43 posts categorized "Wage Abuse" Feed

Federal Watchdog Launches Investigation of Age Bias at IBM

[Editor's note: today's guest post, by reporters at ProPublica, updates a prior post about employment practices. It is reprinted with permission. A data breach at IBM in 2007 led to the creation of this blog.]

IBM logo By Peter Gosselin, ProPublica

The U.S. Equal Employment Opportunity Commission has launched a nationwide probe of age bias at IBM in the wake of a ProPublica investigation showing the company has flouted or outflanked laws intended to protect older workers from discrimination.

More than five years after IBM stopped providing legally required disclosures to older workers being laid off, the EEOC’s New York district office has begun consolidating individuals’ complaints from across the country and asking the company to explain practices recounted in the ProPublica story, according to ex-employees who’ve spoken with investigators and people familiar with the agency’s actions.

"Whenever you see the EEOC pulling cases and sending them to investigations, you know they’re taking things seriously," said the agency’s former general counsel, David Lopez. "I suspect IBM’s treatment of its later-career workers and older applicants is going to get a thorough vetting."

EEOC officials refused to comment on the agency’s investigation, but a dozen ex-IBM employees from California, Colorado, Texas, New Jersey and elsewhere allowed ProPublica to view the status screens for their cases on the agency’s website. The screens show the cases being transferred to EEOC’s New York district office shortly after the March 22 publication of ProPublica’s original story, and then being shifted to the office’s investigations division, in most instances, between April 5 and April 10.

The agency’s acting chair, Victoria Lipnic, a Republican, has made age discrimination a priority. The EEOC’s New York office won a settlement last year from Kentucky-based national restaurant chain Texas Roadhouse in the largest age-related case as measured by number of workers covered to go to trial in more than three decades.

IBM did not respond to questions about the EEOC investigation. In response to detailed questions for our earlier story, the company issued a brief statement, saying in part, "We are proud of our company and its employees’ ability to reinvent themselves era after era while always complying with the law."

Just prior to publication of the story, IBM issued a video recounting its long history of support for equal employment and diversity. In it, CEO Virginia "Ginni" Rometty said, "Every generation of IBMers has asked ‘How can we in our own time expand our understanding of inclusion?’ "

ProPublica reported in March that the tech giant, which has an annual revenue of about $80 billion, has ousted an estimated 20,000 U.S. employees ages 40 and over since 2014, about 60 percent of its American job cuts during those years. In some instances, it earmarked money saved by the departures to hire young replacements in order to, in the words of one internal company document, "correct seniority mix."

ProPublica reported that IBM regularly denied older workers information the law says they’re entitled to in order to decide whether they’ve been victims of age bias, and used point systems and other methods to pick older workers for removal, even when the company rated them high performers.

In some cases, IBM treated job cuts as voluntary retirements, even over employees’ objections. This reduced the number of departures counted as layoffs, which can trigger public reporting requirements in high enough numbers, and prevented employees from seeking jobless benefits for which voluntary retirees can’t file.

In addition to the complaints covered in the EEOC probe, a number of current and former employees say they have recently filed new complaints with the agency about age bias and are contemplating legal action against the company.

Edvin Rusis of Laguna Niguel, a suburb south of Los Angeles, said IBM has told him he’ll be laid off June 27 from his job of 15 years as a technical specialist. Rusis refused to sign a severance agreement and hired a class-action lawyer. They have filed an EEOC complaint claiming Rusis was one of "thousands" discriminated against by IBM.

If the agency issues a right-to-sue letter indicating Rusis has exhausted administrative remedies for his claim, they can take IBM to court. "I don’t see a clear reason for why they’re laying me off," the 59-year-old Rusis said in an interview. "I can only assume it’s age, and I don’t want to go silently."

Coretta Roddey of suburban Atlanta, 49, an African-American Army veteran and former IBM employee, said she’s applied more than 50 times to return to the company, but has been turned down or received no response. She’s hired a lawyer and filed an age discrimination complaint with EEOC.

"It’s frustrating," she said of the multiple rejections. "It makes you feel you don’t have the qualifications (for the job) when you really do."

Filed under:

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Citigroup Promises To Close Pay Gaps For Female And Minority Workers

Logo-citigroupUSA Today reported that Citigroup:

"... will boost job compensation for women and minorities in a bid to close pay gaps in the U.S., United Kingdom, and Germany, becoming the first U.S. bank to respond to shareholder pressure about the inequalities. The New York-based financial company announced the effort Monday, saying it came after a Citigroup compensation assessment in the three countries found that women on average were paid 99% of what men got and minorities on average received 99% of what non-minorities were paid... Citigroup's action prompted investment advisory company Arjuna Capital to withdraw the 2018 gender pay shareholder proposal it had filed in an effort to force an investor vote that would require the bank to address pay inequality."

So, the bank made changes only after a major investor forced it to. The news report cited other banks (text links added):

"No other U.S. bank has taken similar action, Arjuna said. Along with Citigroup, Arjuna said it had filed gender pay shareholder proposals this year with U.S. banks JPMorgan Chase, Wells Fargo, Bank of America and Bank of New York Mellon. The investment adviser said it had filed similar proposals with American Express, Mastercard, Reinsurance Group, and Progressive Insurance. If approved by shareholders, the proposals would require the companies to publish their policies and goals to reduce gender pay gaps."

JP Morgan Chase promised in 2016 to raise the pay of 18,000 tellers and branch workers. It seems that the banking industry, kicking and screaming, has been forced to confront its pay-gap issues for employees. What do you think?

Trump Administration Quietly Rolls Back Civil Rights Efforts Across Federal Government

[Editor's Note: today's guest blog post is by the reporters at ProPublica. Consent decrees are an important oversight tool to ensure corporate responsibility after wrongdoing. Today's post is reprinted with permission.]

By Jessica Huseman and Annie Waldman, ProPublica

Department of Justice logo For decades, the Department of Justice has used court-enforced agreements to protect civil rights, successfully desegregating school systems, reforming police departments, ensuring access for the disabled and defending the religious.

Now, under Attorney General Jeff Sessions, the DOJ appears to be turning away from this storied tool, called consent decrees. Top officials in the DOJ civil rights division have issued verbal instructions through the ranks to seek settlements without consent decrees -- which would result in no continuing court oversight.

The move is just one part of a move by the Trump administration to limit federal civil rights enforcement. Other departments have scaled back the power of their internal divisions that monitor such abuses. In a previously unreported development, the Education Department last week reversed an Obama-era reform that broadened the agency's approach to protecting rights of students. The Labor Department and the Environmental Protection Agency have also announced sweeping cuts to their enforcement.

"At best, this administration believes that civil rights enforcement is superfluous and can be easily cut. At worst, it really is part of a systematic agenda to roll back civil rights," said Vanita Gupta, the former acting head of the DOJ's civil rights division under President Barack Obama.

Consent decrees have not been abandoned entirely by the DOJ, a person with knowledge of the instructions said. Instead, there is a presumption against their use -- attorneys should default to using settlements without court oversight unless there is an unavoidable reason for a consent decree. The instructions came from the civil rights division's office of acting Assistant Attorney General Tom Wheeler and Deputy Assistant Attorney General John Gore. There is no written policy guidance.

Devin O'Malley, a spokesperson for the DOJ, declined to comment for this story.

Consent decrees can be a powerful tool, and spell out specific steps that must be taken to remedy the harm. These are agreed to by both parties and signed off on by a judge, whom the parties can appear before again if the terms are not being met. Though critics say the DOJ sometimes does not enforce consent decrees well enough, they are more powerful than settlements that aren't overseen by a judge and have no built-in enforcement mechanism.

Such settlements have "far fewer teeth to ensure adequate enforcement," Gupta said.

Consent decrees often require agencies or municipalities to take expensive steps toward reform. Local leaders and agency heads then can point to the binding court authority when requesting budget increases to ensure reforms. Without consent decrees, many localities or government departments would simply never make such comprehensive changes, said William Yeomans, who spent 26 years at the DOJ, mostly in the civil rights division.

"They are key to civil rights enforcement," he said. "That's why Sessions and his ilk don't like them."

Some, however, believe the Obama administration relied on consent decrees too often and sometimes took advantage of vulnerable cities unable to effectively defend themselves against a well-resourced DOJ.

