August 31, 2023
With labor in the national spotlight, state AGs are increasingly standing up for workers’ rights
Director of the State and Local Enforcement Project, Harvard Center for Labor and a Just Economy; Senior Fellow, Economic Policy Institute
Labor Day 2023 provides a good opportunity to take stock of the important and growing role that state attorneys general (state AGs) are playing in relation to workers’ rights. Even since last year, state AGs have greatly increased their activities in this area, and protecting workers’ rights is becoming understood as part of state AGs’ core mission. The expanding footprint of state AGs in this area offers considerable promise to increase employer compliance with key workplace protections.
Trends and observations
The trend in recent years has been increased involvement by progressive state AGs in worker protection matters. Nine offices have dedicated labor units (California, D.C., Illinois, Massachusetts, Michigan, Minnesota, New Jersey, New York, Pennsylvania), and several additional states (Arizona, Colorado, Delaware, Maine) have hired dedicated staff to focus specifically on workers’ issues. New Jersey’s AG recently issued a Request for Qualifications for a special counsel in this area; the office intends to hire a law firm or firms as outside counsel to bring labor enforcement cases. And some offices without dedicated labor staff have nonetheless played an important role in this space, including Rhode Island’s AG, who was the driving force behind a new law increasing wage theft penalties. AG offices have also collectively weighed in on major national labor issues, from Supreme Court cases to federal regulations. And alumnae of state AG labor units are now the Labor Secretary of Pennsylvania and Director of the Illinois Department of Labor.
This trend is positive for workers, their families, and state economies. But there is still great untapped potential for more state AGs to get involved in protecting workers’ rights. Although there are challenges for state AGs to take on this work—resources, limited jurisdiction, maintaining relations with the state labor agency that is also a client—state AGs focused on workers’ rights have found ways to have a meaningful impact in this space. While it is inappropriate to expect the core government function of enforcing worker protection laws to be self-funding or “pay for itself,” it is also worth noting that enforcers in such cases can sometimes recover considerable penalties for the state.
The following is a sampling of pro-worker action by state AGs in the past year:
Fighting wage theft
State AGs have fought wage theft in a range of industries, including construction, grocery stores, house cleaning, health care, security, and more. The D.C. AG sued a restaurant and its executives, alleging years of wage theft, including allegations that servers were paid as low as $5 per hour. It also recovered over $460,000 in a settlement with a health insurance provider that allegedly violated the district’s law regarding payment of final paychecks, nearly $1 million in settlements with companies to resolve alleged wage-and-hour law violations, and even secured up to $500,000 in alleged unpaid overtime for Georgetown University employees. The Massachusetts AG’s office cited a New York-based cleaning company that allegedly targeted workers with language barriers for violating wage, sick time, and other laws. The office also obtained an $800K settlement with three C-Mart grocery stores, and brought a lawsuit against a contractor, alleging that it underpaid workers on a public construction job.
Some cases focused on industries with high rates of violations, such as home health care. The D.C. AG’s office obtained a $1.5 million settlement from an assisted living company that allegedly failed to pay workers for all hours worked at the pandemic’s onset, and the Illinois AG’s Office along with the state labor department recovered $950,000 in alleged back wages and interest for employees of a medical staffing company.
The Minnesota AG’s office filed a lawsuit against St. Paul’s largest landowner for allegedly using a common scheme to avoid paying overtime: according to the lawsuit, the employer had security guards work at different locations that were separately incorporated but part of the same business enterprise. Instead of combining all hours worked for overtime calculations, the employer allegedly treated the positions as two separate jobs and paid straight time for all hours worked. The case is ongoing.
State AGs fighting wage theft often find multiple violations: employers who violate wage laws frequently fail to comply with other statutes as well. The Massachusetts AG brought several cases in which there were both alleged wage and paid sick leave violations, involving an insulation company, three motels, and a bakery and staffing company (treated by the state AG office as joint employers). The New York AG office pursued a home health agency that paid a $3 million settlement related to claims of wage theft and Medicaid fraud.
In several cases, offices used an under-utilized tool–the False Claims Act–to address prevailing wage violations. The New York AG’s office and the New York City Comptroller recovered $3 million in a False Claims Act case referred by the Service Employees International Union (SEIU) Local 32BJ. The case alleged that luxury buildings received a tax abatement but failed to meet the requirement to either provide affordable housing or pay prevailing wages to building service workers. In addition to $723,324 for worker restitution and interest, the settlement includes almost $2 million in penalties for New York City and State.
Protecting worker tips, as well as consumers’ intent in leaving them
Customers leave tips for the workers who serve them, not for the workers’ employers. When companies keep a portion of workers’ tips, or fail to ensure that workers receive all gratuities left for them, they cheat workers and also defraud consumers.
