The left-leaning Economic Policy Institute calls on prosecutors and state lawmakers to seek criminal punishment of employers for workplace and labor-law violations that are currently addressed through less serious legal sanctions. There are good reasons to be wary of this advice.
EPI’s new report persistently lumps together different kinds of workplace infractions. At one end of the spectrum are offenses that have long been illegal, such as forced labor or theft of premiums intended for unemployment or injury funds. Everyone agrees that a crooked construction boss who skips town without paying his crew’s wages has committed a crime. There is little controversy over the law coming down hard on offenses like these.
High on EPI’s new prosecutorial agenda, however, are legal infractions at the other end of the spectrum. These include so-called employee misclassification, in which workers are designated as independent contractors or supervisors when a court, state labor agency or similar authority thinks they shouldn’t be. Another EPI priority is the sidestepping of prevailing-wage laws, which set public contractors’ wages well above market value. Also on the list are miscalculations by restaurant managers about when and how the law allows them to engage in tip pooling and conduct that an employee considers retaliation for a workplace complaint.
Among the problems with criminalizing many of these behaviors is that standards for lawful conduct can be impossibly vague, complex, changing or opaque. Managers may have no way of knowing whether they’re violating the law, and infractions may be victimless or even occur at the request of the purportedly victimized party—as with independent contractors or, in the case of California labor law, letting an employee work through lunch so he can leave early.
Consider the main federal statute in the wage-and-hour field, the Fair Labor Standards Act (FLSA). It became law in 1938, but federal courts are still being asked to resolve disputes over whether service advisers at car dealerships are subject to overtime requirements, under what circumstances a union can waive the right to be paid on the clock for donning and doffing protective gear and exactly when the FLSA clock should start running when a flight attendant arrives at the airport. States like California have their own separate and more demanding labor codes, which have been the subject of high-stakes class actions inviting courts to declare unlawful everything from the timing of meal breaks to the way apps like Uber and
Imagine adding the threat of criminal prosecution to this chaos. Imagine the effect that would have on ordinary businesses.
The FLSA’s vagueness is the rule, not the exception, when it comes to labor law. Retaliation is notoriously easy to allege, so much so that some plaintiff lawyers throw it in as part of most cases they file.
The rights of employers and managers are an afterthought—even an annoyance—to EPI. The principle of mens rea, which literally means “guilty mind” and is an acknowledged legal prerequisite for establishing criminal intent, crops up in the EPI report as a pesky obstruction to getting their desired convictions. Going after high-level company executives over ground-level misconduct is difficult. There may be no evidence that the higher-ups knew of or authorized the acts. EPI quotes a law professor who recommends legislation tagging higher-ups with criminal exposure for “making such incidents inevitable.” And the report hails a second law professor who praises criminalization of employer conduct for carrying “the real threat of imprisonment.” The spirit of these proposals is notably in tension with the current trend in law schools to rethink the carceral state.
The report argues that since employees can be prosecuted for crimes like embezzlement, the workplace isn’t only the domain of civil suits. True, principles like freedom of contract should run both ways, but the report has nothing to say about laws in places like Pennsylvania and California that specifically excuse unions and persons engaged in labor disputes from prosecution for stalking, intimidation, street harassment, trespass and a variety of other offenses.
Managers might fear that the EPI recommendations would put a new weapon in the hands of unions and organizers, as well as class-action lawyers: Pay up for our demands or we’ll get you prosecuted. The EPI report not only doesn’t disclaim this possibility, but repeatedly urges district attorneys, state attorneys general and other enforcers to develop close relationships with local unions and organizers, as well as seeking case referrals from wage-and-hour lawyers who represent plaintiffs in class actions.
Exposing managers to criminal prosecution over common, legally unsettled and even sometimes praiseworthy (such as flexible hours) human-resources practices is no way to run a legal system—or an economy.
Mr. Olson is a senior fellow at the Cato Institute’s Robert A. Levy Center for Constitutional Studies.
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Appeared in the June 2, 2021, print edition.