All Maine workers are entitled to the wages they earn and protection from other labor law violations. However, recent data and economic research show how woefully inadequate Maine’s methods are for effectively protecting wage and hour laws. Two bills this session, LD 2184 and LD 372, would equip the state with some of the tools necessary to protect workers.
Maine Department of Labor’s Bureau of Labor Standards (BLS) has made improvements in recent years, including by making data on their enforcement actions public. However, that data tells us many violators are let off with minimal penalties, if any at all. MECEP’s analysis of publicly available BLS data finds from 2021 to 2023, employers the Bureau of Labor Standards found to have violated wage and hour laws paid an average penalty of $9.61 per violation and just 10.7 percent of assessed fines were paid. Perhaps more troubling, BLS was able to recover far less than was due to workers who were found to have been victims of wage theft. In 2023, BLS only recovered 80 percent of back wages in enforcement actions that discovered wage theft. In 2021, BLS only recovered 68 percent of back wages. (Publicly available data for back wages recovered in 2022 appears incomplete.)
A few interrelated dynamics are likely contributing to these results: fines appear too low to be an effective deterrent; enforcement officials have often negotiated penalties down in the interest of reaching settlements with offending employers; and the state’s capacity for recovering stolen wages is severely limited.
Labor law violations are widespread
As striking as these results may be, they reflect just the tip of the iceberg. A 2017 survey of recent economic research found somewhere between 2.3 and 4.3 percent of all workers are victims of minimum wage violations. Among workers with low wages — defined as the lowest quintile of wage earners — between 11.1 and 19.5 percent are not paid the minimum wage. MECEP analysis estimated minimum wage violations in Maine amounted to $30 million in 2017.
Of course, minimum wage violations are just one form of wage theft, which is itself just one type of labor law violation. A landmark 2008 survey of more than 4,300 low-wage workers in three US cities found in the week prior to being surveyed:
- 19 percent of workers had un- or under-paid overtime
- 17 percent were not paid for off-the-clock work
- 57 percent did not receive a pay stub, among other violations
The study found women and foreign-born workers were more likely to experience minimum wage violations, and among US-born workers, African American workers reported three times as many violations as did white workers.
Labor law enforcement protects workers and incentivizes employers
The goal of labor law enforcement is not to punish employers; rather, it is to incentivize them to proactively follow laws protecting their employees’ rights. And research has shown that stronger employment laws, including higher penalties, are associated with lower rates of violations.
Knowing what we do — about the projected scale of violations, particularly in low-wage industries, the relatively few employers in Maine who are investigated and found to have violated wage and hour law, the minimal effective penalties for having done so, and the limited success in recovering stolen wages — our state is clearly failing to effectively deter bad behavior.
A pair of bills being considered this session are aimed at righting this wrong.
LD 2184 would:
- Make changes to the rules around monetary penalties for labor law violations.
- Standardize penalty amounts and the ways they can be diminished, such as by accounting for an employer’s size, track record, the gravity of violations, and whether they engage in good faith with the enforcement bureau.
- Overhaul the Bureau’s reactive approach of responding to complaints, which, due in part to fears of retaliation, workers often refrain from filing. Instead, the Bureau would take a new, proactive approach by focusing on sectors where greater violations are likely to occur. For example, the US Department of Labor’s Wage and Hour Division publishes data on enforcement actions against wage theft in low-wage, high-violation industries. That data shows more compliance actions in food services than in any other industry in each of the past 10 years, with health care, construction, retail, and agriculture among other industries most often cited.
LD 372 would:
- Allow the Director of BLS to order employers to pay back wages, damages, and interest instead of requiring a lawsuit to be filed as is currently the case and authorize DOL to supervise these payments. This change would improve and streamline the process of making workers whole and presents a more efficient use of public resources.
Encouragingly, Governor Mills included resources in her supplemental budget proposal to establish a Wage Recovery Fund. While details of the proposal are as of this writing scarce, some models of such a policy compensate workers while the state pursues unpaid wages, penalties, and interest from offending employers.
Recent research and administrative data show many of Maine’s low-wage workers are vulnerable to labor law violations due to the state’s inadequate enforcement tools. Fortunately, lawmakers have the opportunity to support current proposals that do right by people who work hard to support their communities and power our economy.