The D.C. AG’s office has brought several cases to recover tips intended for workers: the office sued Amazon over this; entered into a settlement of $2.54 million with platform delivery company Instacart; and settled with the platform alcohol delivery company Drizly for over $6 million—in relation to allegations that tips did not go to workers and certain required marketplace taxes were unpaid.
Fighting misclassification of workers as independent contractors
Worker protection laws generally cover employees and not independent contractors. Employer misclassification of workers as independent contractors is a widespread problem that deprives workers of rights, starves public coffers of taxes, and burdens honest employers who must compete with low-road businesses that evade their legal obligations as employers. Several state AG offices have taken action to address worker misclassification.
The D.C. AG’s office has been particularly active in this area. For example, the office reached a settlement with a construction company that included notable terms: the company will pay over $600,000, including restitution and penalties, undertake monitoring/compliance measures, and also agreed not to do any business, on public or private construction projects, in D.C. for a period of five years. Prior D.C. AG misclassification cases during the past year include a consent order in a lawsuit involving security guards, and an $835,000 settlement with another construction company.
Confronting misclassification in the “gig economy”
Several state AGs have taken action to challenge worker misclassification by online platforms, or “gig” companies. The D.C. and Minnesota AGs both filed lawsuits against Shipt, a Target-owned delivery company, for allegedly misclassifying workers. In addition, the Massachusetts AG issued $6.2 million in citations against the delivery company, GoPuff. The New Jersey AG collaborated closely with the state labor department and reached a $100 million settlement with Uber for unemployment taxes based on alleged worker misclassification from 2014-2018.
The federal labor department and media have both reported an upsurge in child labor violations across the country. Some state AGs have taken an active role in enforcing their states’ child labor laws.
The Michigan AG’s office obtained a guilty plea from a meat processing company owner who employed a 17-year-old whose right hand was amputated while operating a meat grinder, hazardous work prohibited by child labor laws. The modest sentence included penalties of $500 plus costs, for a grand total of $1,143, prompting Michigan AG Nessel to encourage the legislature to strengthen state child labor laws.
The Massachusetts AG’s office has long been involved in child labor enforcement, and has issued a number of citations, including against Dunkin’ (at least two times), Dave & Buster’s, and lesser-known employers, too. The office held a convening of community leaders to raise awareness of child labor protections. The Minnesota AG’s office represented the state labor department in a lawsuit against a meatpacking plant that allegedly employed teenagers in prohibited, hazardous work.
Finally, three state AG offices have pursued the fast-food chain Chipotle for alleged child labor violations related to minors’ permissible work hours: the D.C. AG’s office recovered over $300,000 in penalties as well as future compliance measures, and the New Jersey AG’s office worked closely with their labor department in reaching a $7.75 million settlement. These cases followed a similar resolution by the Massachusetts AG’s office in 2020.
Safeguarding labor market competition: fighting no-poach and noncompete agreements, wage collusion, and similar practices
When employers impose noncompete provisions on their workers, or make agreements with competitors not to hire each other’s workers or about wage levels, they impede worker mobility and, research shows, reduce wages.
The New York AG’s office has taken the lead in pursuing employers on these issues, often based on an antitrust legal theory. The office has focused extensively on no-poach agreements in the title insurance industry, and in a multi-year initiative, has resolved investigations with the nation’s largest title insurance companies, including Fidelity National Financial, Old Republic National Title, Kensington Vanguard, Stewart Title Guaranty Corporation, AmTrust, and First Nationwide. The companies agreed to stop using no-poach agreements, to terminate existing agreements, and to pay a total of over $9 million to the state. The office also secured agreements halting the alleged use of illegal no-poach agreements between employers in ski resorts and in the home care industry, where no-poach agreements can also adversely affect patients, by constraining their ability to use the provider of their choice.
The D.C. AG’s office also engaged in advocacy related to labor market transparency, sending a letter to the D.C. Bar Ethics Committee seeking an opinion that attorneys violate legal ethics if they include unenforceable or illegal terms in contracts, such as void or unenforceable noncompete clauses. The Ethics Committee has not issued any public response to date.
Finally, 21 state AGs filed a multistate brief in the Second Circuit supporting former Saks workers who alleged they were harmed by private agreements between Saks and other luxury brands not to hire Saks employees.
State AG criminal jurisdiction varies: a few offices are the sole criminal enforcers for their states; most have limited criminal jurisdiction. Several state AGs have used their criminal authority to pursue employers who have intentionally committed serious violations of workers’ rights. For example, The Rhode Island AG announced charges against three drywall installation contractors for alleged wage theft on a school construction project, and the Massachusetts AG indicted an environmental services company and its owners in connection with alleged worker safety violations and illegal asbestos work in multiple locations.
