Migrant workers in Australia, including international students, backpackers and other temporary migrant workers, are likely owed more than AUD 1 billion (USD 709.2 million) in unpaid wages, according to a study ‘Wage Theft in Australia’ published by the University of New South Wales and the University of Technology Sydney.

The study, which surveyed 4,322 temporary migrant workers from 107 countries, found that almost a third of migrant workers earned AUD 12 (USD 8.5) an hour or less, approximately half the casual minimum wage. Fewer than one in ten migrant workers had taken action to recover unpaid wages, even though they know they are being underpaid.

Among those who tried to recover unpaid wages, two-thirds recovered nothing, and 16% received the full amount they were owed. Meanwhile, 3% of underpaid workers went to Australia’s workplace watchdog the Fair Work Ombudsman, and of those, 58% recovered nothing.

“The study dispelled the misconception that temporary migrants are underpaid because they are unaware of minimum wage rates in Australia,” the report stated.

Bassina Farbenblum, a senior law lecturer at the University of New South Wales, commented, “The scale of unclaimed wages is likely well over a billion dollars.

“There is a culture of impunity for wage theft in Australia. Unscrupulous employers continue to exploit migrant workers because they know they won’t complain,” Farbenblum said.

University of Technology Sydney senior law lecturer Laurie Berg, also commented, “The system is broken. It is rational for most migrant workers to stay silent. The effort and risks of taking action aren’t worth it, given the slim chance they’ll get their wages back.”

The report made a number of recommendations including regulatory and procedural changes. Among these include establishing a dedicated team to address migrant workers’ inquiries, directing information to international students and other migrant workers on accessing solutions for their unpaid wages.

Meanwhile, Unions New South Wales Secretary Mark Morey said migrant workers on temporary visas should be given a deportation amnesty while worker if they report wage theft.

Temporary migrant workers comprise up to 11% of the Australian labour market.

CEO pay in Australia has hit record highs according to an analysis of CEO pay by the Australian Council of Superannuation Investors (ACSI). Reported pay for ASX (Australian Securities Exchange) 100 CEOs is the highest it has been in the 17 years of the study.

Median realised pay for an ASX100 CEO rose 12.4% to $4.36 million (USD 3.2 million) and was up 22.1% to AUD 1.76 million (USD 1.3 million) for ASX101-200 CEOs.

The ACSI said that persistent and increasing bonus payments to Australia’s top chief executives are driving remuneration to record levels.

The analysis coincides with figures published by the Australian Bureau of Statistics which showed the Consumer Price Index (CPI) at 2.1%, wiping out Australia’s near record low wage growth of 2.1%. This means that real wage growth is now zero.

The Australian Council of Trade Unions said costs of items and services like electricity, gas and childcare continue to increase well above CPI, meaning that wages are going backwards compared to non-discretionary spending.

For workers in the private sector, who account for approximately 85% of the workforce, they are experiencing wages growth of 1.9%, which is well below inflation (2.1%). Workers in the public sector are experiencing annual wages growth of 2.3%.

“Real wage growth is now zero,” ACTU Secretary Sally McManus said. “The system is failing working people who desperately need a pay rise to be able to afford to support themselves and their families.

“Working people in Australia should not be struggling to pay for transport, or healthcare, or to put food on their table. Australians need a pay rise,” McManus said. “When the system is out of balance and big business has too much power, this is what happens. Balance needs to be restored so working people can win the pay rises they deserve.

McManus added that “we need to change the rules so that Australians get a pay rise.”

The Australian Council of Superannuation Investors also found that in FY17, all but six of the 80 CEOs eligible for a bonus received one, compared with ten CEOs departing their roles. Bonus payments up more than 18%. The median bonus awarded to an ASX100 CEO was at 70.5% of their maximum entitlement and close to one in three ASX100 CEOs were awarded at least 80% of their maximum bonus in the latest period.

“At a time when public trust in business is at a low ebb and wages growth is weak, board decisions to pay large bonuses just for hitting budget targets rather than exceptional performance, are especially tone-deaf,” ACSI CEO Louise Davidson said.

