Payroll Cards and Fees are Workers’ Rip-off and in Some Cases Illegal


New Orleans  Some employers, including McDonalds, Walgreens, and others are forcing workers to be paid through bankcards.   They “load” the cards with the amount owed the workers, and according to recent reports are even making money via kickbacks or rebates from the card issuer, oftenbig banks like Citi and others.   These same banks make out like bandits because the cards generate significant fees for anything as small as a balance inquiry or as large as a couple of bucks for using an ATM that is “out of network.”  A story in the New York Times recently reported a number of cases of workers feeling coerced to agree to these supposedly “voluntary” systems, and in some cases they were clearly not voluntary at all.   The New York Attorney General Eric Schneiderman has now announced an investigation with inquiries to 20 large employers from Walmart on down.

            This has been a rip-off ever sense banks invented these cards, but what is categorically clear is that if companies like some of the McDonalds franchisees are mandatorily requiring minimum wage workers to have to access their funds in this way, then it is also likely illegal.  The Fair Labor Standards Act (FLSA), which was passed 75 years ago, sets the federal minimum wage.  Workers cannot receive less than these wages.   If the employer requires a uniform, then it is settled law that the employer has to pay for the uniform and the cost of laundering the uniform.   If the employer requires the worker to pay certain out-of-pocket transportation costs, then those costs would have to be reimbursed.  Why?  The FLSA requires that nothing can dilute the worker’s wage so that she is making less than the federally required minimum which is currently $7.25.   So in reported cases where McDonalds might be paying $7.44 an hour, if these add-on’s reduce the amount the worker receives to less than $7.25 then back pay and penalties are owed.   Of course if the worker is only being paid $7.25, then it is already clear that this is against the law.

            This is open and shut, and if it’s happening in New York, these bank cards are undoubtedly being marketed, bought, and used to exploit workers all over the country.  Some state laws, like the ones in New York, may offer some additional protections, but at the least, anything anywhere that leaves a worker with less than the minimum under FLSA is plainly and simply against the law and workers are owed money.  Banks are so used to playing fast and loose with any and all laws that they probably don’t much care, but employers are on the hook now, and we all ought to make sure that they do right by their workers.   They are already paying way too little, so they have no right to pick the pockets of their own employees, no matter what their feeble excuses might be.


Nonprofit Deductions, DREAMing, Facts, Live-In Wages, Tax Justice, and Twitter Access

Quito     With 80% of the United States households earning, and therefore paying, taxes on incomes of less than $100,000 per year, that means that the vast majority of us are filing “short forms” on IRS 1040A.  Independent studies regularly establish that the most generous Americans, when measured as a percentage of income, are those making the least money, which means the vast 80%.  For most of us there is no real tax break and therefore reason to file a “long form” and itemize deductions, because there are not enough loopholes for us.  A lot of the generosity of the vast majority of American families is simply not driven by the chance of a tax break but by the size of their heart, the needs of their neighbors, family, and community.

All of which is somewhat depressing, if not downright pathetic, to read of the efforts of big-time so-called charities lining up with oil companies and others to make sure that their tax loopholes are protected in the current negotiations on creating a more equitable tax system in the United States.  These charities and their lobbyists seem to be lining up mainly as tools of the rich, rather than servants of the public interest, which is actually the basis of their 501c3 exemptions anyway.

It seems clear many of them are indeed playing “Chicken Little,” regardless of Diane Aviv’s statements below to the contrary, even when the impact on most of them is relatively minor.  Why can nonprofits defend standing in the way of a more equitable tax system, including one that eliminates at least some of the huge number of breaks for the 20%, when the 80% are getting so few?  Seems unconscionable.

“Charities Maneuver to Keep Tax Breaks on Donations,” 11/30/12, Wall Street Journal

There is no specific plan to eliminate deductions for charitable giving in current talks. Instead, proposals that have been floated focus on capping overall deductions.  The White House in the past has proposed limiting deductions to no more than 28% of income for families making $250,000 or more. Republicans including former presidential nominee Mitt Romney have suggested limiting deductions to a specific dollar amount. Others have suggesting a “haircut” option, letting taxpayers claim, for example, 80% of their current deductions.

Nonprofit leaders say that if deductions are limited, taxpayers will cut back their giving. Diana Aviv, president of Independent Sector, a coalition of nonprofits, cited studies suggesting Mr. Obama’s plan would lead to $1.7 billion to $7 billion less a year in charity giving. The impact of a dollar cap on deductions, she said, would be even greater.

