Abstract
Regulatory efforts to curb wage theft are failing. And for good reason: these laws generally empower individual workers to pursue their rights when employers neglect to pay them what they are owed and deter employers with substantial penalties. But the vast majority of workers do not take formal action against their employers. So, when the penalties for committing wage theft are almost entirely triggered by claims workers do not bring, they do not deter employer behavior. Instead, because the likelihood of being penalized at all is so low, some employers make profit-maximizing decisions to commit wage theft on a large scale. In addition to being against the law, these practices impose substantial costs on taxpayers and distort the competitive labor market, as law-abiding employers struggle to compete with others who cut costs by underpaying workers.
This Article explores government contracting initiatives at the state and local level as a supplemental tool for deterring wage theft. In addition to deterring unlawful behavior, conditioning government contracts and other public business relationships on recipients’ past and continued compliance with existent wage payment laws ensure that public funds are not used to subsidize wage theft’s public harm. Furthermore, publicly labeling wage-theft offenders as ill-fit government partners or providers of public goods and services challenges industry practices that have normalized this one particular kind of property “theft.”
While contract-based initiatives are an increasingly popular government tool for promoting certain workplace activities, these initiatives are specifically well suited for promoting wage-payment obligations and addressing the economic and logistical shortcomings of existing anti-wage-theft laws. Rather than relying on individual worker complaints to spur the enforcement process, contract-based initiatives make self-enforcement and rigorous disclosure obligations the price tag for lucrative public works and publicly subsidized opportunities. And because the potential penalty (or cost) of committing wage theft is contract ineligibility, contract-based initiatives turn employers’ cost-benefit analyses inside out. Instead of using low enforcement rates and predictable penalties to determine whether wage theft is likely the most profitable course of action, conscious employers must make these decisions with an added cost variable—the potential loss of public business opportunities. As the movement towards privatization marches on into new services and industries, more employers than ever should assess these costs as too high to risk having to pay.
Recommended Citation
Courtlyn G. Roser-Jones, Using State and Local Governments’ Purchasing Power to Combat Wage Theft, 80 Wash. & Lee L. Rev. 1937 (2024).Available at: https://scholarlycommons.law.wlu.edu/wlulr/vol80/iss5/5
Included in
Contracts Commons, Labor and Employment Law Commons, State and Local Government Law Commons