"I think a recalibration would be welcome," said Richard Epstein, a professor at New York University School of Law and a fellow at the Hoover Institution at Stanford, adding that consent decrees should be used in cases where clear, systemic issues of discrimination exist.

Though it's too early to see how widespread the effect of the changes will be, the Justice Department appears to be adhering to the directive already.

On May 30, the DOJ announced Bernards Township in New Jersey had agreed to pay $3.25 million to settle an accusation it denied zoning approval for a local Islamic group to build a mosque. Staff attorneys at the U.S. attorney's office in New Jersey initially sought to resolve the case with a consent decree, according to a spokesperson for Bernards Township. But because of the DOJ's new stance, the terms were changed after the township protested, according to a person familiar with the matter. A spokesperson for the New Jersey U.S. attorney's office declined comment.

Sessions has long been a public critic of consent decrees. As a senator, he wrote they "constitute an end run around the democratic process." He lambasted local agencies that seek them out as a way to inflate their budgets, a "particularly offensive" use of consent decrees that took decision-making power from legislatures.

On March 31, Sessions ordered a sweeping review of all consent decrees with troubled police departments nationwide to ensure they were in line with the Trump administration's law-and-order goals. Days before, the DOJ had asked a judge to postpone a hearing on a consent decree with the Baltimore Police Department that had been arranged during the last days of the Obama administration. The judge denied that request, and the consent decree has moved forward.

The DOJ has already come under fire from critics for altering its approach to voting rights cases. After nearly six years of litigation over Texas' voter ID law -- which Obama DOJ attorneys said was written to intentionally discriminate against minority voters and had such a discriminatory effect -- the Trump DOJ abruptly withdrew its intent claims in late February.

Attorneys who worked on the case for years were barely consulted about the change -- many weren't consulted at all, according to two former DOJ officials with knowledge of the matter. Gore wrote the filing changing the DOJ's position largely by himself and asked the attorneys who'd been involved in the case for years to sign it to show continuity. Not all of the attorneys fell in line. Avner Shapiro -- who has been a prosecutor in the civil rights division for more than 20 years -- left his name off the filings written by Gore. Shapiro was particularly involved in developing the DOJ's argument that Texas had intentionally discriminated against minorities in crafting its voter ID legislation.

"That's the ultimate act of rebellion," Yeomans, the former civil rights division prosecutor, said. A rare act, removing one's name from a legal filing is one of the few ways career attorneys can express public disagreement with an administration.

Gore has no history of bringing civil rights cases. A former partner at the law firm Jones Day, he has instead defended states against claims of racial gerrymandering and represented North Carolina when the state was sued over its controversial "bathroom bill," which requires transgender people to use the facility that matched their birth gender.

All of the internal changes at the DOJ have left attorneys and staff with "a great deal of fear and uncertainty," said Yeomans. While he says the lawyers there would like to stay at the department, they fear Sessions' priorities will have devastating impact on their work.

The DOJ's civil rights office is not alone in fearing rollbacks in enforcement. Across federal departments, the Trump administration has made moves to diminish the power of civil rights divisions.

U.S. Department of Education logo The Department of Education has laid out plans to loosen requirements on investigations into civil rights complaints, according to an internal memo sent to staff on June 8 and obtained by ProPublica.

Under the Obama administration, the department's office for civil rights applied an expansive approach to investigations. Individual complaints related to complex issues such as school discipline, sexual violence and harassment, equal access to educational resources, or racism at a single school might have prompted broader probes to determine whether the allegations were part of a pattern of discrimination or harassment.

The new memo, sent by Candice Jackson, the acting assistant secretary for civil rights, to regional directors at the department's civil rights office, trims this approach. Jackson was appointed deputy assistant secretary for the office in April and will remain as the acting head of the office until the Senate confirms a full-time assistant secretary. Trump has not publicly nominated anyone for the role yet.

The office will apply the broader approach "only" if the original allegations raise systemic concerns or the investigative team argues for it, Jackson wrote in the memo.

As part of the new approach, the Education Department will no longer require civil rights investigators to obtain three years of complaint data from a specific school or district to assess compliance with civil rights law.

Critics contend the Obama administration's probes were onerous. The office "did such a thorough review of everything that the investigations were demanding and very expensive" for schools, said Boston College American politics professor R. Shep Melnick, adding that the new approach could take some regulatory pressure off schools and districts.

But some civil rights leaders believe the change could undermine the office's mission. This narrowing of the department's investigations "is stunning to me and dangerous," said Catherine Lhamon, who led the Education Department's civil rights office from August 2013 until January 2017 and currently chairs the United States Commission on Civil Rights. "It's important to take an expansive view of the potential for harm because if you look only at the most recent year, you won't necessarily see the pattern," said Lhamon.

The department's new directive also gives more autonomy to regional offices, no longer requiring oversight or review of some cases by department headquarters, according to the memo.

The Education Department did not respond to ProPublica's request for comment.

Education Secretary Betsy DeVos has also proposed cutting over 40 positions from the civil rights office. With reduced staff, the office will have to "make difficult choices, including cutting back on initiating proactive investigations," according to the department's proposed budget.

Elsewhere, Trump administration appointees have launched similar initiatives. In its 2018 fiscal plan, the Labor Department has proposed dissolving the office that handles discrimination complaints. Similarly, new leadership at the Environmental Protection Agency has proposed entirely eliminating the environmental justice program, which addresses concerns that almost exclusively impact minority communities. The Washington Post reports the plan transfers all environmental justice work to the Office of Policy, which provides policy and regulatory guidance across the agency.

Mustafa Ali, a former EPA senior adviser and assistant associate administrator for environmental justice who served more than 20 years, quit the agency in protest days before the plan was announced. In his resignation letter, widely circulated in the media, Ali suggested the new leadership was abandoning "those who need our help most."

Ryan Gabrielson contributed to this report.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

JPMorgan Chase To Raise Pay of 18,000 Tellers And Branch Workers

JPMorgan Chase logo Jaime Dimon, the Chairman and CEO of JPMorgan Chase, announced that the bank will raise the pay of about 18,000 tellers and branch workers in 75 cities. The announcement appeared in an opinion article in The New York Times:

"Our minimum salary for American employees today is $10.15 an hour (plus meaningful benefits, which I’ll explain later), almost $3 above the current national minimum wage. Over the next three years, we will raise the minimum pay for 18,000 employees to between $12 and $16.50 an hour for full-time, part-time and new employees, depending on geographic and market factors."

The article discussed the bank's non-wage benefits for employees, why the pay increase was the right thing to do, and related investments:

"It is true that some businesses cannot afford to raise wages right now. But every business can do its part through whatever ways work best for it and its community. It can identify local partners to address economic inequality. It can encourage and provide continuous training, teach leadership capabilities and identify mentors to help sharpen employee skills. In our case, we will invest over $200 million in 2016 on training for thousands of entry-level employees in our consumer banking business... We are also investing $325 million in career-oriented education aligned to growing sectors. This fall, through partnerships with education organizations, we will provide 10 states with up to $2 million each to strengthen and expand career-focused education in their school systems..."

An economist in the company's commercial banking unit wrote in October 2015:

"Raising the minimum wage has the potential to vastly improve the lives of low-income workers who are currently employed—but it could also limit opportunities for future job seekers... Proposals for raising the minimum wage have strong political appeal. It would be wonderful, of course, if it were that easy to help low-income earners who are struggling. Unfortunately, despite the well-meaning intentions behind this effort, non-business actions that force businesses to absorb higher costs would likely carry hidden costs. Though higher wages would undoubtedly benefit low-earning workers who retain their jobs, those who become unemployed, or future potential workers who are trying to get a start in the job market, could find fewer opportunities to rejoin the labor force."

Will the bank's hiring slow as a result? Time will tell.

An August, 2015 report by the National Employment Law Project found that while bBank tellers comprise the largest banking-related occupation in the United States, with almost half a million workers nationwide, three in four (74.1 percent) earn less than $15 an hour, compared with 42.4 percent of the total U.S. workforce. Tellers’ median hourly wage is just $12.44.

JPMorgan isn't the only bank to raise the pay of its employees. In January 2016, Bangor Savings Bank raised its minimum wage to $13.00 an hour. In August 2015, Amalgamated Bank raised its minimum wage to $15.00 per hour. In July 2015, C1 Bank raised its minimum wage to $15.00 per hour.

