue wage and hour violations on behalf of workers -- and to collect damages and attorney's fees when those workers prevail in court -- was sent to the House for additional consideration.
Kevin Brousseau, political director for the Massachusetts AFL-CIO and co-chair of its Wage Theft Coalition, said the bill's "heart and soul" is its lead contractor liability provisions, under which a lead contractor could be subject to joint and several civil liability for wage theft violations among its subcontractors. The shift towards greater subcontracting has exacerbated wage theft issues in the construction industry, bill supporters said.
Massachusetts workers miss out on nearly $1 billion in pay a year and the state loses out on about $100 million in annual revenue because of wage theft practices, according to the Wage Theft Coalition. A 2021 study from the UMass Amherst Labor Center estimated that at least one in six construction industry employers in the Bay State misclassified workers as independent contractors between 2017 and 2019 and that between 22,146 and 36,719 workers -- roughly 10 to 15 percent of that industry's total workforce here -- were affected by wage and tax fraud in 2019.
Stephen Joyce, contractor relations director for the North Atlantic States Regional Council of Carpenters, said "all in all, the bill that came out would tremendously help workers in my industry, in construction, and across the board." Joyce said the union is "supportive of moving legislation forward to stop what we see as an epidemic of wage theft across the commonwealth and, quite frankly, across the country."
Similar legislation has passed the Senate at least twice before but has not been embraced by the House in recent sessions. Before it was redrafted by the Labor and Workforce Development Committee, the legislation had 117 House co-sponsors and 30 Senate co-sponsors, DiDomenico said during a hearing on the bills last summer.
Joyce and Brousseau both said they were hopeful, given the unanimous vote of the Labor and Workforce Development Committee, that this session will be the one that ends with a bill signing ceremony.
Current state wage laws and enforcement mechanisms are insufficient to tackle the full scope of the problem, supporters of tighter restrictions say. In fiscal year 2021, the Fair Labor Division of the attorney general's office ordered just $5 million in restitution impacting fewer than 11,000 workers across Massachusetts and mandated that violators pay $3.1 million in penalties.
"It is very clear that current state laws, regulatory structures and the level of public resources allocated to monitoring and enforcement has been unable to curb illegal misclassification of workers, cash payments, wage theft and tax fraud and a variety of illegal and unethical activities in residential construction. The egregious conditions we have documented on jobsites across the Commonwealth and the hyper-exploitation of undocumented workers have no place in Massachusetts," UMass Amherst professor Tom Juravich wrote in a 2021 report compiled with the Institute for Construction Economic Research. "The Commonwealth has a responsibility to ensure that its laws are followed in the construction industry and that workers are not routinely asked to perform unsafe work, cheated out of their wages, or forgo access to the economic benefits enjoyed by workers classified as employees."
Juravich's report estimated that misclassification in the Massachusetts construction industry led to as much as $40.6 million less for the state's unemployment insurance fund in 2019 and that contractors evaded as much as $78.3 million in workers' compensation insurance premiums in the same year. In terms of state income tax revenue, the failure of some companies to withhold state payroll taxes meant as much as $41.3 million in forgone personal income taxes in 2019, the report found.
Though supporters cheered the inclusion of lead contractor liability in the committee's latest edition of the wage theft bills, the concept has been something of a hurdle to legislative action in past sessions. Associated Industries of Massachusetts told the Labor and Workforce Development Committee last session that its members could not support vicarious liability -- through which lead contractors can be liable for subcontractors' violations -- as part of the solution to wage theft.
While the latest redraft does include lead contractor liability provisions, the committee appears to have narrowed them from what was originally filed by Donahue and DiDomenico. Under the latest draft, a lead contractor would be liable for violations among subcontractors as long as written notice of the violation is provided within 45 days of the most recent occurrence of alleged wage theft. Another section would limit a lead contractor's liability "to 120 consecutive days of any alleged wage theft."
Other groups, including the Massachusetts Restaurant Association, Massachusetts Chapter of Associated Builders and Contractors, and Associated General Contractors of Massachusetts were recorded in opposition to wage theft bills last session, according to lobbyist disclosures filed with the secretary of state's office.