“In light of these results, we will be looking closely at bonus outcomes in the upcoming reporting season,” Davidson said. “If they’re not transparent and reflective of performance, we will be recommending that our members vote against those remuneration reports.”

By Pamela Wolf, J.D.

Under proposed settlement agreements submitted to an NLRB Administrative Law Judge on March 20 for approval, McDonald’s USA, LLC, and its franchisees would give what is “intended to provide” 100 percent of back pay for workers who allegedly were treated unfairly. The proposed deals represent a full remedy for all unfair labor practice cases pending before ALJ Lauren Esposito, including those previously severed from the litigation. However, neither the Labor Board, nor McDonald’s, has put a monetary amount on the proposal.

McDonald’s USA, LLC, as a joint employer, and multiple franchisees, were accused of violating workers’ rights by, among other things, making statements and taking actions against them for engaging in activities aimed at improving their wages and working conditions—including their participation in nationwide fast-food worker protests.

Joint employer battle. The McDonald’s cases have long been the face of the battle over the joint-employment standard established under the Board’s 2015 Browning-Ferris ruling during the Obama era, which swept certain indirect employment relationships more common in today’s workplaces into the definition of employment for NLRA purposes. That standard was purportedly overruled in December 2017, during a narrow window of a Republican majority on the Board. That case, Hy-Brand Industrial Contractors, Ltd., was later vacated by the Board on February 26 due to ethics concerns raised in an inspector general’s report over Member William Emanuel’s participation in the decision, which the report labelled a “do over” for the Browning-Ferris parties, one of which was represented by Emanuel’s former law firm, Littler Mendelson.

The vacatur of the Hy-brand decision returned the Board to the broader, more adverse standard from the perspective of McDonald’s and its franchisees. The Board had sought a stay for negotiations while Hy-brand was still operative, only to find itself returned to the earlier Obama-era standard.

More on the proposed deals. The settlement agreements, which were submitted by McDonald’s and its franchisees, had been negotiated by the Counsel for the General Counsel of the NLRB, according to the Board’s release. Drafts of the agreements were previously presented to counsel for charging parties for review and comment.

McDonald’s USA, LLC, has agreed to certain steps aimed at ensuring that the proposed settlement, if approved, will be fully effectuated and honored by its franchisees. Those steps include the establishment of a settlement fund—the amount of which has not been revealed—in the event of any breaches of the settlement agreements.

McDonald’s corporate statement. In a statement provided to Employment Law Daily, a McDonald’s USA spokesperson noted that the proposed settlement resolves all matters without any admission of wrongdoing. “Additionally, current and former franchisee employees involved in the proceedings are receiving long overdue satisfaction of their claims,” the spokesperson said. “As it has maintained throughout this process, McDonald’s USA is not and never has been a joint employer with its franchisees.”

The spokesperson also said that while the settlement is not yet final, “we believe this is a major first step in ending this wasteful multi-year litigation.”

From the other side. Not all parties see the proposed settlement as an appropriate resolution of the cases. In a statement to Employment Law Daily, Micah Wissinger, an attorney representing the Fight for $15 worker organizing committees and the SEIU, put it this way: “The proposal by McDonald’s is not a settlement. In a real settlement, McDonald’s would take responsibility for illegally firing and harassing workers fighting to get off food stamps and out of poverty. We look forward to presenting our objections to the judge.”

White men are paid more than black men, even when they share similar educational backgrounds and are from affluent families, according to a new report from the Equality in Opportunity Project. And a study released last year found a significant portion of the racial wage disparity can be attributed to unexplained factors that could include discrimination and differences in opportunity.

White men are paid more than black men, even when they share similar educational backgrounds and are from affluent families, according to a new report from the Equality in Opportunity Project. And a study released last year found a significant portion of the racial wage disparity can be attributed to unexplained factors that could include discrimination and differences in opportunity.

By Lorene D. Park, J.D.