In 2012, JPMorgan Chase was part of a group of banks that paid $25 billion to resolve allegations of foreclosure abuses of homeowners' mortgages. The bank paid $13 billion in 2014 to settle charges by the U.S. Justice Department about alleged wrongdoing with mortgage-backed asset securities. Later that year, we taxpayers learned that large portions of the fines were tax deductible.

Dimon's April 6, 2016 letter to shareholders about the company's performance in 2015 said:

"Our company earned a record $24.4 billion in net income on revenue of $96.6 billion in 2015. In fact, we have delivered record results in the last five out of six years, and we hope to continue to deliver in the future. Our financial results reflected strong underlying performance across our businesses..."

The bank has done well financially. It's good that the bank shared some of its success with employees, but why not raise the minimum wage with a $15.00 per hour floor? Dimon's pay (including incentives rose 35 percent last year, from $20 million to $27 million. One person summarized accurately the bank's pay increase in a comment on Robert Reich's Facebook page:

"I think that pushing larger crumbs off the table isn't quite the same as setting a place."

Dimon's statement in the New York Times did not mention the total cost of the pay increase and related programs. Even if the total is $1 billion (spread over 3 years), it seems that JPMorgan Chase can easily afford that without a slow-down in hiring. If the bank can afford multiple, massive settlement agreement payments, it can easily afford the pay increase for its employees.

What do you think?

Digital Economy Workers Fight For Their Rights And Fair Treatment

The digital economy includes a variety of industries, ranging from e-commerce and auction sites (e.g., eBay, Etsy) to ride-sharing services (e.g., Uber, Lyft), and more. A lot of people love them, and participate as consumers, sellers, or workers. A recent article New York Times article about workers in the digital economy caught my attention:

"... many workers have felt squeezed and at times dehumanized by a business structure that promises independence but often leaves them at the mercy of increasingly powerful companies. Some are beginning to band together in search of leverage and to secure what they see as fairer treatment from the platforms that make the work possible."

Uber logo The article described a growing awareness among workers:

“We started realizing we’re not contractors, we’re more like employees,” said Berhane Alemayoh, one of the UberBlack drivers in Dallas. “They tell us what kind of car to drive. They kick you out if a customer accused you of not having a clean car. They started to tighten the rope. Gradually, we can’t breathe any more.”

In June, the California Labor Commission ruled that Uber drivers are employees, not contractors. In December, the Seattle City Council approved an ordinance allowing ride-sharing drivers to unionize. That was a first.

Uber drivers in New York City have protested. Clearly, rates for drivers must exceed the costs of auto payments, insurance, government fees, maintenance, repairs, gasoline, and commissions due the ride-sharing company. Otherwise, it's pointless. Learn more about UberBlack and how it differs from Uber X. Learn about UberSelect, UberBlack, and UberXL in Los Angeles.

Postmates logo The article cited more examples, including compensation and workers' safety issues:

"A group of couriers who find work on the platform Postmates is waging a campaign to create an “I’m done after this delivery” button because they worry that turning down jobs will affect how many future assignments they receive... The National Domestic Workers Alliance, which organizes nannies and housekeepers, recently produced what it calls the Good Work Code, which it has urged gig economy companies to adopt. “They would be dispatched to a home that didn’t feel safe, but would be hesitant to exit themselves from that situation because it might affect their ratings...”

National Domestic Workers Alliance logo Historically, independent contractors negotiate rates with businesses. Employees don't. Independent contractors, often called freelance workers, typically set their own hours and work approach. Employees don't. Employers typically tell employees when to work, where to work, how to do the job, specify the materials they must use, and dictate the pay rate. Perhaps, most importantly:

"... to the extent that the Dallas drivers have been successful, one crucial advantage is that they were able to organize in person rather than depend exclusively on the Internet and social media. That also helps explain the success of the campaign in Seattle, where Uber had previously reversed a rate cut after facing pressure from drivers..."

Experts have observed:

" "There’s a sense of workplace identity and group consciousness despite the insistence from many of these platforms that they are simply open ‘marketplaces’ or ‘malls’ for digital labor," said Mary L. Gray, a researcher at Microsoft Research and professor in the Media School at Indiana University who studies gig economy workers."

Who are these freelance workers? Forbes Magazine explained:

"... 53 million Americans, or 34% of the population, qualify as freelancers. Not all of them make their living exclusively as freelancers. The number includes 14.3 million workers who would be called “moonlighters”—people who have a primary, traditional job that pays benefits, and supplement their income with extra work, like a full-time tech support worker... Of the remaining 38.7 million, 21.1 million are what the survey calls “traditional” freelancers who do temporary work on a project basis. Some 9.3 million have multiple sources of income which can include a part-time job like working 20 hours a week at a dentist’s office. Another 5.5 million are temporary staffers who work for a single employer but not on a permanent basis that comes with benefits, like a business strategy consultant working for a startup on a contract that can include months of employment. Then there are the 2.8 million business owners who have between one and five employees..."

The issues aren't going away, as companies continue to outsource work globally, not only in the United States. So, you probably know people who work as freelancers. I know many in graphic design, website and mobile app development, and copy writing. Maybe you're a freelancer. I am.

Like any other business, companies in the digital economy merit watching by both freelancers and by customers. Nobody wants to support a business that mistreats its workers.

The examples cited in the newspaper highlight the fact that there's strength in numbers. Companies organize into trade associations, or industry trade groups, to promote their interests and influence government policies through federal, state, and local politicians. Workers should have the same freedoms to organize, if they choose. Both are natural (and necessary) components of a free-market capitalist system.

Don't like organizing? You don't have to join any group. However, when bad things happen in the workplace and you're unable to solve it alone, you may regret having rejected the support of a group. What are your opinions?

SEC Adopts Pay Ratio Rule For Public Companies

Securities and Exchange Commission logo The U.S. Securities and Exchange Commission (SEC) announced this week that it has adopted a final rule that requires public companies to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. The median pay is the amount which half of a company's employees earn less and half of its employees earn more. The SEC announcement:

"The new rule will provide shareholders with information they can use to evaluate a CEO’s compensation, and will require disclosure of the pay ratio in registration statements, proxy and information statements, and annual reports that call for executive compensation disclosure.  Companies will be required to provide disclosure of their pay ratios for their first fiscal year beginning on or after Jan. 1, 2017."

The new rule was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Adobe PDF). The rule does not apply to:

"...smaller reporting companies, emerging growth companies, foreign private issuers, MJDS filers, or registered investment companies."

Critics claimed that the cost is high for companies to comply with the rule. The Los Angeles Times reported:

"The SEC estimated the requirement would cost companies about $73 million, but the U.S. Chamber of Commerce puts the price tag far higher -- at an "egregious" $700 million a year or more. The chamber said most large companies do not have a centralized payroll, which would make the cost of compiling data 'prohibitively high.' "

The new rule provides flexibility for companies to calculate their pay ratios. In its Fact Sheet, the SEC explained:

"To identify the median employee, the rule would allow companies to select a methodology based on their own facts and circumstances.  A company could use its total employee population or a statistical sampling of that population and/or other reasonable methods... A company could apply a cost-of-living adjustment to the compensation measure used to identify the median employee...  A company also would be permitted to identify its median employee once every three years unless there has been a change in its employee population or employee compensation arrangements that it reasonably believes would result in a significant change to its pay ratio disclosure...  A company would be required to calculate the annual total compensation for its median employee using the same rules that apply to the CEO’s compensation..."

The Fact Sheet contains more details about the methodology, disclosures, assumptions, and estimates for calculating pay ratios.

College professor and former U.S. Secretary of Labor Robert Reich said Wednesday on Facebook:

"This is an important step. It will focus public attention on the pay gap that's become a giant chasm. It won't shame corporations into reducing the gap, but it may prompt shareholders to take some action and perhaps even consumers to boycott companies with the largest gaps. It could also bolster efforts, such as I've outlined in recent days, to increase corporate taxes on companies with high ratios and reduce them on companies with low ratios."

I agree. What are your opinions?

Banks Pay Most of Their Tellers Less Than $15 Per Hour

Everyone knows that many low wage employees work in restaurants, fast food, and construction. Add banks to the list.

