Commentary, News

Attorney General moves to limit anti-worker “no poaching” agreements

Attorney General Josh Stein

North Carolina Attorney General Josh Stein took an important step forward in protecting both businesses and workers this week by announcing a new multi-state settlement that prohibits several major fast food companies from forcing their employees to sign “no-poaching” agreements — or contracts that prohibit employees of one franchise from moving to another.

Public attention has been drawn to employers’ increasing use of non-compete agreements to keep their low-wage workers from taking other similar jobs in the same industry. One of the more infamous cases involves Jimmy John’s, which forced its front line sandwich makers to sign binding agreements promising not to work for a competitor sandwich-making company under certain circumstances. Although employers typically use non-competes to keep skilled employees from taking proprietary knowledge to a competing business, these kinds of restrictions for low-wage workers—who clearly lack such skills or knowledge — is nothing more than an effort to suppress wages by limiting these workers’ options.

Unfortunately, some industries have upped the ante from non-competes and are increasingly using another stealth tactic to limit employees’ job mobility: no-poaching agreements.

These agreements take non-competes one step further and prohibit employees of one franchise location from taking a job with another franchise of the same company. In other words, a McDonald’s in downtown Raleigh could prohibit an employee from leaving to work at a different McDonald’s franchise in Southeast Raleigh. Even more troubling, workers may not even be aware when accepting a job that future job opportunities are restricted by these agreements, which are signed between employers.

Because the fast food industry has become a chronic abuser of no-poaching agreements,  on March 12, North Carolina joined 12 other states and the District of Columbia in reaching a settlement with Arby’s, Dunkin’ Donuts, Five Guys, and Little Caesars.  Those restaurants have agreed not to include no-poaching clauses in their franchise agreements, to remove them from existing agreements, and not to enforce such clauses.  Investigations are continuing into Burger King, Popeyes, and Panera.

This agreement follows a major effort by the Washington attorney general resulting in no-poaching clauses in franchise agreements nationwide with a wide range of companies, well beyond the fast food industry.  The most recent agreement included Einstein Bros. Bagel, Express Employment Professionals, FASTSIGNS, L&L Franchising, The Maids, Westside Pizza and Zeek’s Pizza, bringing the total number of companies affected to 57.

Employees interested in learning their rights with respect to non-compete agreements can find information here.

Carol Brooke is a senior attorney with the N.C. Justice Center’s Workers’ Rights Project. 

Commentary, News, public health, Trump Administration

Trump administration moves to curb health and safety rules for workers

President Donald Trump (Credit: Gage Skidmore/Wikimedia Commons)

The Trump Administration launched its latest attack on working people yesterday, repealing a 2016 rule requiring large employers to electronically report injuries and illnesses to the federal Occupational Safety and Health Administration (OSHA).

And this is just the latest assault. Previous efforts have included privatization of inspections in hog slaughtering plants, allowing 16- and 17-year-olds to operate patient lifting machines in nursing homes, limiting mine and oil rig inspections, and many others.

See the statement below from Deborah Berkowitz, program director for worker health and safety with the National Employment Law Project, a nonpartisan research and advocacy group that focuses on low-wage and unemployed workers:

“Today, despite the ongoing federal government shutdown, the Trump administration announced yet another rollback of workplace safety protections. The final rule, published today, allows dangerous employers to hide workplace injuries, seriously hindering the efforts of the Occupational Safety and Health Administration (OSHA)—as well as the efforts of state agencies, the public health community, workers, and employers—to identify and prevent workplace injuries.

“The administration’s new rule repeals provisions of an existing rule adopted in 2016—the ‘Improve Tracking of Workplace Injuries and Illnesses’ rule—which required large employers (those with 250 or more workers in an establishment) to electronically submit to OSHA important detailed information on injuries at their workplaces. The administration has arbitrarily reversed the conclusions of the 2016 final rule, which found enormous benefits to the rule—not just in targeting scarce agency enforcement resources, but in providing compliance assistance and overall injury prevention efforts.

“Without citing any supporting evidence or facts, the Trump administration has again sided with big corporate interests over working people. It ignores the abundance of evidence that workers and their representatives overwhelmingly supported the collection of this data. Once again, the Trump administration has ignored the voices of workers and their representatives, and listened exclusively to large corporations and their lobbyists who don’t want to report any of this information to the government and the public. It’s yet another shameful move by the Trump administration.”

Carol Brooke is a senior attorney for the N.C. Justice Center’s Workers’ Rights project. 

Courts & the Law, News

Underpaid au pair workers settle lawsuit for $65.5 million

Childcare workers who earn less than the minimum wage had a big win this month with the settlement of a lawsuit against 15 companies who recruited so-called au pairs from around the world.