That is a small part of the roughly $300 billion Americans donate yearly, but Ms. Aviv said certain charities would be hit disproportionately. “This is not a Chicken Little situation,” she said. “Something is going to happen unless we are able to persuade lawmakers that the charitable deduction is different from other deductions.”

Activists are descending on Capitol Hill next week. They have written letters to the president and congressional leaders. They are urging their supporters to contact congressional offices.

Under the tax code, a person can claim a charitable deduction that matches his tax rate. A taxpayer in the 18% bracket who donates $1,000, for example, would have tax savings of $180.

For some more uplifting news, here is a quote from the article in today’s Times from the critical United We Dream conference of young immigrants in Kansas City over the weekend:

On Sunday, six immigrant parents, also here illegally, joined a “coming out” ceremony where they spoke in public for the first time, as many youths have done in recent protests.  One father, Juan Jose Zorrilla, 45, who is from Mexico, recounted how he had entered the United States several times by swimming across the Rio Grande. “For parents, there is no sacrifice so large that we won’t make it for our children,” Mr. Zorrilla said. A mass of youths jumped up from their chairs to embrace Mr. Zorrilla and the other parents.

Nate Silver, FiveThirtyEight Blog, New York Times continues to try to administer bitter information by sharing “just the facts, ma’am” with the rest of us though:

“…the seeming inaccuracy of Mr. Romney’s internal polls ought to present a warning to future campaigns. The problems with internal polls may run deeper than the tendency for campaigns to report them to the public in a selective or manipulative way. The campaigns may also be fooling themselves.  Our self-perceptions are very often more optimistic than the reality; 80 percent of people think they are above-average drivers, for example.These problems can be worse when we join together to form businesses or organizations.”

Speaking of the facts, Editorial on Domestic Workers, Times

The study, by Nik Theodore, an associate professor of urban policy at the University of Illinois at Chicago, and Linda Burnham, research director of the National Domestic Workers Alliance, surveyed 2,086 workers in 14 cities. It found that 23 percent of workers made less than their state’s minimum wage, which must be at least $7.25 an hour. Live-in workers had it worse: 67 percent of them earned less than the minimum, 65 percent had no health insurance and about 82 percent had no paid sick days.”

Live-in workers are still not covered by the minimum wage in the Fair Labor Standards Act the last time I checked.  Why is that so hard to correct?  Seems like an easy fix?  Is it because most of them work for the rich or richer?

Will creating a more equitable tax system be the end of the US economy as we know it?  – Not So Much Really – Times

While data on the tax status of all stockholders is hard to come by, many economists agree than an increasing proportion of the entire equities market is now held by retirement investors whose holdings are not subject to current tax law; by foreign investors who don’t pay American taxes, or by institutional investors like insurance companies and pension funds that are exempt from taxes.  Among the stocks that are held in the United States, 48 percent are held directly by households, down from 65 percent in 1988, according to Federal Reserve figures. And 40.7 percent of households have mutual funds in tax-exempt accounts.   But only some of these have income over $250,000 a year, and a portion of those people have their money in accounts protected from taxes. Eric Toder, a co-director of the Tax Policy Center, said as a result market prices should have little to do with the taxes paid on gains because prices are largely “being determined by tax-exempt investors and by foreign investors.”

For a humorous – and more realistic – perspective from someone who clearly makes enough to use the “long form,” David Carr, Media Columnist for NTY on John Huey leaving Time, Inc. as Editor-in-Chief:

Now Mr. Huey is packing his stuff to prepare for a fellowship at Harvard. “I’m looking forward to getting back closer to the keyboard than I have been,” he said. Before he goes, he will probably slip Merle Haggard’s “Big City” into the CD player, an album whose title track frequently kept him company in his corner office.

I’m tired of this dirty old city.

Entirely too much work and never enough play.

And I’m tired of these dirty old sidewalks.

Think I’ll walk off my steady job today.

Gesturing at the magazines on the table, Mr. Huey said: “We still make a great deal of money because consumers pay us money for the products that we give them.”

“But I can’t look anybody in the eye who is coming into the business and tell them that they are going to end up in an office like this,” he added, with a wave at its expanse. “But who is to say that anybody should live like this anyway?”

Finally, we are going to leave all of this in the hands of Congress, which sounds fine, until you remember there are big time crazies among us.  Here’s a quote in NYT from Texas Republican Congressman Ted Poe:

“We freeze terrorist organizations’ bank accounts, and we ought to freeze their Twitter accounts, too,” he said.

Dude, censor this!