The National Employment Law Project (NELP) published an August 2015 report about the earnings of employees in banks. The report focused upon retail banks, where consumers and small businesses typically have checking accounts, savings accounts, and loans. NELP studied the pay at banks because:

"Bank tellers constitute the largest banking-related occupation in the United States, with almost half a million workers nationwide. Three in four (74.1 percent) earn less than $15 an hour, compared with 42.4 percent of the total U.S. workforce, according to NELP’s report. Tellers’ median hourly wage is just $12.44. The workforce is overwhelmingly female: more than five in six bank tellers are women."

The media hourly wage is the amount that divides any group in half. Half of the group earns less and half of the group earns more that the median hourly pay. The median hourly pay for several positions in retail banks:

  • Financial clerks: $18.52
  • Secretaries and administrative assistants: $18.22
  • Credit authorizers, checkers, and clerks: $17.65
  • Loan interviewers and clerks: $17.34
  • Bill and account collectors: $17.20
  • Bookkeeping, accounting, and auditing clerks: $17.04
  • New accounts clerks: $16.33
  • Customer service representatives: $15.94
  • Office clerks: $14.64
  • Receptionists and information clerks: $12.93
  • Janitors and cleaners: $10.65

Additional findings from the report (click any image to view a larger version):

Figure 1: Bank employees earning less than $15 per hour. NELP. Click to view larger image

Figure 2: Most bank tellers are women. NELP. Click to view larger image

Figure 3: Most bank tellers are white. Latinos are over-represented. NELP. Click to view larger image

Christine Owens, executive director of NELP said:

“Many people hear about bank profits and lavish CEO compensation and assume that all jobs in banking pay well. But the reality is far different for bank tellers: Though they handle other people’s money all day, many tellers struggle to survive on wages too low to sustain families... In New York, the families of nearly 4 in 10 bank tellers must rely on some form of public assistance to get by; nationally, almost one in three do so.”

The last sentence is worthy of emphasis: 4 in 10 bank tellers must rely on some form of public assistance. So, when companies pay extremely low wages, the rest of us -- taxpayers -- end up paying to support companies that have decided not to pay their employees what many call a "living wage." You can conclude: minimum wage jobs encourage bigger government via assistance programs.

Don't like big government? Then, support minimum wage increases in the state where you live.

Download the full report (Adobe PDF). What are your opinions of these wages?

Study: Companies Pay Their Senior Executives More Than They Pay In Federal Taxes

The Institute For Policy Studies released the results of a study of executive compensation and corporate taxes. Researchers analyzed the pay of Chief Executive Officers (CEOs) in the largest corporation and the highest paid CEOs. Key findings were:

"Of America’s 30 largest corporations, seven (23 percent) paid their CEOs more than they paid in federal income taxes last year... Of America’s 100 highest-paid CEOs, 29 received more in pay last year than their company paid in federal income taxes—up from 25 out of the top 100 in our 2010 and 2011 surveys."

The pay of those 29 CEOs averaged $32 million. The study also investigated tax shelters. The 29 corporations that paid more to their CEOs than federal income taxes also operated:

"... 237 subsidiaries in tax havens. The company with the most subsidiaries in tax havens was Abbott Laboratories, with 79. The pharmaceutical firm’s CEO paycheck was $4 million larger than its IRS bill in 2013. Of the 29 firms, only 12 reported U.S. losses in 2013. At these 12 unprofitable firms, CEO pay averaged $36.6 million—more than three times the $11.7 million national average for large company CEOs..."

The corporations are familiar brands and names:

"The company that received the largest tax refund was Citigroup, which owes its existence to taxpayer bailouts. In 2013, Citi paid its CEO $18 million while pocketing an IRS refund of $260 million. Three firms have made the list in all three years surveyed. Boeing, Chesapeake Energy, and Ford Motors paid their CEO more than Uncle Sam in 2010, 2011, and 2013."

It would seem that the shareholders at these 12 unprofitable firms either don't care or have allowed the boards of directors to authorize exorbitant pay packages in the face of unprofitable performances. If those seven largest, profitable corporations had paid the full statutory tax rate of 35 percent, they would have paid $25.9 billion in federal taxes, which could have been used instead for:

"... Restoring elementary and high school teaching jobs lost to recession and austerity budget cuts... Resurfacing 22,240 miles of four-lane roads... Running the U.S. Department of Veterans Affairs for two months... Making pre-K [educaton] universal..."

The authors, Scott Klinger and Sarah Anderson, concluded:

"For corporations to reward one individual, no matter how talented, more than they are contributing to the cost of all the public services needed for business success reflects the deep flaws in our corporate tax system. Rather than more tax breaks, Congress should focus on addressing these deep flaws by cracking down on the use of tax havens, eliminating wasteful corporate subsidies, and closing loopholes that encourage excessive executive compensation."

Some specific actions Congress could take (links added):

"... the CUT Loopholes Act would close a variety of loopholes that facilitate tax dodging through offshoring. This bill would treat the foreign subsidiaries of U.S. corporations, whose management and control occur primarily in the United States, as U.S. domestic corporations for income tax purposes. It would also force corporations to take the same expense for stock option grants on their tax returns as they report on their shareholder books... Passing this legislation would reduce the incentive to shift profits and jobs overseas and could raise an additional $189 billion over ten years without raising corporate tax rates... Corporate Tax Fairness Act (S. 250 and H.R. 694)... would eliminate the ability of corporations to defer tax payments on their offshore profits. Instead, all worldwide profits earned by U.S. corporations would be immediately taxable in the United States. Firms would receive a dollar-for-dollar tax credit for any taxes paid to foreign governments. Corporations earning their profits in places like the United Kingdom, Germany, or France, where effective corporate tax rates are similar to U.S. rates, would pay little if any additional tax to the U.S. government. But firms stashing their profits in offshore tax havens would be forced to pay up for their years of tax haven abuse. The bill would raise an estimated $590 billion over ten years."

Download the report, "Fleecing Uncle Sam" (Adobe PDF). A copy is also available here.

Uber: Its Labor Ruling In California, Lawsuits, And Privacy Concerns

Uber logo During June, Uber, the ride-sharing company, has been in the news for a variety of reasons. Many consumers like the ride-sharing service as an alternative to tradition taxi-cabs. Uber is one of the largest ride-sharing services with about 8 million users worldwide and 160,000 drivers in the United States.

First, in March the State of California Labor Commission ruled that Uber drivers are employees and not independent contractors, as the company claimed. The ruling became public after the company appealed the original decision. In the original complaint, an Uber driver filed a claim for reimbursement of $4,152.00 of expenses.

The issues are worthy noting. Time reported:

"... the ruling is non-binding, has no legal bearing on any other drivers, and won’t force any money to change hands. But Uber’s decision to appeal will now move the fight to California’s court system where — along with several similar lawsuits pending in the state..."

One of several pending lawsuits:

"Uber has essentially shifted to its workers all the costs of running a business, the costs of owning a car, maintaining a car, paying for gas,” says Shannon Liss-Riordan, a Boston-based attorney who has a class-action case pending against Uber in California federal court. “Uber has saved massive amounts …. It’s important that the labor laws be enforced so that the companies can’t take advantage of workers that way. Uber’s a $50-billion company and I think it can afford to bear the responsibilities of an employer...”

Second, a new Uber policy bans firearms in its vehicles. KRJH in Tulsa, Oklahoma reported:

"Uber drivers and passengers have to follow a new company policy. Uber has banned all firearms from any vehicle used for its service. The policy comes two months after an Uber driver shot a man who was firing into a crowd of people in a Chicago neighborhood. The Uber driver had a concealed carry license and was not charged with a crime, but it raised the question of safety and comfort for its drivers and riders."

Third, the Electronic Privacy Rights Center (EPIC) has filed a complaint with the U.S. Federal Trade Commission (FTC) about Uber's upcoming privacy policy amendments to both collect more data about its customers and to track customers. Uber's new Privacy Policy goes into effect on July 15:

Location Information: When you use the Services for transportation or delivery, we collect precise location data about the trip from the Uber app used by the Driver. If you permit the Uber app to access location services through the permission system used by your mobile operating system (“platform”), we may also collect the precise location of your device when the app is running in the foreground or background. We may also derive your approximate location from your IP address."

"Contacts Information: If you permit the Uber app to access the address book on your device through the permission system used by your mobile platform, we may access and store names and contact information from your address book to facilitate social interactions through our Services and for other purposes described in this Statement or at the time of consent or collection."