The former employees, who traveled from their home countries on J-1 visas to work for U.S. families, were typically paid a salary that works out to $4.35 per hour, for 45 hours of work per week.

The lawsuit alleged that the au pairs’ sponsoring agencies colluded to create the impression that State Department salary guidelines for paying au pairs set a ceiling on compensation rather than a floor.  If it is approved by the court, 100,000 former au pairs will benefit from the settlement, which will pay out $65.5 million in back wages.

The J-1 program, and particularly the au pair part of the program, is marketed as a cultural exchange.  Critics describe it as a work visa with little oversight and serious abuses.  Former employees recount stories of financial struggle and lack of support from sponsoring agencies.

Persons who worked as au pairs on J-1 visas between January 1, 2009 and October 28, 2018 may benefit from the settlement if it is approved.  Information can be found here.  Current au pairs may be able to use this model agreement to help negotiate understandings with their employers, and can find more information about their legal rights here.

Carol Brooke is a senior attorney with the N.C. Justice Center’s Workers’ Rights project. 

Commentary

A rare bit of good news for North Carolina workers

North Carolina’s state government took an important first step this week toward recognizing and addressing the problem of misclassification, which occurs when employers wrongly classify employees as independent contractors. On August 11, Governor Cooper signed The Employee Fair Classification Act (SB 407). The Act codifies the Employee Classification Section in the NC Industrial Commission, established by Governor McCrory via Executive Order in 2015. The section was originally created in response to series of articles in the News and Observer that highlighted the costs of worker misclassification on employee wages and benefits as well as the harm to state coffers and to competing businesses that classify their workers appropriately.

While the new law is a good first step, many more are needed to address the problem, since the work of the Employee Classification Section remains hamstrung. Three obvious ones top the list:

  • North Carolina does not currently recognize worker misclassification as per se illegal, and there are no penalties to deter employers from wrongly classifying employees as independent contractors. This needs to change
  • In other states, agencies or task forces established to combat misclassification have the power to issue stop work orders to employers violating misclassification law. North Carolina should adopt such a rule.
  • Additionally, there is no current legal framework in North Carolina to prohibit state or local governments from contracting with businesses that misclassify their workers.Again, we should move in this direction.

The bottom line: The new law is a good start, but only one small step. North Carolina needs more comprehensive protections for workers and businesses to deter and stop employee misclassification and state leaders should redouble their efforts in this area.

Commentary, News

Report: NC employers stealing $316 million per year from employees; Labor Commissioner faulted

A bedrock principle of private property is that stealing is wrong. Yet the problem of employers refusing to pay their workers the wages they’ve earned—or wage theft—is pervasive and growing in North Carolina. That’s the message of Employers steal billions from workers’ paychecks each year, a report recently released by The Economic Policy Institute.

This report looks specifically at employers’ failure to pay the minimum wage to their employees at in the 10 most populous states, including North Carolina, and reveals the magnitude of the impact of wage theft on the low income workers who are least able to withstand it. While other types of wage theft are also harmful – non-payment of overtime wages and illegal deductions, for example – minimum wage violations are a direct hit to low income workers who rely on their wages to meet basic needs.

Workers in the food and drink industry suffer the highest rates of minimum wage violations, followed by agricultural workers (some of whom are not covered by minimum wage laws), leisure and hospitality, and retail workers. Unsurprisingly, women, young people, people of color, non-citizens, workers with lower levels of education, unmarried, workers, and workers without the protection of a union contract are disproportionately affected, though that is primarily because they are also more likely to be low wage workers.

Labor Commissioner Cherie Berry’s lax enforcement is cited in the report

EPI found that 12.3% of low wage workers in North Carolina who are covered by minimum wage laws are not receiving minimum wage—and they’re losing almost a third of the wages they are due. This is the third highest average loss among the states studied, just behind Texas and Pennsylvania.

The researchers attribute this in part to a lack of political will to enforce the law:

“The severity of minimum wage violations in North Carolina may come as less of a surprise given that the state’s elected labor commissioner during the period studied showed little interest in enforcing wage laws. An investigation by The Charlotte Observer noted that during the commissioner’s 15-year tenure, her office “sued companies for failing to pay wages only 35 times, an average of less than 2.5 times a year” (Locke 2015) [See The Reluctant Regulator].…

It is noteworthy that in all three of these states—Texas, Pennsylvania, and North Carolina—the binding minimum wage is the federal minimum wage of $7.25. The particularly large lost wages for wage theft victims in these states, despite the relatively low value of the minimum wage, raises questions about these states’ legal framework, penalty structure, and enforcement practices for combating wage theft. To the extent that these states are deferring enforcement to federal authorities, they may be placing their state’s most vulnerable workers at risk of particularly harmful labor practices.”

EPI advocates for greater enforcement, higher penalties, and better legal protections against wage theft and retaliation to combat this pervasive problem.