Reversing in part the dismissal of retail sales employees’ claims that their employer’s draw-on-commission policy violated the FLSA’s minimum wage and overtime provisions, the Sixth Circuit explained that it was lawful to advance a “draw” against future commissions to make sure an employee is paid the minimum wage each week, but requiring repayment of outstanding draws after termination would violate the FLSA, so the plaintiffs sufficiently stated their claim in that regard. They also sufficiently alleged that the employer unlawfully encouraged them to work off the clock for mandatory training. Judge Sutton dissented in part, finding that because the employer did not actually enforce the post-termination repayment part of the policy, that provision did not violate the FLSA (Stein v. HHGregg, Inc., October12, 2017, Moore, K.).

Draw-on-commission policy. The employer operates 25 HHGregg stores in Ohio and over 200 nationwide, selling appliances, furniture, and electronics. All retail sales employees, including the two plaintiffs here, are subject to a draw-on-commission policy. Under this policy, sales reps are paid based solely on commissions, and during pay periods when earned commissions fall below the minimum wage, they are paid a “draw” against future pay to meet the minimum.

If an employee works 40 hours or less in a week, the draw is “the difference between the minimum wage for each hour worked and the amount of commissions [actually] earned.” If an employee works over 40 hours (an overtime week) the draw is “the difference between an amount set by the Company (at least one and one-half (11/2) times the applicable minimum wage) for each hour worked and the amount of commissions” earned. Draw payments are calculated weekly, and an employee only receives a draw if commissions fall below the minimum wage (in a non-overtime week) or one and one-half times the minimum (in an overtime week). Sales reps repay the draw, usually by deducting it from future commissions. An employee may be subject to discipline for receiving frequent draws or accumulating too great a deficit, and the policy requires immediate repayment of any deficit upon termination.

Variation from DOL regs. Although the U.S. Department of Labor recognizes the draw-on-commission pay structure (referred to as “straight commission with . . . ‘draws’”) as a potential method of compensation for retail employees, the draw policy here was “somewhat unique.”

Whereas a typical draw system pays a fixed amount as a draw, the amounts here varied from week to week. Also, the fixed draw usually bears a fixed relationship to expected commissions, but here the draw was based not on expected commissions but on the minimum wage.

Lawsuit. Filing a class action, the plaintiffs claimed the draw-on-commission policy violated the FLSA and state law and that they were encouraged to work “off the clock” for training and conferences, among other claims. The court dismissed the suit and the employees appealed.

Retail or service establish exemption does not apply. Reversing, the Sixth Circuit first held that the lower court erred in applying the Section 7(i) retail or service exemption. This only exempts a retail or service employee from overtime pay if “the regular rate of pay . . . is in excess of one and one-half times the minimum hourly rate applicable to him” under the FLSA’s minimum wage provisions. The “regular rate of pay” is the “hourly rate actually paid the employee for the normal, nonovertime workweek for which he is employed,” explained the court, and the allegations here showed only that in a nonovertime week, employees are entitled to exactly the minimum hourly rate. There was therefore no basis to apply the exemption.

Drawing on future commissions is ok, post-termination liability isn’t.The appeals court next held that while the plaintiffs failed to allege sufficient facts demonstrating that the practice of deducting a draw from future earnings violates the FLSA, they did sufficiently allege a violation where the draw-on-commission policy holds employees liable for any unearned draw payments upon termination for any reason.

As to the first point, the employees had argued that the practice of deducting the draw violated the DOL regulations requiring that minimum wages be delivered “free and clear.” They characterized the draw as “nothing more than a loan” that sale reps have to repay or “kick-back” to the employer. However, the appeals court saw things differently and explained that sales reps could keep the full amount “delivered,” while the deductions were instead made from wages that were not yet delivered or paid. This was not a “kick-back” as that term is ordinarily defined.

The conclusion that drawing on future commissions was lawful was also supported by the DOL field operations handbook, which indicates that the FLSA permits employers to “credit . . . draws or guarantee payments against their minimum wage obligation when settling out the amount due employees at the end of the pay (settlement) period.”

