Flagrant Fouls or Honest Mistakes?

Flagrant Fouls or Honest Mistakes?
A new study finds a majority of low-wage workers are often paid less than the law requires. Whether the organizations are intentionally cheating workers or simply unaware of complex laws, the result is that HR leaders are failing the employees -- and employers -- in a very basic way, experts say. By Scott Westcott
Low-wage workers frequently don't receive proper overtime pay, are often paid less than minimum wage and are victims of frequent workplace-law violations, according to a new study, Broken Laws, Unprotected Workers.
The study should be a wake-up call for HR leaders, experts say. But dealing with the issue presents a wide range of challenges both to HR as a profession and for practitioners at individual companies and organizations.
The study, the most comprehensive examination of wage-law violations in a decade, was based on surveys of hourly workers in New York, Los Angeles and Chicago. It found that nearly seven in 10 (68 percent) workers interviewed had experienced at least one pay-related violation in the previous workweek.
The study also found low-wage employees rarely filed for workers' compensation.
Only 8 percent of workers who suffered serious injuries on the job filed for compensation to pay for medical care and missed days at work stemming from those injuries, according to the survey. Researchers suggested the low rate could be the result of employers pressuring workers not to file claims.
Ruth Milkman, one of the study's authors and a sociology professor at the University of California in Los Angeles and the City University of New York, says the violations spanned businesses of all sizes, but that smaller firms were most often the culprits.
Many of the firms employing the low-wage workers likely don't have HR managers, Milkman says. "And even for those that do, those managers may not be in a position to directly monitor, say, breaks.
"But they could certainly do a better job of reminding first-line supervisors what the laws are and that they must be honored," she says.
Researchers surveyed 4,387 workers in various low-wage industries, including apparel manufacturing, child care and discount retailing. The typical worker had lost $51 the previous week through wage violations, from average weekly earnings of $339.
Milkman says immigrants made up about 70 percent of the sample, with slightly more than half of them being illegal immigrants. She added, however, that "plenty of U.S.-born workers experienced violations too."
"On the policy front, we argue that it's crucial to move toward immigration reform and, meanwhile, there should be a strong firewall between workplace-law enforcement and immigration-law enforcement."
The report drew a response from Labor Secretary Hilda L. Solis, who e-mailed the New York Times saying, "There is no excuse for the disregard of federal labor standards -- especially those designed to protect the neediest among us."
Solis writes she is in the process of hiring 250 more wage-and-hour investigators. "Today's report clearly shows we still have a major task before us," she writes.
(Read Peter Cappelli's column on his thoughts about this survey.)
Kelly Scott, head of employment law at Ervin Cohen & Jessup in Beverly Hills, Calif., was not surprised by the findings, acknowledging that some employers break the law in the quest to boost the bottom line.
Yet, he says, laws governing wages and workplace issues have become so complex and variable from state to state, that even well-intentioned employers likely commit violations.
For instance, he says, many employers may be unaware that the time it takes for a computer to boot up to allow for an employee to clock in for the day is likely compensable. Same goes for the time it takes to get through a security clearance.
"There's a lot of nuance and things can get complicated," Scott says. "I think it's safe to say I could go into any employer, even those that have seasoned HR departments with experienced labor counsel, and I could do an audit and find something wrong."
HR leaders should focus on raising awareness among front-line managers and educating all employees about workplace laws, he says. Reviews and spot checks should also be done on a regular basis.
"Complacency and routine are the enemy and have no place in the workplace," Scott says. "You have to challenge what you are doing on at least an annual basis to see how the workplace is functioning. It's important to review forms, procedures and policies."
Reviewing and questioning procedures is particularly important for HR leaders coming into new organizations to make sure policies are not outdated or downright illegal, Scott says.
Johnny C. Taylor, author of The Trouble with HR: An Insider's Guide to Finding and Keeping the Best People, agrees that "wage-and-hour laws are often very confusing for employers." Still, he believes HR as a profession has an obligation to take a proactive stance on the issue.
"The HR profession should be very troubled by these findings because it suggests we are failing our employees and our employers in a very basic way -- paying people as promised for the time they work and providing them appropriate medical coverage and care when injured on the job," says Taylor, who also served as chairman of the Society for Human Resource Management.
"When people are not paid properly or not allowed to participate in the workers' comp system, the employer exposes itself to major financial damages and reputational harm, he says.
Taylor also advocates for regular audits and compliance training for managers. When violations are uncovered, HR leaders need to inform senior management of the problems, he says.
"HR leaders must have a candid discussion with their senior-management team about why it's happening and what remedial efforts need to be taken to correct it," says Taylor. "HR leaders in organizations must muster up the courage to help their organizations understand they are not only engaged in illegal activity, but that the behavior is also antithetical to good employee relations practices."
Milkman of UCLA agrees that company leaders need to be in the loop as soon as violations are uncovered.
"Top management are ultimately liable, both in terms of financial penalties and the firm's reputation," she says.
September 22, 2009
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