On February 3, 2016, Cincinnati city council members voted 7-2 to pass a “wage theft” ordinance. The ordinance allows the city to revoke tax-credit agreements and require the repayment of grants, taxes, and other benefits if a court or government agency finds that an employer did not pay wages. Contractors could also be barred from future city contracts.
The curious part of the ordinance debate came from Republicans Amy Murray and Charlie Winburn, who voted “no” to the ordinance. Murry asked that the ordinance be amended so that it only applies to situations where companies didn’t pay wages to legal/documented workers. According to one article, “Murray indicated that she worried that without her amendment, the ordinance would send the message that the city doesn’t care who companies hire, as long as they stay within state and federal law on the minimum wage, overtime and other related laws.”
Murry’s concern seems to be that undocumented workers/“illegal immigrants” should not be given the same benefits as legal workers. Unfortunately, by imposing stiffer penalties on companies that break the law with respect to legal workers, Murry’s amendment would actually encourage companies to hire undocumented workers – the opposite effect that she probably had in mind.
Under Murry’s proposal (as I understand it), a company could either:
- Hire a legal worker but be subject to harsh penalties if the company commits wage theft.
- Hire an undocumented worker and be subject to lighter or no penalties if the company commits wage theft.
Under this scheme, the company is economically incentivized to hire undocumented workers.
Courts have repeatedly held that wage and hour laws, like the Fair Labor Standards Act, apply to both legal and illegal workers. One of the reasons is that, if an employer doesn’t have to pay undocumented workers the same as legal workers, the employer is actually incentivized to hire undocumented workers instead of legal, U.S. workers. I don’t think that’s Murry’s intention.
If you are going to have wage and hour laws, they must apply across the board (as they currently do), otherwise you risk encouraging companies to hire undocumented workers. Strangely, it makes some economic sense to increase the minimum wage rate for only undocumented workers, thereby strongly discouraging companies from hiring those workers over legal (and cheaper) labor.