More Hours, More Availability, More Production, and More Labor Standards

New Orleans   Susan Lambert, a University of Chicago professor, offers a series of intriguing arguments in an op-ed piece in the Times about work, women, hours, and flexibility some of which are compelling and all of which are interesting, even if less certain than she argues.  To state her case plainly, she believes that people, women in particular, in lower waged jobs want more hours and fixed hours and at higher paid jobs want less hours.  She believes that the Fair Labor Standards Act (FLSA) needs to be amended to offer guarantees for hours not just pay for the hours and overtime needs to be added for salaried, professional job classifications.   Of course the FLSA is not going to be modified in this way at least anytime soon.  In this economy we are still hoping the government will take a look at the minimum wage, and that’s not likely soon either.

What about the rest of her arguments?  In some cases I’m not sure, but let’s get the conversation going.

I had my annual physical this week.  My doctor is a woman, and this year she was unusually talkative about her business.  It started when she focused on the computer to “write the orders,” and commented sarcastically about how “lucky” she was that she got to do all of her own orders now.  She told the common story of so many of our mother’s advice in her generation who had her take typing so she “would have something to fall back on.”  My mother told my brother and I the same thing and we took it in summer school somewhere, and in fairness it’s a skill that has been invaluable over the years.  It goes without saying that this new requirement had eliminated the job of a medical clerk but in a “work to rule” story from the professional side of the divide, she told me how she was handling 25 patients a day, but unilaterally cutback to 18 because she didn’t have enough staff to keep up, so the waiting was increasing and no one was happy.  Her one nurse simply couldn’t keep up with the orders as she was typing them out.  She works out of the clinic of a large hospital, and the bean counters at the big house finally noticed that her production was down and asked her about it, so she suspected things were about to change with more increased staffing.  It goes without saying that she was not going to work more hours which is part of why this problem hit the wall.

Studies about well trained and highly demanded registered nurses several years ago found some interesting things as well.  As pay increased to a certain level, the nurses, largely women, elected to simply work less hours having essentially met their income goals and having gained more flexibility on the job.  Obviously, nurses are among the “aristocracy” of waged labor with different job-based bargaining strength than aides, sitters, and others, but it points to the fact that Lambert’s generalization about the worker demand for more hours may be a little sweeping.

On the lower waged, retail service sector, it is also not quite so simple.  Lambert makes an excellent point about “availability” now being a “major form of human capital,” but I think it is perhaps more nuanced and less understood.  At Fair Grinds Coffeehouse, as an employer over our first year, I have continually tried to create something like fulltime hours and regular, stable shifts with our crew of baristas, and have been largely unsuccessful.  Thirty hours becomes a lot of hours, and part of the demand from the workforce continues to be more flexibility even as we want the availability and stability for our community of customers.

From a labor union perspective I think part of the issue is that service work has all become contingent.  Many workers are balancing multiple jobs, school, and family responsibilities.  In Professor Lambert’s ideal work world everyone wants one fulltime job with decent pay, and assuming that the work has some value and is fulfilling, who would disagree, but in the real world today, millions both up and down the wage scale have become what my friend Joel Solomon calls “portfolio workers,” balancing two, three, or more jobs, projects, or whatever that they are cobbling together to make a living wage and a life.

All of which leads me to believe that even if we had the power and will to modify the FLSA, we need to know a lot more about how to integrate the real world of the service economy and its employment patterns before we can be as certain as Professor Lambert about what the legislative solutions might be.  The old paradigm for 40-hours, 2080 a year for life may have been hit so hard in the new economy that there is no dialing back for many employers and, perhaps surprisingly, for many workers.

It’s hard for me to believe that when it comes to the bottom line it’s not more likely to be less about the hours and more about the money.


“Justice Will Be Served” for Nail Salon Workers as Opportunity Knocks

New Orleans    A week long jury trial in federal court gave five nail salon worker employed by a Korean-owned chain in Long Island almost $250,000 in back pay and overtime for Fair Labor Standard Act violations for underpayment below minimum wages.  The case for these marginal, often ignored service workers was brought forward by a coalition of organizations who are part of the “Justice Will Be Served” Campaign, spearheaded by the well known Chinatown Restaurant Workers in New York City.

A visit to the campaign’s website proves quickly that this has been a long time fight to organize marginal service workers by an independent group of organizations working in the New York, Connecticut, and New Jersey area, mostly employing a strategy of winning compliance with FLSA standards on wages.  The charge, complaint, and enforcement strategy to build confidence in the workers inspiring more organizing, is a tedious and determined road for the campaign, but seemingly a sure one.  The nail salon case dates back to 2009.  Other accomplishments on the website date as far back as 2003.  This is hard, patient work in the vineyards for service workers that need organization, but fall outside of the usual parameters of most institutional labor unions.