The sharing of customers' information by Uber seems extensive:

"We may share your information: With Uber subsidiaries and affiliated entities that provide services or conduct data processing on our behalf, or for data centralization and / or logistics purposes; With vendors, consultants, marketing partners, and other service providers who need access to such information to carry out work on our behalf; In response to a request for information by a competent authority if we believe disclosure is in accordance with, or is otherwise required by, any applicable law, regulation, or legal process; With law enforcement officials, government authorities, or other third parties if we believe your actions are inconsistent with our User agreements, Terms of Service, or policies, or to protect the rights, property, or safety of Uber or others; In connection with, or during negotiations of, any merger, sale of company assets, consolidation or restructuring, financing, or acquisition of all or a portion of our business by or into another company..."

Words to focus upon include vendors, consultants, marketing partners, and other service providers. That can include a lot of companies anywhere. Note: that sharing is in addition to any sharing you may perform with social networking sites.

You may remember that ethics and privacy issues surfaced after news reports in 2014 about Uber allegedly using customer and tracking data it collected to target journalists critical of the service.

The EPIC complaint filed with the FTC (Adobe PDF) stated:

"19. Uber will also collect precise location information if the app is operating in the background. On phones running iOS, this means that Uber may be able collect location data even after an app has been terminated by the user."

"20. Even if a user disables the GPS location services on their phone, the company may still derive approximate location from riders’ IP addresses."

"21. This collection of user’s information far exceeds what customers expect from the transportation service. Users would not expect the company to collect location information when customers are not actively using the app, or have turned off their GPS location finder (as Uber can still collect location information through the phones’ IP addresses)..."

"24. Uber claims that it will allow users to opt-out of these features. However, this change in business practices places an unreasonable burden on consumers and is not easy to exercise: while iOS users can later disable the contact syncing option by changing the contacts setting on their mobile devices, the Android platform does not provide any such setting..."

"31. Job interviewees have been granted provisional access all the customer location data available to full-time employees, allowing non-Uber employees to temporarily track any customer. One such interviewee was granted this access for an entire day, even after the job interview ended. He admitted using the database to search records of people he knew, including politician’s relatives."

Based upon the new privacy policy, the tracking and data collection seems very invasive since it will also occur when customers aren't using the service. It seems invasive because the address book collection includes people who aren't Uber customers, didn't agree to the data collection, can't opt out of the collection, and have no control over how their contact information is used. Based upon the company's history, Uber executives seem to play fast and loose with consumers' personal private information.

If you don't like the privacy invasion, there are several resources online about how to cancel and delete your Uber account: C/Net, Reddit, and wikiHow.

What are your opinions of Uber's new privacy policy?

Guestworker Programs, Reshoring, And Skilled Workers. The Impacts Upon American Workers

In March 2015, Ron Hira, a Research Associate and Associate Professor of Public Policy at Howard University, testified before the U.S. Senate Judiciary Committee hearing about immigration reforms needed to protect skilled American workers. That classification includes workers in various high-tech jobs. Mr. Hira testified:

"Congress and multiple Administrations have inadvertently created a highly lucrative business model of bringing in cheaper H-1B workers to substitute for Americans. There are mainframe-sized loopholes built into the H-1B program’s design... Some of these loopholes are intentional, some are not, but they all add up to a system that encourages employers to exploit the H-1B program for cheap labor. Given the extraordinarily high profits involved in using guestworkers instead of Americans, it should surprise no one that many employers are taking advantage of this business model and lobbying to expand it... Myth: Employers must prove there are no qualified American workers before hiring an H-1B... Myth: H-1B workers cannot be cheaper than Americans because employers must pay the “prevailing wage”... Myth: Compliance with the program’s rules that protect American workers is robust..."

You may have believed those myths. Now you know otherwise. That abuse of the H-1B visa program may affect you, an employed family member, or somebody you know. How? Mr. Hira explained:

"... This is not just adversely affecting a few workers. The H-1B program is very large with approximately 120,000 new workers admitted annually. Once admitted those workers can remain in the U.S. up to six years. While no one knows exactly how many H-1Bs are currently in the country, analysts estimate the stock of H-1B workers at 600,000..."

Of course, the corporations claim that they can't find skilled American workers. Mr. Hira explained what's really happening and how it extends beyond H-1B visa recipients:

"Most of the H-1B program is now being used to import cheaper foreign guestworkers, replacing American workers, and undercutting their wages... There are hundreds of thousands of additional guestworkers admitted on L-1 and OPT visas, and they too are harming the job prospects of American workers. Because Congress never expected L-1 and OPT workers to be potential competition to American workers those programs have virtually no rules to protect American workers. That expectation was incorrect. As with the H-1B program, these guestworker visa programs are now being used too to replace and undercut American workers."

Sadly, government agencies also perpetuate the problem:

"The recent case of Southern California Edison (SCE) illustrates the most flagrant abuses of the H-1B program and exposes the flaws in the protections for American workers. As reported by ComputerWorld and the Los Angeles Times, SCE is replacing its American workers with H-1B workers hired by outsourcers Tata and Infosys. To add insult to injury, SCE forced its American workers to train their H-1B replacements as a condition of receiving their severance packages. There could not be a clearer case of the H-1B program being used to harm American workers’ wages and working conditions."

You may remember a similar incident at Disney where fired American workers were forced to train their foreign replacements before leaving. Pew Charitable Trusts reported about other alleged abuses:

"A computer programmer from India was promised a $46,500 salary in New York, plus tuition to study for a master’s degree. Instead, his annual pay averaged less than $13,000 and his degree was withheld when his employer failed to make the promised tuition payments. In California, veteran computer workers at a health care company say they were forced to train cheaper foreign replacements before being laid off, even though the replacements were hired under a program meant to fill critical jobs when employers can’t find qualified U.S. citizens or permanent residents who hold green cards to fill them."

I encourage you to visit the Pew Charitable trusts article, because it features an interactive map where you can discover the number H-1B workers in your state.

Some readers in denial may be thinking: I have a college degree, or I work in a high-tech job such as writing code for websites and mobile apps. It won't affect me. I'm immune.

Don't fool yourself. It will affect you. It probably already has. Former U.S. Labor Secretary and professor Robert Reich summarized the problem in a June 16 Facebook post (links added):

"... the [U.S.] Senate is considering a bill to raise the number of skilled foreign workers that can come to the U.S. on H-1B visas... It’s a bad idea. When Secretary of Labor, I was responsible for implementing the H-1B visa program – and again and again found high-tech companies claiming they needed skilled workers from abroad because they couldn’t find ...such workers in the U.S. -- when in reality they just didn’t want to pay higher wages to Americans with those same skills... A study released in April by the National Bureau of Economic Research found that H-1B visa recipients crowd out American workers, lowering wages and raising profits without increasing productivity. A 2013 analysis by the Economic Policy Institute found there are more than enough U.S.-born high-tech workers to fill jobs here, and that companies have been using foreign workers to cut costs, knowing they’re easy to intimidate because if they lose their jobs they have to leave the U.S."

You can read this study by researchers at the University of Notre Dame and University of California at Berkeley (Adobe PDF). They concluded:

"We find some evidence that additional H-1Bs lead to lower average employee wages while raising firm profits... we robustly find that new H-1Bs cause no significant increase in firm employment..."

Think about that. Firms pay less to other employees. So, even if you aren't replaced, you may be paid less or your annual wage increases are smaller. The savings went to the company's profits, and to senior executives rewarded for those savings via bonuses.

I have experienced the high-tech guest-worker situation. As a freelancer with a master's degree and plenty of experience, I work with a variety of digital agencies to produce websites for corporate clients. Several years ago, I subcontracted with an agency to work on a website redesign project. That project included a client company's internal website (called an "Intranet") to automate and streamline its human resources processes, forms, and performance reviews for both managers and employees. I was hired to perform the usability work and lead several focus-group sessions with the client company's employees and managers.

After meeting my project team members, I saw immediately the situation. Another person and I were the only two American workers on this project team. The rest of the team included workers from India to perform the project management, documentation, website development, quality assurance, and coding work. Plenty of my peers at other digital agencies, and some as freelancers, regularly perform all of these tasks. So, there's no shortage of qualified, experienced American workers.