Post-termination liability for deficit would violate FLSA. Although the plaintiffs failed to sufficiently allege that the draw payment plan violated minimum wage or overtime requirements, the result was different with respect to the requirement that an employee “immediately pay” any unpaid deficit upon termination and the company has “the right to demand payment” of the deficit after termination. This aspect of the policy violated the “free and clear” regulation because it requires a repayment of wages already delivered, explained the appeals court. The employer’s oral assurances to the court that this aspect of the policy wasn’t actually enforced did not change the analysis, which focused solely on the language of the written policy.

Claim regarding off-the-clock work revived. The appeals court further held that the plaintiffs sufficiently alleged the employer’s policies encouraged them to work “off the clock” without compensation in order to avoid a higher draw. Specifically, they alleged that managers encouraged them to work off the clock when attending mandatory training and conferences. Though the employer argued that the practice would not violate the FLSA because under-reporting working time in draw weeks would lessen draw payments (and increase commission) in future weeks, that argument failed because the FLSA requires employers to actually pay the minimum wage for all hours worked in any given pay period. The appeals court also found that the alleged off-the-clock work supported the employee’s claim of overtime violations as well.

Partial dissent. Dissenting in part, Judge Sutton agreed that the employer could not lawfully “claw back” draw payments after an employee’s termination, but the judge disagreed that there was a violation here because there were no allegations that the employer actually enforced the policy by demanding repayment of a draw after termination.

A Melbourne-based labour-hire operator has been fined the maximum available penalty after he failed to pay a foreign apprentice mechanic any wages for nearly three months of work, instead using the employee’s wages to purchase a vehicle, reports the Sydney Morning Herald. Australia’s Fair Work Ombudsman said the man trading as United Consulting or United Consulting Services has been hit with maximum penalties of AUD 10,800 (USD 8,600) in the Federal Circuit Court and referred to the Commonwealth Director of Public Prosecutions. The court found that the man who traded as United Consulting, Leonard Greenan, hired a 29-year-old Pakistani worker who came to Australia on a bridging visa (temporary visa) to work at a dealership. The worker took out loans to pay off AUD 9,500 (USD 7,500) for a visa sponsorship which was not provided. The judge said that Leonard invoiced the dealership for the foreign worker wages but instead was using the money for a down payment on a car. Leonard also ignored a compliance notice to back-pay the worker.

By Pamela Wolf, J.D.

On July 27, 2017, House Education and the Workforce Committee members introduced the Save Local Business Act, which would amend the NLRA and the FLSA to restore what they called “the commonsense definition of what it means to be an employer.” The legislation, H.R. 3441, would roll back what proponents see as a “extreme joint-employer scheme” and clarify that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers.

The bill, which has bipartisan support, would get rid of the revised-joint employer standard articulated in the 3-2 Browning-Ferris Industries decision, in which the National Labor Relations Board returned to its pre-1984 standard for determining joint-employer status under the NLRA. In that ruling, the Board announced that it would no longer require that a joint employer not only possess the authority to control employees’ terms and conditions of employment, but also exercise that authority. Nor would the Board require that to be relevant to the joint-employer inquiry, a statutory employer’s control must be exercised directly and immediately. If otherwise sufficient, control exercised indirectly—such as through an intermediary—may establish joint-employer status.

The controversial Browning-Ferris decision immediately drew sharp and sustained criticism, as well as Congressional hearings that lobbed a host of grievances, including what is seen as the Board’s overreach.

The Save Local Business Act was unveiled at a press conference with small business owners. “Federal labor policies should be focused on benefiting workers and helping small businesses grow instead of creating barriers that limit opportunity,” said Subcommittee Chairman Bradley Byrne (R-Ala.). “Also important, Congress—not unelected federal bureaucrats—should set our nation’s labor policies through statute instead of executive fiat. Under this bipartisan legislation, workers, and the businesses they work for, will be given much needed clarity and certainty.”

“Owning and maintaining a small business has been part of the American dream for generations,” said Representative Henry Cuellar (D-Tex.). “We must ensure that our small businesses and franchises receive fair treatment from the government, and not confusion and arbitrary regulations that harm them. I have heard from small business owners throughout my district and the country, and it is clear that the NLRB’s joint employer decision was a major threat to the life of the franchise industry and the dream of business ownership for millions of Americans. The Save Local Business Act will provide our nation’s small and franchise businesses the certainty necessary to grow and invest in the future.”