Organizers quoted in the New York papers yesterday hope that this inspires a wave of organizing among nail salon workers.  That will probably not be the case, but what this victory may do is eventually provide some resources and deepen the commitment and interest in future organizing by the campaign and its member organizations, many of whom are likely supported now more by private resources than membership dues.

A strategy to move among marginal service workers has to be applauded.  Victories on FLSA might create partnerships between organizations and law firms gaining more confidence in moving towards class actions for such workers and being able to fund the organizing through potential cy pres monies.

One can hear the organizing opportunity knocking loudly if anyone is still attuned to the sound.

Justice needs to be served for such workers!


Good News, Bad News for Home Health and Home Day Care Workers

 Detroit                        News reports and political developments brought both smiles and frowns to home-based health and daycare workers across the country.   President Obama announced that he was implementing coverage for home health care workers under the overtime provisions of the Fair Labor Standards Act, which is good news for 2 million such workers, though few get full time hours much less overtime.  On the other hand reports from around the states in USA Today documented the cutbacks coming for home based day care and similar workers because of the terrible budget situations in state after state.

All of this is important, not simply because these are lower waged workers who need and deserve a break, but also because these types of workers have been the single most important organizing success for our generation of labor organizers, enrolling probably between 500,000 and 750,000 new members from these new job classifications in recent decades.  The outstanding success story of SEIU’s Illinois based local 880 growing from zero members 25 years ago to a 70,000 member powerhouse is one of the best examples along with the over 125,000 home care local in Los Angeles.  Unfortunately, Illinois is one of the states that seems poised to cutback on financing for home day care workers, where it has been a leader in both coverage and unionization.

Labor undeniably was a primary voice in lobbying the White House for this expansion of coverage, so props are in order.  Now the harder, unsung fights will be in state legislature after state legislature trying to hold onto these jobs in the face of fiscal assaults.

The irony was clear in the USA Today story.  We are in the heart of the recession still, and lower waged workers depend on this child care support to allow them to access and retain their jobs.  Now when most needed, the waiting lists (more than 10,000 in Louisiana alone for example!) are swelling for such family support.

Hard to catch a break!


Informal Worker Organizing in Kenya

Discussion with AFL-CIO Solidarity Center in Nairobi

Nairobi Our annual check-in with the AFL-CIO’s Nairobi based Solidarity Center working in various eastern African countries like Uganda and Tanzania in addition to Kenya underscored my belief that the future of organizing has to be among the growing numbers of informal workers. Talking with director, Rick Hall, the real organizing excitement and accomplishment seems to be found in collective agreements won for floral agricultural workers and important new drives with informal fisherman around Lake Victoria among all of the water-sharing countries.

More worrisome was hearing the continued difficulty in implementing the important improvements in standards that had been established for urban and rural minimum wage rates and in other critical areas like the measures protecting domestic workers. The potential impacts of these measures are huge. As we all talked (the ACORN Kenyan organizers, Paladin Partners, and Solidarity Center staff) it was hard not to think about how door-to-door campaigns might work. When Rick mentioned that he wished they could canvass the middle and upper income neighborhoods distributing the standards and getting signed recognitions from householders to actually pay the minimums and provide the benefits, I found myself telling about the 1978 campaign when I moved back to New Orleans with the Household Workers Organizing Committee when we were forcing compliance with for domestic workers who were just gaining coverage under the Fair Labor Standards Act in the USA in that year and trying to make examples out of employers (the Gambino bakery family in city was our big “shame” target) who were paying way below and not paying the required social security payments. Now more than 30 years later Kenya is ahead of much of the world, and certainly Africa, but still has to move a campaign to make the law come alive.

The other story that was disappointing was hearing the ineffective enforcement program by the Labor Department in Kenya of minimum wage violations. Rick and his team were delicate, but it sounded too often like the act of making complaints by workers and unions was seen too frequently as an opportunity by inspectors to cash in from the companies by looking the other way. Seemed like another situation where the “crowdsourcing” tools we were talking about this week in Nairobi might also be effective for our friends and allies in labor unions.

Nonetheless, the story in eastern Africa is still encouraging as a bright light for organizing and organizers fearlessly putting together new and effective strategies and breaking ground for informal worker union. A story from Uganda of a terrible problem in a fish processing center that was the springboard to the fisherman’s organizing where a lockout pushed 400 workers out on the street with 40 active committee members fired when the plant reopened and hundreds of police working for the state and the company against the workers, also reminded all of us why this work is both so hard, and so important.