During this three-month project, the foreign guest workers flew in from Mumbai as needed for their roles, and shared rooms in a rented home (cheaper than a hotel). When their role on the project was finished, they either returned to Mumbai or traveled to another U.S. location for their next project. The math probably went like this: the digital agency probably charged it's corporate client an average of about $120 per hour across all project team members. The digital agency paid me $90.00 per hour, paid the foreign workers maybe $40.00 per hour, and pocketed the difference. So, the agency's profits were $30.00 per hour for American workers like me, but a far higher $80.00 per hour with foreign workers.

This looked to me like a clear corporate choice aided by a willing digital agency. You'd never know it happened unless you worked directly on the project.

Multiply my experience by thousands of others and you get an idea of how vast the problem is. Corporations, politicians, and news media that defend this employment abuse may announce that thousands of jobs are returning to the USA (often called "reshoring"), but you now know what's really happening. Informed voters question announcements and demand to know if the returning jobs are pre-filled with foreign guest-workers while the employers don't bother looking to hire American workers. You now know more to contact your elected officials and demand that they explain what they are doing to protect American workers.

When returning jobs are pre-filled with guest workers, then there's really no benefit to USA citizens and plenty of downside: unemployment levels remain high, it is harder to find full-time work, and for workers over 55 years of age it can be impossible to find full-time work. You now know it's a pro-business free-for-all at the expense of middle-class and skilled workers.

What are your opinions of skilled guest workers? Of the H-1B visa program? Have you had to train foreign guest workers?

Two Graphics About Wage And Wealth Inequality In The USA

Today's blog post includes two factual graphics. The first graphic compares the bonuses (not salaries, but the year-end bonuses in addition to salaries) paid to executives at Wall Street firms to the earnings of all full-time minimum-wage workers nationwide:

Comparison of Wall Street bank bonuses to minimum wage earnings

The current Federal minimum wage is $7.25 per hour. Given a 40 hour work week, that equals about $15,000 a year. Tough to live on that. Meanwhile, the average bonus for Wall Street executives was about $170,000 per person. Read this detailed discussion about the bonus culture on Wall Street:

"Wall Street bonuses rose 3 percent last year, despite a 4.5 percent decline in industry profits. The size of the bonus pool was 27 perfect higher than in 2009, the last time Congress increased the minimum wage... The bonus pool is so large it would be far more than enough to lift all 2.9 million restaurant servers and bartenders, all 1.5 million home health and personal care aides, or all 2.2 million fast food preparation and serving workers up to $15 per hour."

Yes, the playing field is tilted this badly. This is another reason to move your money from big banks to smaller, regional banks or to credit unions.

The second graphic (see below) compares the actual distribution of wealth (the top bar) to what Americans perceive it to be (the second bar), and to what Americans think it should be (the bottom bar). Former U.S. Labor Secretary and professor Robert Reich presented this graphic on his Facebook page:

How consumers view inequality compared to the reality

Mr. Reich said on March 10:

"If more Americans knew the truth, we'd have a better shot at changing what must be changed -- raising the minimum wage, expanding the EITC, raising the cap on income subject to Social Security taxes, limiting the deductibility of CEO pay, making it easier to form labor unions, and increasing taxes at the top to pay for world-class education for all our kids. So, please, spread the truth."

Now, you know the truth. Tell your friends, family, coworkers, and classmates. Not only is the situation worse than you thought, but it's easier for the wealthy to retain their wealthy since investments are taxed at a lower rates than wages. (Or depending upon your point-of-view, more difficult for wage earners to amass wealth.) And, some politicians want to eliminate the Federal minimum wage supposedly to increase employment, but more likely to facilitate a race to the bottom in some states to lower wages further and increase company profits.

Notice a trend that benefits the people who are already wealthy?

Take a moment to study both graphics. You can select either graphic to view a larger version. Remember this when you vote.

More Wage Theft Complaints Filed By Employees Against Their Employers

The New York Times reported recently about a surge in lawsuits by workers against their employers:

"... a flood of recent cases — brought in California and across the nation — that accuse employers of violating minimum wage and overtime laws, erasing work hours and wrongfully taking employees’ tips... Some federal and state officials agree. They assert that more companies are violating wage laws than ever before, pointing to the record number of enforcement actions they have pursued."

One possible reason why wage theft is increasing:

"... underlying changes in the nation’s business structure. The increased use of franchise operators, subcontractors and temp agencies leads to more employers being squeezed on costs and more cutting corners... companies on top can deny any knowledge of wage violations [by contractors]...".

The news story reported plenty of examples:

"... Guadalupe Rangel worked seven days straight, sometimes 11 hours a day, unloading dining room sets, trampolines, television stands and other imports... Even though he often clocked 70 hours a week at the Schneider warehouse here, he was never paid time-and-a-half overtime, he said. And now, having joined a lawsuit involving hundreds of warehouse workers..."

One wage-theft tactic is to force workers to sign blank timesheets:

"Julie Su, the state labor commissioner, recently ordered a janitorial company in Fremont to pay $332,675 in back pay and penalties to 41 workers who cleaned 17 supermarkets. She found that the company forced employees to sign blank time sheets, which it then used to record inaccurate, minimal hours of work."

Reclassifying jobs is another tactic:

"... in California, a federal appeals court ruled last week that FedEx had in effect committed wage theft by insisting that its drivers were independent contractors rather than employees. FedEx orders many drivers to work 10 hours a day, but does not pay them overtime, which is required only for employees. FedEx said it planned to appeal."

And, the wage theft problem is spreading:

"Commissioner Su of California said... My agency has found more wages being stolen from workers in California than any time in history... This has spread to multiple industries across many sectors. It’s affected not just minimum-wage workers, but also middle-class workers..."

Terrible business practices and unethical behaviors. The tiny bit of good news: more workers are learning what their rights are and are standing up for their rights.

I am not surprised at all by these mounting wage-theft allegations. Why? First, professor and former U.S. Labor Secretary Robert Reich summarized the ethical problem well in September 2013 on Twitter.com while discussing wrongdoing at the big banks:

"Fines effective only if risk of being caught x probability of being prosecuted x amount of fine > profits to be made."

Besides banks, executives in other and medium-sized businesses have done the math, too. Browse the website for the atate attorney general where you live. Some enforce wage laws vigorously. Others, not so much -- leaving it to workers to file civil suits. Low- and minimum-wage workers often don't have the funds to hire an attorney; if they know their rights. They are busy trying to survive, feed their families, and pay their bills.

Second, many unethical executives have concluded that labor laws in their states are weak. This 2013 study by NELP highlighted the problem: 83 percent of workers still had problems collecting unpaid wages -- even when they already had a court decision in their favor. That means, employers realize there are likely no consequences from violating labor laws.

Third, with any search engine you can easily find news reports about wage-theft settlements. I have reported about some recent cases in New York State: Domino's, McDonald's, and Masonry Services. Fourth, you see similar unethical behavior by executives with employer-operated retirement plans. This blog post reported about some typical cases. Overall, the U.S. Department of Labor recovered $1.2 billion in 2012 for workers. The facts speak for themselves.

What are your opinions of the wage-theft allegations?

Market Basket Returns To Normal Operations As Arthur T. Demoulas Buys Company And Resumes Management

This seemed like timely content for a Labor Day holiday.

On Thursday, the New Hampshire Union Leader reported that a deal had been reached regarding the confrontation at the Market Basket supermarkets in Massachusetts and New Hampshire. Arthur T. Demoulas will acquire a 50.5 percent ownerhsip of the company and return to managing it. He had been ousted last year by the company's Board of Directors, which included other family members. Reportedly, the company issued a statement that Arthur T. Demoulas:

"... and his management team will return to Market Basket during the interim period while the transaction to purchase the company is completed... All associates are welcome back to work with the former management team to restore the company back to normal operations.”

A grassroots effort of managers and employees had stopped work, promising to return to work when Arthur T. Demoulas was reinstated. Supporting this effort, most customers stopped shopping at the supermarket chain, whose revenues dropped more than 90 percent. Store shelves became bare, and many workers had their hours reduced. The confrontation lasted about five weeks and made news headlines worldwide.

Reportedly, the sale will be completed in a couple months. Mr Arthur T. Demoulas thanked cheering employees and supporters.

I cannot recall a time in history when a group of managers and employees banded together to support a senior executive of a corporation. When Arthur T. Demoulas previously managed Market Basket, he managed it more like a benefit corporation --  a joint enterprise between the company, its owners, and the community. He kept prices lower than competitors' prices, paid employees more, and gave both employees and managers more authority.

