The wage and hour bureau at the North Carolina Labor Department in Raleigh has long followed simple process when workers complain that their employers failed to pay them for hours worked.
Investigators make a phone call to get the employer’s side of the story, and if necessary send a follow-up letter. When the employer fails to respond or goes out of business, the investigator typically closes the case and informs the stiffed worker that they can pursue a civil claim through the courts.
The News & Observer confirmed this pattern in an investigation published on Sunday. The newspaper reported that the Labor Department, under the leadership of Commissioner Cherie Berry, “has rarely pushed uncooperative companies to settle debts to their employees.” The newspaper reviewed reports from almost 50 cases in fiscal year 2014 that, they said, “resulted in little or no money for workers.”
“If a company owner pleaded poverty or refused to pay, state investigators nearly always gave up,” the newspaper reported. “If the employer simply ignored them, the department closed the case.”
Mental health agencies, home healthcare companies and group homes, whose employees are some of the lowest paid in the state, accounted for more unresolved wage payment cases than any other single industry in the state last year, according to the News & Observer investigation.
Employees who turn to the Labor Department for help collecting back wages rarely have enough money to hire a lawyer in the first place. Imagine their frustration when they wait weeks, even months, for the Labor Department to carry out a fruitless investigation, only to be told that they’re welcome to take their former employers to court.
Workers who have been left to fend for themselves by the wage and hour bureau have often lost their apartments and had to turn to family members for support, while the state agency doesn’t bother to investigate whether deadbeat employers have other assets. For example, the News & Observer reported that Reaching Your Goals, a Raleigh-based company that cares for children with mental impairments, owed workers $11,800. Through local tax records the newspaper established that the couple that operated Reaching Your Goals owned a $910,000 house in Raleigh. But state investigators never bothered to knock on the door to try to track down the owners, much less take legal action to liquidate the asset to pay the workers. Another employer sought by investigators was vacationing in the Bahamas while his former employees were scrambling to pick up the pieces of their lives.
It doesn’t have to be this way.
State law gives the Labor Department the authority to take deadbeat employers to court to collect payments, but the agency rarely, if ever, does that. “The department’s marching orders for wage and hour investigators are clearly spelled out in a manual,” the News & Observer reported. “Don’t bother looking for assets belonging to companies that have shut down.”
Whatever the Labor Department’s excuse for not pursuing deadbeats, the mechanism for collecting debts is hardly quantum physics and is frequently used by other state agencies. For example, the couple that owned Reaching Your Goals not only failed to pay its workers, but also failed to pay the state more than $500,000 in unemployment and payroll taxes. The state Department of Revenue and Division of Employment placed liens against them, and the state will get its money when they foreclose on the couple’s $910,000 house. Unfortunately, the workers won’t get their cut.
In Kentucky, a state hardly known as a paragon of progressive government, when an employer refuses to pay up, labor officials file a lien against the company’s assets, according to the News & Observer. The state of Tennessee fined companies almost $70,000 for breaking wage laws last year. And the state of Arkansas assigned lawyers to pursue claims against employers who flout wage and hour laws in 77 different cases.
The outrageous irony is that in many cases deadbeat employers in the mental health, home healthcare and group home fields are enriching themselves through Medicaid payments, making their livelihoods on the taxpayer dime while they rip off workers. To compound the injury, the Labor Department also operates through taxpayer funds, paid in part by the very workers that they fail to protect.
The uselessness of the wage and hour bureau in collecting unpaid wages unfortunately reinforces a common refrain among the Republicans who run state government that goes back to the presidency of their hero, Ronald Reagan: Government is the problem, not the solution.
When Berry won her post as state labor commissioner in 2000, she was the only Republican elected to the council of state. She had a full decade under her belt before her party took control of the legislature in 2010 and then the governor’s mansion in 2012.
Berry’s run for office was motivated by aggravation over a Labor Department safety inspection at her spark plug factory in Catawba County, according to the News & Observer. “She describes regulations as often unnecessary and nearly always cumbersome. She has styled her department to work in concert with employers, even when they run afoul of laws she is obliged to enforce.”
It’s fair to ask whether the agency’s seemingly willful failure to collect unpaid wages is by design. You can’t be accused of incompetency if you don’t even try.