Should corporations with a history of serious wage theft receive government contracts? The answer seems obvious: If the government is choosing between a law-abiding business and one whose bid is lower because they cheat workers, the law-abiding company should win.
But an investigation released last week by ProPublica and Documented identified 25 employers with serious wage theft records who have received city and state contracts in New York worth collectively $500 million since 2018.
Wage theft occurs when workers don’t get paid everything they’re owed: when workers are stiffed altogether, aren’t paid for all work time, get sub-legal wages, don’t get overtime, or have tips stolen.
Wage theft is rampant: A 2017 Economic Policy Institute study examined one form of wage theft — minimum wage violations — in the 10 most populous states, and found that 2.4 million workers are cheated out of $8 billion annually, losing $3,300 on average each year. ProPublica last year reported that 127,000 New Yorkers have lost $200 million-plus over a five-year period because of wage theft.
Scofflaw employers shouldn’t get government contracts. Companies with bad compliance histories often have performance problems, but more importantly, public dollars should create high quality jobs with good wages and conditions.
Labor compliance should be baked into the government contracting process. Laws should make it crystal clear that bidders will be disqualified from government contracting if they have a history of serious wage theft: repeat violators and those who have committed egregious, willful, or widespread violations.
New York law currently disqualifies bidders who have committed felonies related to bribery, government fraud, or corruption; wage theft should be added to that list.
Implementation is also critical. Although procurement is decentralized, occurring in many different agencies, clear protocols could help weed out bad-actor bidders.
Companies seeking government contracts should be required to disclose all prior investigations, lawsuits, or settlements involving alleged violations of worker protection laws. In addition, employer wage theft records should be published in publicly available databases that procurement officers (the government employees who make contracting decisions) should consult.
The U.S. Labor Department, as well as states like Massachusetts and Texas, disclose labor violations on their websites. Also, the non-profit Good Jobs First maintains a violations tracker database with wage violations and similar listings.
Procurement officers should be given clear direction and training on how to research wage theft violations. There should also be protocols on evaluating a company’s history: Were violations de minimis? Were they limited yet concerning, such that ongoing monitoring could help ensure future compliance? Or is this a corporation that simply should not be allowed to be a government contractor?
If the would-be contractor is the only available provider for an essential government service, monitoring would be called for; government should also diversify its contracting sources and consider whether to bring the work in-house, rather than privatizing it.
Workers, labor organizations and the public should have a clear avenue to raise concerns, as well as tools to research government contractors (New York State comptroller and New York City have webpages for this purpose). Indeed, procurement consequences can be a valuable tool in fighting wage theft generally.
Government contracts should lead to high quality jobs, through prevailing wage requirements, living wage laws, or other measures. The nonprofit Jobs to Move America has created the U.S. Employment Plan, a policy tool that helps government agencies incorporate job quality into the contracting process. It requires bidders to disclose details about the jobs they’ll create if they receive a government contract — and holds them to those promises.
Improving working conditions through government contracting is particularly important as federal infrastructure funds flow to states and localities. Ensuring labor compliance is, again, a minimal first step.
New York isn’t the only place where some government contractors have violated workers’ rights. Some jurisdictions have already taken steps to remedy the situation. ProPublica’s report points to Washington State, where a 2017 law disqualifies bidders with willful violations in the past three years. Even in red states, cities like Austin and Columbus created systems to block wage-thief employers from government contracts.
There are many intractable problems in the world today, but this is not one of them. The lowest responsible bidder must never be a company that cheats their workers — not in New York, and not anywhere.
Gerstein is the director of the NYU Wagner Labor Initiative.