Professor and former U.S. Labor Secretary Robert Reich posted on August 28 via Facebook:

"In a big win for employees, managers, and customers of “Market Basket” -- the supermarket chain in Massachusetts, New Hampshire, and Maine whose beloved CEO, Arthur T. Demoulas, was fired by a greedy board of directors who thought him too generous – Arthur T. is now back. Yesterday the board relented and agreed to sell the company to him. Arthur T. told cheering workers at the company’s headquarters in Tewksbury that he loved them, appreciated their efforts helping him gain control of the company, and was “in awe of what you have all accomplished.” Over the last several weeks, the sacrifices of employees, managers, and customers of “Market Basket” gives new meaning to the old term “solidarity.” It also illustrates the power of treating such people as partners in an enterprise rather than as costs to be cut. When all benefit from a business's success, all will sacrifice to keep it successful. May the rest of American business take note."

Note: workers as partners, not a cost to be cut. And...  a sacrifice, indeed, by managers, employees, and customers. It showed what solidarity can achieve. Congratulations!

Burger King And Tim Horton's Agree To Merge. The Consequences

Burger King logo This morning, several news sources reported that Burger King, the fast-food chain, and Tim Horton's restaurants have agreed to merge. Horton's is based in Canada. The merger allows Burger King to benefit from a tax inversion, where:

"The combined Canadian coffee chain and U.S. burger chain will have its global headquarters in Canada... In a tax inversion, two international companies merge and move their tax domicile to the lower tax country."

Last month, Bloomberg BusinessWeek published an interesting and informative analysis of the company, its young management, corporate history, and current marketplace challenges. You'll probably want to read the BusinessWeek report titled, "Burger King Is Run By Children."

Professor and former U.S. Labor Secretary Robert Reich posted on Facebook the following about the merger (links added):

"BK’s profits have been flat, mainly because its mostly lower-income customers don’t have enough money to boost sales. So the pending deal is welcome news to investors, who today sent its stock up nearly 20 percent. But it’s a lousy deal for you and me and other Americans because we’ll have to make up for the taxes Burger King stops paying. We’re already subsidizing Burger King because it refuses to raise the pay of its frontline workers, who are now at or near the minimum wage. So we're paying for the food stamps, Medicaid, and wage subsidies its workers need in order to stay out of poverty. That means when BK deserts America to cut its tax bill, we’ll be paying twice. That's a whopper of a slap at America."

A whopper of a slap, indeed. Mr. Reich posted in an update (link added):

"It’s one thing when a company the Pfizer flirts with corporation desertion (technically, a tax “inversion”) to become a foreign company and lower its tax bill. But Burger King, like Walgreen, is highly visible to consumers. Walgreen dropped its plan to desert the United States after a customer backlash and bad publicity. So a boycott of Burger King, accompanied by letters to the local press, picketing for the broadcast media, and a general ruckus, should be helpful."

The phrase "tax inverson" sounds clinical and almost meaningless. I like and prefer the phrase, "corporate desertion" since it better describes what is really happening. And, a boycott seems the appropriate consequence for the burger chain's actions.

What are your opinions of Burger King's tax inversion? Of the "corporate desertion" phrase? Of a boycott?

B Corporations: What They Are And Why They Are Different

Here in Massachusetts, the local news media has reported extensively about the confrontations at Market Basket, a regional, low-price supermarket chain. Perhaps, you have heard about it.

The first confrontation was between family members for control of the company. The company's board of directors fired Arthur T. Demoulas in June 2013 and replaced him with two new managers. After that event, workers and managers at the stores banded together to demand Arthur T's return. That led to the current work stoppage and boycot by many customers. Store sales have declined and shelves in most stores are largely empty. During the last few days, hours for many on-the-job workers have been cut.

Former Labor Secretary Robert Reich explained how Arthur T. Demoulas managed Market Basket:

"... his business model. He kept prices lower than his competitors, paid his employees more and gave them and his managers more authority. Late last year he offered customers an additional four percent discount, arguing they could use the money more than the shareholders. In other words, Arthur T. viewed the company as a joint enterprise from which everyone should benefit, not just shareholders. Which is why the board fired him."

In his article, Mr. Reich concluded, perhaps most importantly:

"... interestingly, we’re beginning to see the Arthur T. business model pop up all over the place."

Mr. Reich explained Arthur T's managerial approach was similar to the "B Corporations" (a/k/a "B Corps"):

"That’s a for-profit company whose articles of incorporation require it to take into account the interests of workers, the community and the environment, as well as shareholders. The performance of B-corporations according to this measure is regularly reviewed and certified by a nonprofit entity called B Lab. To date, over 500 companies in sixty industries have been certified as B-corporations... 27 states have passed laws allowing companies to incorporate as “benefit corporations.” This gives directors legal protection to consider the interests of all stakeholders rather than just the shareholders who elected them."

Take a moment for that to sink in.

Benefit corporations intentionally structured themselves to provide benefits for several groups: workers, the community, the environment, and shareholders. That means other types of corporations focus only on benefits for shareholders. They may provide benefits for groups besides shareholders, but they don't have to. In fact, the dominant, traditional business structure provides incentives to benefit primarily shareholders. Mr. Reich explained how this dominant corporate structure happened:

"In the 1980s, corporate raiders began mounting unfriendly takeovers of companies that could deliver higher returns to their shareholders – if they abandoned their other stakeholders. The raiders figured profits would be higher if the companies fought unions, cut workers’ pay or fired them, automated as many jobs as possible or moved jobs abroad, shuttered factories, abandoned their communities and squeezed their customers. Although the law didn’t require companies to maximize shareholder value, shareholders had the legal right to replace directors. The raiders pushed them to vote out directors who wouldn’t make these changes..."

You're probably wondering if any brands or companies you know are B Corps. Maybe you are curious, or maybe you want to shop only at businesses that are B Corps. Maybe you want to invest in B Corps, or socially responsible corporations.

The folks at B Labs developed a nifty mechanism to search their database. You can search by name, industry, city, state, and/or country. I ran several searches and found:

  • Amazon: no
  • Ben & Jerry's: yes
  • Breckinridge Capital Advisors: yes
  • Etsy: yes
  • Hobby Lobby: no
  • King Arthur Flour Company: yes
  • McDonald's: no
  • Tech Networks of Boston: yes
  • Trillium Asset Management: yes
  • Whole Foods: no

After searching, you can click through to a detailed report about each company and how it performs against B Corps criteria; often for both the current and prior years. The B Labs site explained it:

"B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk. B Corps are certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. Today, there is a growing community of more than 1,000 Certified B Corps from 33 countries and over 60 industries..."

This search tool allows consumers to learn whether your favorite brand walks the talk, or not. Any corporation can hire an advertising agency to develop ads, taglines, slogan, websites, and/or apps that say their company provides benefits to groups beyond shareholders. But do they really? Are they structured to do so? How have they performed? You can use the B Labs site to start answering these questions. You can find corporations that are walking the talk.

It is important to remember that there is a difference between "B Corps" and "Benefits corporations." The Cullinane Law Group emphasized the difference:

"B Corps and Benefit Corporations are distinct terms that are often used interchangeably, but there are clear differences. In short,
- B Corp: a certification or “stamp of approval” by a third-party certifying company.
- Benefit Corporation: is a specific legal corporate structure within a state."

The states that provide the "Benefit Corporation" structure:

"... Arizona (effective December 31, 2014), Arkansas (effective August 2013), California, Colorado (effective April 1, 2014), Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Nevada (effective January 1, 2014), New Jersey, New York, Oregon (effective January 1, 2014), Pennsylvania, South Carolina, Vermont, Virginia, and Washington D.C."

Will Market Basket workers or its board prevail? That remains to be seen. Will Market Basket restructure as a Benefit Corporation? That, too, remains to be seen. Perhaps, if it did the company could have avoided the pain it is now experiencing.

What are your opinions of B Corporations? Of the B Labs search tool? Should more states enact legislation for benefits corporations?

New York State Senate Passes Bill To Amend The State's Wage Theft Law

The New York State Senate passed a bill on June 19 that would amend, if it becomes law, several provisions in the state's landmark 2010 Wage Theft Protection Act. The amendments repeal the annual wage notification employers must provide to employees, and increase the fines for employers for wage payment violations. Supporters of the bill emphasized the paper work reduction benefits for employers.

