Business

State Senate backs tough action on wage theft

A long-building effort to toughen the state’s wage laws cleared a major hurdle Wednesday when the Massachusetts Senate approved legislation to crack down on companies that fail to pay workers their full earnings.

Backers say wage theft is a particular problem in construction and service businesses that largely deal in cash; some either withhold wages, pay less than promised, or disregard overtime laws.

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The Senate measure would hold companies responsible if subcontractors they hire violate wage laws. It would also authorize the attorney general to shut down work sites as soon as four days after receiving a report of a violation. Companies would have 10 days to appeal a stoppage, and any employees left out of work as a result could be entitled to back wages.

“All anybody’s looking for is for people to play by the rules,” said Mark Erlich, head of the New England Regional Council of Carpenters, a labor union that has campaigned against wage abuses.

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Originally drafted by a joint legislative committee, the current version of the wage bill won the Senate leadership’s backing. Now, though, it needs House approval before the legislative session adjourns at the end of the month.

Previous attempts to crack down on wage theft ran into stiff opposition from business groups, which are now lobbying to keep the new bill from moving forward. They say it is unreasonable to expect a construction company that farms out work to numerous subcontractors to police all of their payrolls.

“You can have 30 subcontractors on a building job, and how that contractor would know that one of those 30 subcontractors is not paying wages is pretty impossible,” said James F. Grosso, a partner at a Boston firm that represents businesses opposed to the bill.

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In a letter on Tuesday to senators, 14 groups representing construction, real estate, and other business interests called the proposal draconian. They said holding a company liable for wage lapses of its business partners would be a first for any state in the country.

David Begelfer, chief executive of the real estate group NAIOP Massachusetts, said the legislation would hold a contractor “guilty by association” just because “the company they hired did something wrong.”

He and other business leaders said existing state laws give the attorney general authority to crack down. In 2015, the attorney general’s office received 5,025 complaints of labor law violations and issued nearly 400 citations that resulted in $3.3 million in recovered wages and penalties.

Advocates say most wage theft occurs in the “underground economy,” where contractors exploit immigrants and temporary workers, in particular. It becomes difficult to hold anyone responsible for violations, advocates say, because these companies often go out of business.

“There are now these many, many layers between employers and their workers, and there’s a lot more opportunity where abuse might happen from people skirting the system,” said Darlene Lombos, executive director of Community Labor United, a Boston-based nonprofit pushing the bill.

The new legislation, Lombos and other backers say, would force the top company on a project to more carefully vet and oversee subcontractors.

The Baker administration has not taken a position on the legislation, a spokeswoman for the Office of Labor and Workforce Development said.

Lombos said she was encouraged by the 38-to-2 vote in the Senate Wednesday.

“That, I think, is a real testament to this understanding that wage theft just needs to be dealt with,” she said.

Michael Bodley can be reached at michael.bodley@globe.com. Follow him on Twitter @michael_bodley.
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