Chairperson Silverman and members of the Committee, thank you for the opportunity to testify today. My name is Ed Lazere and I am the executive director of the DC Fiscal Policy Institute. DCFPI promotes budget and policy choices to expand economic opportunity for DC residents and to reduce income inequality in the District of Columbia, through independent research and policy recommendations.
I would like to focus my testimony today on enforcement of DC’s labor laws, unemployment insurance reforms, and implementation of the WIOA State Plan. My written testimony also contains a discussion of two of DC’s workforce development programs—MBSYEP and the LEAP Academy—as well as the need to fund two laws that were passed last year subject to appropriation—the Building Service Employees Minimum Work Week Act and the Procurement Integrity, Transparency, and Accountability Amendment Act.
DOES and OLLE: Enforcement of Labor Laws
The District enacted a number of laws in recent years to improve wages and benefits of people who work in the District, including increases to the minimum wage, paid sick and safe leave, new penalties for “wage theft” when employers fail to pay workers fully, and protecting workers from discrimination. These new laws have the potential to be incredibly beneficial to working residents, but they are only as good as they are enforced.
Those who are most vulnerable to wage theft and workplace accidents are not only less likely to know their rights, but also to come forward even when they do.
For this reason, a complaints-based enforcement model is not likely to be effective. A more strategic enforcement model would include targeted investigations within industries where evidence shows the greatest labor law violations—industries where workers are most likely to be cheated out of their wages, and where they are least likely to speak up and report such violations. It should be noted that moving out of a complaints-based model and to a strategic enforcement model does not have to be more expensive. Triaging complaints—based on severity, number of workers impacted, and/or whether the complainant is still employed at the firm, for example—can save money, which can then be spent (perhaps more effectively) on strategic enforcement.[1]
Recent efforts by the Office of Labor Law and Enforcement (OLLE) show some important steps in the right direction. For example, the tipped worker portal is up, so that OLLE can monitor whether employees are being paid at least the minimum wage. OLLE is engaging in audits where they see violations. We are pleased to see that there has been relatively robust enforcement of this law. Some 263 audits have been conducted since the portal’s launch last summer, and 80 violations have been found.
In addition, the policy of investigating an entire employer after receiving one complaint from a single employee seems to be effective. In FY 2016, 26 percent of cases investigated in this way were found to have additional violations, and in FY 2017, 35 percent of cases.
Other notable efforts by OLLE include:
- Employer education: OLLE is holding roundtables in key industries on proper compliance with new labor laws.
- Employee education: DC will post ads outside and inside Metro trains and on the outside and inside of buses. Most or all of the bus ads will be on buses that originate at Brentwood Bus Station. We have been told that they will be by the end of March.
- New “strategic” enforcement: OLLE is visiting worksites to inform workers of their rights in selected “hot spots”, and conducting random audits of businesses.
There are signs that even with his progress, OLLE should build on these strengths and pursue additional opportunities:
First, there seems to be a very low volume of complaints on all labor laws. For example, in FY 2016, there were just 167 complaints on the Minimum Wage Act, 40 on the Living Wage Act, and just 22 on the Sick and Safe Leave Act.[2] This seems to suggest what we note above, which is that many workers in low-wage industries fail to even report a violation, which further suggests there is room for improvement in bringing these violations to light through strategic enforcement initiatives.
Also, no hearings or investigations have been conducted regarding violations of the Wage Payment, Minimum Wage, Living Wage, and Sick and Safe Leave laws. Especially considering the fact that the policy to fully investigate violators of the tipped wage law has been relatively effective, this seems like a lost opportunity to ensure that employers are not continuing to violate these laws as well.
In light of this, the department should consider additional “strategic enforcement” strategies, including:[3]
- Increasing the cost of non-compliance by using all enforcement tools, including civil money penalties, liquidated damages, and debarments.
- Identifying the business’s supply chains, and alerting businesses to suppliers that are particularly egregious violators of labor laws, so that companies can consider whether to utilize the services of suppliers who skirt the law.
- Publicizing the results of significant cases through various media sources. This is an effective way to educate other employers about their responsibilities and encourage compliance.
- Partnering with workers’ organizations and high-road employers to identify bad actors.[4]
Unemployment Insurance
We commend the Council and DOES for passing and implementing increases to Unemployment Insurance (UI) benefits for the first time in 11 years. The increase went into effect on October 1, 2016 and already nearly 12,500 claimants have seen a boost in their benefit, for an average increase of $60 per week. This will go a long way in helping these families make ends meet while between jobs. In addition, it is great to see that the UI trust fund still seems quite robust. Benefit payments are down due to the declining unemployment rate, while IU tax collections are up, leading to a consistently higher fund balance.