But not everyone is looking through the same lens. Said Committee Ranking Member Bobby Scott (D-Va.): “H.R. 3441 immunizes joint employers from liability, even if they share contractual control of wages, benefits, scheduling, or discipline. Workers who seek to hold their employers accountable for violating wage and hour laws or refusing to collectively bargain will lose under this bill. Real wages have been stagnant for decades, and workers are increasingly employed by temporary staffing firms or working as permatemps. On top of that, this bill strips workers of their legal rights to secure the wages they have earned or to bargain for a better life.”

By Marjorie Johnson, J.D.

A federal court in New York will revisit claims by two convicted sex offenders seeking to hold Allied Van Lines liable under the New York State Human Rights Law after their employer fired them based on the results of a criminal background check Allied had required as a condition of its services contract with the employer. After the movers appealed summary judgment against them, the Second Circuit sought guidance from the New York Court of Appeals pertaining to who could be held liable under NYSHRL Sec. 296(15) (which prohibits the denial of employment on the basis of a criminal conviction) and Sec. 296(6) (the “aiding and abetting” provision). Now that New York’s highest court has responded—limiting Section 296(15) to “employers” while concluding that an out-of-state nonemployer could be held liable for aiding and abetting discrimination—the Second Circuit vacated the district court’s order to the extent it conflicted with the state court’s decision and remanded for further proceedings (Griffin v. Sirva Inc., May 31, 2017, per curiam).

The two movers were employed by Astro Moving and Storage Company, which provided certain moving and storage services under contract to Allied Van Lines, Inc. Astro terminated them after a criminal background check revealed their past criminal convictions for sexual offenses against young children. They subsequently brought the instant action alleging NYSHRL claims against Astro, Allied, and Sirva (Allied’s parent company). They claimed that because Astro had signed a contract under which Allied prohibited any individuals convicted of certain crimes from working on Allied jobs, Allied could be held liable under the NYSHRL for discrimination based on their criminal convictions.

The district court dismissed their claims against Allied and its parent company on summary judgment, finding that Section 296(15) of the NYSHRL applied only to the aggrieved party’s “employer.” Since the two movers were not employed by Allied, the court found it could not be held liable under the NYSHRL for “denying employment” on the basis of a criminal conviction.

Certified questions. On appeal, the Second Circuit certified three questions to the New York Court of Appeals: (1) whether the NYSHRL’s criminal conviction provision applies only to “employers”; (2) if yes, what is the scope of “employer”; and (3) whether a nonemployer can be liable under the NYSHRL’s “aider and abettor” provision. On May 4, 2017, the New York Court of Appeals issued its decision in response to those certified questions.

“Employer” liability. The New York Court of Appeals answered the first certified question in the affirmative—as the district court had—holding that liability under Section 296(15) was limited to an aggrieved party’s employer. It then reformulated the second certified question to address how courts should determine whether an entity is an “employer” for purposes of that provision. Based on New York case law, it identified four factors to be considered in determining whether an entity is an aggrieved party’s employer: (1) the selection and engagement of the servant; (2) the payment of salary or wages; (3) the power of dismissal; and (4) the power of control over the servant’s conduct. These common-law principles determined who could be liable as an employer under Section 296(15), with “greatest emphasis placed on the alleged employer’s power to order and control the employee in his or her performance of work.”

The court also reformulated the third certified question to be whether Section 296(6) “extends liability to an out-of-state nonemployer who aids or abets employment discrimination against individuals with a prior criminal conviction.” Answering in the affirmative, the court decided that the federal district court had read the section too narrowly, and that Section 296(6) extends lability to persons and entities beyond joint employers. It also applies to out-of-state defendants and should be construed broadly.

Vacated and remanded. Based on that guidance, the Second Circuit vacated the district court’s grant of summary judgment and remand the case for proceedings consistent with the opinion of the New York Court of Appeals.