Labor Department Targets Warehouse Industry for Wage Enforcement

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The U.S. government’s minimum-wage enforcers plan to zero in on the warehouse and logistics industry, amplifying scrutiny of a sector criticized during the pandemic for its labor practices.

A combination of explosive growth, low wages and the widespread use of contract staff demands that greater attention be paid to how the sector treats its “essential workers,” Jessica Looman, the acting administrator of the U.S. Department of Labor’s Wage and Hour Division, said in an interview Feb. 8. “We want to make sure that the outcome, as we’re continuing to move out of this pandemic, hasn’t been an opportunity for greater exploitation of workers, but instead that we have learned a lot of lessons and it can be an opportunity to empower more workers.”

In an emailed statement, Looman’s agency pledged “vigorous enforcement” as part of a new initiative stepping up efforts to ensure warehousing and logistics workers are paid the required hourly wage and overtime pay, can take time off as prescribed by law and aren’t retaliated against for exercising their rights. The agency has been conducting 70 investigations in the warehouse and logistics sector in recent months, and three-quarters of those it resolved found violations of the law, a spokesperson said.

Looman

The new initiative will include a major focus on misclassification of workers as independent contractors rather than employees, an issue the Biden administration has vowed to address more forcefully. “One of our biggest challenges is that there are business models that are designed specifically to call a worker an independent contractor in order to avoid the payment of minimum wage and overtime,” Looman said.

Applying an Obama-era concept called “strategic enforcement,” Looman’s division aims to use its limited resources to investigate and foment change in industries prone to widespread violations, rather than waiting for workers to file complaints and then just embarking on ad hoc, one-off probes.

“There is this incredible impact that we can have when workers understand their rights, employers understand their obligations, and we back all of that up with a strong enforcement program,” Looman said. “It really can change the dynamics in a sector and it can empower workers.”

Increased demand and constraints on the global supply chain have strained the nation’s warehouse and logistics industries. We’re taking action to ensure that warehouse and logistics workers’ wages and workplace rights are protected. https://t.co/gtpYlSbWgU — U.S. Department of Labor (@USDOL) February 8, 2022

Warehouse working conditions have drawn more attention during the pandemic because many workers risked their health and lives serving customers sheltering at home. Employees have mounted strikes and pursued litigation around the country over safety concerns. They also secured a new law in California that requires companies to disclose their facilities’ productivity quotas and prohibits employers from enforcing them in ways that prevent workers from using the bathroom.

Amazon.com Inc., which benefited from a surge in online shopping during the pandemic, has drawn much of the criticism. While the company spent billions to help COVID-proof its facilities, employees staged walkouts demanding greater protections. A group of workers also filed a lawsuit claiming Amazon was putting them and their families at risk. A federal judge dismissed the complaint, and Amazon denied the allegations, but the employees have asked an appeals court to revive it.

Amazon warehouse workers in New York and Alabama have mounted union campaigns, as have Los Angeles port truckers, who claim XPO Logistics Inc. illegally misclassified them as contractors. (XPO denied wrongdoing.)

The Wage and Hour Division announced last week that it aimed to recruit 100 new investigators, with more hiring to come later this year. Looman, a former Minnesota building trades labor leader, has been running the agency for a year. President Joe Biden’s nominee to permanently lead the agency is David Weil, who served in the same role during Barack Obama’s second term after previously spearheading a report for the division advocating the strategic enforcement approach.

— With assistance from Benjamin Penn.