Given the continued strength of the UI trust fund, we also are hopeful that DOES will recommend a cost of living increase to these benefits this year, for FY 2018. The law adopted last year to raise benefits required DOES to consider an increase benefits for inflation each year, but left the decision to DOES’ discretion. Raising benefits to reflect cost of living changes is important to avoid the problem we had over the past decade, when benefits were not adjusted at all. The first such decision by DOES is due September 30, 2017.
We also want to use this testimony to raise some concerns about the administration of DC’s Unemployment Insurance program, problems raised in more detail in the joint testimony of the Legal Aid Society and the Claimant Advocacy Program.
- Domestic Violence: We commend the DOES Office of Unemployment Compensation for its efforts to serve victims of domestic violence. To further improve awareness of access to UI for workers who lose their jobs due to domestic violence, we recommend that DOES produce and distribute outreach materials to claimants and employers on the special unemployment claims processing for victims.
- Ill or Disabled Family Member: DC residents can claim UI if they leave work to care for an ill or disabled family member, but DOES has not issued rules to interpret this part of the statute. DOES is requiring applicants to provide medical documentation, a significant requirement that we believe can only be used after going through a rule-making process. We recommend that DOES immediately stop requiring such documentation and pursue rulemaking if it wishes to adopt such a requirement.
- ID Checks: DOES conducts random ID checks of Unemployment Insurance recipients, as required by federal rules. Problems with this system, however, may be leading to loss of UI benefits for eligible recipients. About one-fourth of people contacted for an ID check face temporary or permanent loss of benefits, yet worker advocates find that many affected UI recipients did not receive the notification to provide an ID. Improving this process will help limit improper benefit denials.
- Language Access: DOES should assess the share of UI claimants who are Amharic speakers, and begin providing materials in Amharic if the number exceeds the level required under the Language Access Act. DOES also should assess the length of time Spanish speakers have to wait for telephone translation services.
- Overpayment penalty waivers: DOES should take steps to limit issuing penalties for overpayment when those overpayments were not the fault of the claimant. That includes publishing guidelines for investigations, so that claimants have opportunities to review and challenge an overpayment allegation, and developing standards for evaluating waiver requests, including hardship and no-fault standards.
Marion S. Barry Summer Youth Employment Program
The Department of Employment Services has made progress to strengthen the quality and broaden the scope of MBSYEP. Given the large number of youth served, and the substantial cost of the program, the District should take ongoing steps to ensure that it is accomplishing as much as possible through MBSYEP and that the program is driven by rigorous evaluation of outcomes.
- Improve Services to Prepare Host Sites: The District should develop a standard curriculum to ensure that all hosts have a clear understanding of their expectations and can communicate program rules to participants.
- Improve Connection of Older Youth to Long-Term Options: DOES should ensure that 22-24 year old MBSYEP participants have access to longer-term options if they want them. DOES also should ensure that self-identified out-of-school youth are connected with the Youth ReEngagement Center. We encourage DOES to explore opportunities to more effectively collaborate with DCPS, public charter schools, and OSSE to ensure connectivity between the SYEP program experience to either CTE coursework or year-round employment opportunities.
- Youth One-Stop: The development of a youth-specific Virtual One Stop could be highly effective in connecting youth not only to postsecondary educational options, but also employment and training opportunities. This development is referenced in the District’s WIOA State Plan and should be a priority.
LEAP
The LEAP Academy targets long-term TANF participants, with the goal of connecting unemployed DC residents to government job opportunities.
DOES’s 2017 Performance Oversight Responses show that since April 2015, there have been 4 cohorts of LEAP academy members, serving a total of 111 participants. Of these, 93 have been permanently hired, and 18 have terminated, resigned, or expired. These initial outcomes are very strong. At the same time, the cost of the program is relatively substantial. In FY 2016 DHS allocated $1.9 million for the program, in addition to $2.3 million supplemental funds to fund positions at DPR and DPW, for an average per participant cost of nearly $38,000.[5]
Particularly given the substantial cost per participant, we think that more information is needed to fully assess LEAP’s value. This could include, for example, an assessment of the experience of employers participating in the program, monitoring of participant employment retention, and exploration of ways to reduce program costs. It also is worth assessing the characteristics of LEAP participants, in particular to assess whether the program is reaching TANF participants with the most serious employment barriers.