The company and owners were charged with violating the state’s clean air act, and with reckless assault and battery related to allegations that an asbestos worker fell several stories through a roof after being repeatedly denied protective safety equipment.
Representing and collaborating with state labor agencies
A core function for all state AG offices is representing the state in court. In labor cases, this can mean defending new pro-worker laws that are challenged in court, defending state labor departments when employers challenge their enforcement, or representing labor departments when—as part of their own enforcement—they need to file suit. This work is generally non-discretionary. The following are some examples of this work from the past year:
The Washington AG’s office defended the state’s workplace safety and health enforcement structure from a frontal attack by Amazon. Washington state’s workplace safety laws, unlike the federal Occupational Safety and Health Act (OSH Act), allow for an order requiring abatement of hazards before all appeals are concluded. Amazon challenged this aspect of the law and lost. The office also successfully defended a state Covid safety rule for farmworkers against an OSHA preemption challenge, as well as a challenge to the state’s prevailing wage statute.
The Michigan AG office successfully defended the state Department of Technology, Management, and Budget in its implementation of a prevailing wage requirement for government contractors as part of the contracting process. The New Jersey AG’s office successfully defended a new law creating extensive new rights for temporary workers. And the Connecticut AG’s office has been defending a challenge to a new “freedom of conscience” state law that prohibits employers from punishing workers for refusing to listen to religious or political speech by the employer.
Along with defending new laws, state AGs can provide legal backup for state agencies’ enforcement. For example, the Minnesota AG’s office filed a lawsuit against a construction subcontractor for allegedly obstructing a state labor investigation. State AGs also can collaborate on multi-agency enforcement actions, as occurred in New Jersey when numerous agencies, including the AG office, participated in a multi-agency sweep of a construction site in Jersey City, finding misclassification and other violations involving multiple subcontractors. And state AGs can file lawsuits on behalf of state agencies: the Connecticut AG’s office sued the operator of state rest stops for $6 million for allegedly failing to pay workers a higher wage rate that was required as a condition of state contract.
Policy: filing amicus briefs, authoring comment letters, proposing legislation
State AG offices often weigh in on broader legal and policy issues by filing amicus briefs, authoring comment letters about proposed federal regulations, and proposing legislation.
A coalition of state AGs wrote an amicus brief in Glacier Northwest, a case in which the Supreme Court held that the National Labor Relations Act did not preempt a state-court tort case in which the employer alleged that the union intentionally destroyed company property during a labor dispute. State AG coalitions also filed amicus briefs in a case challenging a New York City law requiring just cause to terminate fast food workers, a case involving alleged no-poach agreements by McDonalds, and an equal protection challenge to California’s AB5 law (which helps curb worker misclassification by creating a streamlined test for determining employee status). California’s AG filed an amicus brief in the state’s supreme court about worker rights under the state’s Private Attorney General Act, which allows workers to sue for penalties based on labor law violations.
State AGs also worked together to file comments on proposed federal regulations on worker classification and joint employment, implementation of the Inflation Reduction Act, worker pesticide exposure, and noncompete provisions in employment contracts.
Rhode Island AG Peter Neronha played a leading role in championing legislation to increase the state’s criminal penalties for wage theft. After several years of the AG strongly promoting the bill, it passed in the 2023 legislative session. A bill raising wage theft penalties also passed in Delaware; among other things, that law allows the state labor department to refer cases to the AG’s office for prosecution. The AG’s office supported the legislation.
Education and outreach
Finally, state AGs can help educate the general public and legal community about new developments or pressing issues affecting workers. The Massachusetts AG’s office, for example, issued an advisory regarding rights of immigrant workers, including a new U.S. Department of Homeland Security process granting deferred action for workers who are potential witnesses in labor enforcement cases. The Illinois AG issued a press release about guidance issued on protections against employment discrimination related to pregnancy and reproductive health decisions, and California’s AG issued a legal alert about unlawful employer-driven debt.
With workers’ rights in the spotlight, state AGs can do even more
Labor Day is a day to recognize and celebrate the contributions of workers. At a time when workers’ rights are increasingly in the spotlight, state AGs’ growing involvement in enforcing labor laws is a positive and necessary development. As the above discussion demonstrates, some AGs are playing a key role in promoting compliance and fair working conditions within their states. At the same time, Labor Day 2023 is a good moment to note the considerable untapped potential for even more extensive and impactful involvement by state AGs on behalf of the nation’s working people.
Terri Gerstein is Director of the State and Local Enforcement Project at the Harvard Center for Labor and a Just Economy. She is also a Senior Fellow at the Economic Policy Institute.