Specific components of the legislation:

"Section 1 amends Subdivision 1(a) of Section 195 of the Labor Law to strike the annual notice requirement from the Wage Theft Prevention Act when the same information is provided in another manner.

Section 2 amends Subdivisions 1-b and 1-d of Section 198 of the Labor Law to increase penalties for employers' failure to comply with certain sections of the Wage Theft Prevention Act."

So, employers would no longer be required to inform employees each year of pay rates; only new employees. The potential penalties for failing to notify new employees increases from $50 per week with a maximum of $2,000 to $50 per day with a maximum of $5,000, plus costs and attorney's fees. The court may award other payments, too.

The bill also includes provisions for employers that are repeat and/or egregious offenders:

"Section 6 amends Subdivision 1(b) of Section 215 of the Labor Law to authorize the Commissioner to assess a greater civil penalty for those employers who have committed wage theft and had a previous violation within the previous six years...

Section 3 amends Subdivision 1 of Section 218 of the Labor Law if an order directing payment of wages, benefits, wage supplements and liquidated damages is issued to an employer who had previously committed wage theft, or to an employer whose violation is willful or egregious, the employer will be required to report specified employee and wage data to the Commissioner of Labor, which will be published on the Department of Labor's website."

Offenders will often reorganize their business (e.g., declare bankruptcy and shed debt) to avoid paying employees and contractors. So, this section of the bill is important:

"Section 3 also adds a new Subdivision 5 of Section 218 of the Labor Law to provide that an employer similar in operation or ownership to a prior employer who had previously committed wage theft is liable for the acts of the prior employer for the purposes of civil penalties."

The bill would also extend liability to the ten (10) largest owners in limited liability companies (LLCs):

"Section 11 adds new Subdivisions (c) and (d) to the Limited Liability Company Law requiring that the ten members with the largest percentage ownership in a limited liability company be personally liable for all debts, wages, or salaries due and owing to any of its laborers, servants or employees, for services performed by them for such limited liability company... An action to enforce such liability shall be commenced within ninety days after the return of an execution unsatisfied against the limited liability company upon a judgment recovered against it for such services. The bill allows for any member who has paid more than his or her pro rata share to be entitled to contribution pro rata from the other members liable under this section with respect to the excess so paid, over and above his or her pro rata share, and may sue them jointly or severally or any number of them to recover the amount due from them..."

This component appeals since it holds owners accountable, and encourages them not to ignore the actions of the company's executives.

The bill now moves to the Assembly for a vote and/or changes. The law would go into effect 60 days after it is signed by Governor Andrew Cuomo. Learn more about Senate Bill A08106C.

What Kind Of Society Allows This?

Robert Reich, former U.S. Labor Secretary and Professor of Public Policy at UC-Berkely, posted on Wednesday May 7 the message below on Facebook (link added):

"According to annual rankings published yesterday by Institutional Investor’s Alpha Magazine, hedge-fund manager David Tepper took home $3.5 billion last year. Assuming he worked 40 hours a week and went on a two-week vacation, that came to $1,750,000 an hour. $1,750,000 an hour is enough money to hire 241,380 workers at the nation’s current minimum wage of $7.25 an hour. It’s enough to lift the wages of 538,461 minimum-wage workers (roughly one out of every seven of today's minimum-wage workers) to $10.40, which the President and Democrats are seeking as the new minimum wage. It’s enough to hire 103,734 workers at the nation’s median hourly wage of $16.87."

Pause for a moment and let that statistic sink in: $1.75 million per hour. That was not per month or per week. It was per hour. Using an average annual salary of $36,587 for workers in the USA,  it would take an average-paid worker almost 48 years -- your entire working career -- to make what Tepper made in one hour. Something is very wrong.

Reich also wrote in his Facebook post:

"I’m not suggesting Tepper do any of these things, but I can’t help wondering how he possibly can spend $1,750,000 an hour. I also wonder what kind of society is it that won’t raise the minimum wage from $7.25 to $10.10 an hour but gives hedge-fund managers earning well over a million dollars an hour a special tax break allowing them to treat their income as capital gains subject to the lower capital-gains rate instead of ordinary income?"

Good question: what kind of society allows this type of senior executive pay while at the same time refuses to raise the Federal minimum wage for the lowest paid workers? Remember, the minimum wage doesn't affect all workers; just the lowest paid workers.

The Federal minimu wage rate has been stuck at $7.25 since 2009. Meanwhile, elected officials in Congress get automatic cost-of-living increases (COLA) to their pay. (Their COLAs are in addition to what appears to be legalized "insider trading" for member of Congress.) Is that fair? If COLAs are good for a few, they are good for everyone.

Are these your values? These are not my values, and I doubt that they are your values either. These don't seem like Christian values either. Yet, we've elected government officials that have crafted and voted for laws that allow this to continue.

And, it's not only income inequality. It's wealth inequality, too. Some of the problems with wealth inequality (link added):

"Wealth gathering at the top creates all sorts of problems. Some of these elites will hoard their wealth and fail to do anything productive with it. Others channel it into harmful activities like speculation, which can throw the economy out of whack. Some increase their wealth by preying on the less well-off. As inequality grows, regular people lose their purchasing power. They go into debt. The economy gets destabilized... By the time you get to 2010, US inequality, according to Piketty’s data, is quantitatively as extreme as in old Europe in the first decade of the 20th century..."

This is a mugging of the middle class. This is a mugging of the American Dream. This is a war on both the middle class and the poor. Can you imagine making $1.75 million an hour? I can't imagine anyone being worth that much. Can you?

What type of society allows this? What type of person denies others the benefits they enjoy? One possible explanation: academic studies have found that right-wing conservatives, and the rich CEOs they support, are often sociopaths.

Learn more about income inequality, the six principles of the new populism, the film Inequality For All, and take action. Consumers worldwide are slowly waking up to the issues. For higher wages and more rights in the workplace, fast food workers will protext on May 15 in 150 cities and 30 countries.

23 Domino's Stores In New York To Pay $448K To Settle Wage Theft Charges

Yes, today is April 1. This news item is not a joke. Last week, the office of the New York State Attorney General announced a settlement with 23 Domino's stores regarding wage theft charges. The settlement includes a restitution payment of $448,000 for alleged underpayment wage violations. Attorney General Eric Schneiderman said:

"The violations in these cases demonstrate a statewide pattern of Domino’s franchisees flouting the law and illegally chiseling at the pay of minimum-wage workers... My office will be relentless in pursuing fast-food employers that underpay the hardworking people who are the backbone of their operations.”

The Domino's restaurants are located in eight counties: New York City, Dutchess, Erie, Nassau, Rockland, Schenectady, Suffolk and Westchester. The restitution payment will go directly to 750 minimum-wage workers. Most workers will receive $200 to $2,000.

The attorney general's office conducted an investigation and found that from 2007 to 2013, the restaurants:

"Some franchisees paid delivery workers as little as $5 per hour, which is below the $5.65 tipped minimum wage that has applied to delivery workers since 2011 under New York law.

Two franchisees failed completely to pay adequate overtime, as required by law. Other franchisees underpaid overtime because they did not combine all hours worked at multiple stores owned by the same franchisee or because they used the wrong formula to calculate overtime for tipped workers, unlawfully reducing workers’ pay.

Delivery workers who used their own cars to make deliveries were not fully reimbursed for their job-related vehicle expenses. Delivery workers who used their own bicycles to make deliveries were typically not reimbursed for any expenses related to maintaining their bicycles, nor were they provided with protective gear as required by New York City law.

Some stores violated a state requirement that employers must pay an additional hour at minimum wage when employees’ daily shifts are longer than 10 hours.

Some stores also violated a state requirement that employers must pay restaurant workers for at least three hours of work when those employees report to work for a longer shift but are ultimately sent home early because of slow business or other reasons."

The settlement agreement requires the restaurants to implement a complaint process, provide bi-lingual employee handbooks, train supervisors on labor law, post a statement of workers' rights, and submit compliance reports quarterly to the Attorney General's Office. Two restaurants with the most violations are also required to hire an independent auditor that will conduct unannounced inspects for the next three years.

Investigations of additional Domino’s franchises are ongoing.

Congratulations to the Attorney General and his staff for excellent work.