The Performance Oversight responses state that “LEAP offers wrap around services and supports that align with WIOA. The service model aligns with the District’s focus on work-based occupational skills training.” It would be helpful to have more information in this area, particularly how the program ties to DC’s broader workforce system, and whether there is a possibility to use WIOA money to fund the program.
Need to Fund Labor Laws that Were Passed Last Year Subject to Appropriation
Two labor laws were passed last year that can go a long way to helping vulnerable workers. However, both of these bills were passed subject to appropriation. They should be funded as soon as possible, so that they can be properly implemented and enforced, and workers can begin to benefit from them.
- Building Service Employees Minimum Work Week Act of 2016. This new law sets a minimum work week of 30 hours for any employee performing janitorial or building maintenance services in DC office buildings. The estimated cost is $445,500 in fiscal year 2017 to pay for 5 FTEs for education and enforcement.
- Procurement Integrity, Transparency, and Accountability Amendment Act of 2016requires that contracts above $75 million must have a Project Labor Agreement. FIS states it will cost $113,000 in fiscal year 2017, and that it can increase construction contract costs by $26.2 million annually (can be paid with capital budget).
Workforce Investment Council
DCFPI wants to acknowledge the important progress made by the Workforce Investment Council (WIC) over the past year to strengthen its foundation.
- The WIC board is now WIOA compliant.
- The WIC is making progress on Corrective Action Plan developed with the U.S. Department of Labor, to improve federally funded youth programs.
- The WIC led an extensive effort to develop a thorough WIOA state plan that has been adopted by the U.S. Department of Labor.
The Workforce Investment and Opportunity Act (WIOA) has opened up opportunities for better integration of workforce development systems within state and local jurisdictions, and across jurisdictional lines. A new research report looks at the WIOA State Plans of DC, Maryland, and Virginia to identify promising practices and areas for improvement in each, and points to the strategies and resources that each jurisdiction can borrow from the others. The report—entitled “Maximizing WIOA’s Potential”[6]—was coauthored by the Commonwealth Institute, DC Appleseed, DCFPI, the Job Opportunities Task Force and the Maryland Center for Economic Policy. It was funded by the Greater Washington Workforce Development Collaborative.
DC’s promising practices include:
- The District’s Career Pathways Task Force, which has developed a city-wide strategic plan to design and develop career pathways specifically for adult learners. In addition, a Career Pathways Innovation Fund was established through legislation to pilot and scale best practices in career pathways implementation.
- DC also innovated in the use of labor market information to focus its growth occupations on jobs that provide a living wage and require an associate’s degree or less.
The report makes several recommendations for improvement in the District, including:
- Barrier remediation: The review highlighted the need to create a system for providing supports to workers in education and training, including transportation and child care assistance, especially for adult learners and individuals with disabilities.
- Sector Partnerships: The District should move forward to establish “sector partnerships” in the industries with the best job-creating potential for low-income residents. Sector partnerships are efforts to bring together the key institutions needed to connect workers to jobs: training providers, academic institutions, unions, employers, and DC government, among others. In addition, DC needs to ensure that technical training providers integrate basic skills education opportunities so that adults can pursue literacy and occupational training at the same time.
- Transparent Implementation Plan: The District should outline a specific timeline for implementation of key WIOA goals and activities, making information on implementation and performance publicly available and including community stakeholders in the process.
Our nearby jurisdictions offer important lessons, including the EARN sector partnership model from Maryland, and PluggedinVA which provides career pathways in Virginia specifically for adult learners through partnerships with community colleges and other post-secondary institutions.
We hope that DC’s government officials work swiftly to take some of these recommendations and begin the important work of implementing WIOA effectively.
Thank you for the opportunity to speak today; I am happy to answer any questions.
[1] Janice Fine. 2017. Presentation to DC Just Pay Implementation Retreat. February 7, 2017.
[2] DOES Performance Oversight Responses, #2. 2017. Totals are the result of summing the number of complaints that remain open, plus those in which an initial determination has been made, plus those closed with an initial determiniation, and those closed without an initial determination. pp. 53-62.
[3] Janice Fine. 2013. “Solving the Problem from Hell: Tripartism as a Strategy for Addressing Labour Standards Non-Compliance in the United States.” Osgoode Hall Law Journal, Vol. 50, No. 4.
[4] Janice Fine and Jennifer Gordon. 2010. “Strengthening Labor Standards Enforcement through Partnerships with Workers’ Organizations.” Politics and Society, Vol. 38, No. 4, pp. 552-558.
[5] DOES Performance Oversight Responses, #2. 2017. Per participant cost is $1.88 million + $2.3 million divided by 111 total participants. p. 4.
[6] https://thecommunityfoundation.org/wfdevreports/