• establishing dedicated local labor standards offices that enforce workers’ rights laws 
• establishing ongoing worker boards or councils 
• passing local worker protection laws
• actively enforcing local worker protection laws 
• setting job quality standards for contractors with the municipal government 
• establishing legal consequences for labor violations among applicants for municipal permits or licenses 
• practicing high-road employment principles in relation to municipal employees
• championing worker issues through public leadership 

While other reports have done an excellent job of exploring local action on specific issues like paid sick leave, living wages, and creation of worker boards, this report identifies and examines the broader trend of increased local action and analyzes the landscape of cities and other localities’ pro-worker actions in a comprehensive way.

Why it matters: Policies and enforcement that protect the rights of workers, ensure workers are able to meet their basic needs, and support workers’ efforts to organize are foundational to building healthy, thriving, and equitable communities. Working people in the United States today face multiple crisis situations that not only adversely impact their well-being, but also undermine the health and well-being of communities. Outdated labor laws are skewed against workers trying to form and join unions, and workers who try often face retaliation and other violations by employers. Public enforcement resources are inadequate, and workers are increasingly unable to bring their claims in court because of forced arbitration. In this context, cities and localities are vitally important and necessary actors in the effort to expand and enforce workers’ rights. They are close to their residents, and often are nimble and fast-moving in responding to emerging needs. A few cities (along with a few states) are also at the vanguard of innovating on policy and piloting new approaches to expanding and protecting workers’ rights. There is very meaningful work currently happening at the local level, with untapped potential for much more local action. 

What can be done about it: Local policymakers, enforcers, advocates, and community members can work together to pilot new local laws, create dedicated labor enforcement agencies and worker boards, develop strategic community enforcement partnerships, and use permits to drive compliance. Localities can fight abusive state preemption that impairs the abilities of local governments to build upon minimum standards set at the state level. Unions, worker advocates, and the public can think creatively about how to enact measures within their own localities and press for action. Other actors and observers in this space—federal and state government, the media, funders, academics, and more—should develop a greater understanding of the emerging role of cities in protecting working people. They should work to institutionalize and chronicle protecting and supporting workers as part of our understanding of what localities do. This report offers a road map of opportunities to enact policies at the local level that advance workers’ rights and improve working conditions.

Executive summary

In recent years, cities, counties, and other localities have become innovators and leaders in standing up for working people. Responding to increased inequality, degraded working conditions, and insufficient or inconsistent worker protections at the state and federal level, localities have in many cases joined states as the “laboratories” of experimentation (as Supreme Court Justice Louis D. Brandeis described) in relation to workplace matters.1 A number of localities have come to view protecting workers and improving their conditions as part of their core municipal function.

This report provides an overview of some of the most noteworthy ways in which localities have taken action on behalf of working people in recent years:

• Some localities have established dedicated local labor standards offices that enforce workers’ rights laws; educate employers, workers, and the public about these laws; and in some cases help formulate or inform municipal policy in this area.
• Localities have established ongoing worker boards or councils to provide workers with a formal role in local government and/or access to local officials and agencies.
• Other localities have focused on passing local worker protection laws, including ordinances regarding minimum wages, paid sick leave, and fair scheduling; industry-specific protections for sectors with high violation rates or specific vulnerability (such as the domestic worker, gig, hotel, retail, fast-food and freelance industries); broader anti-discrimination protections; and specific laws responsive to the COVID-19 pandemic.
• Localities are actively enforcing local worker protection laws, including with funded community partnership models in some instances.
• Some localities have established job quality standards for contractors, while others have established legal consequences (including denial and revocation) for applicants for initial or renewed municipal permits or licenses who have a history of wage theft violations or unresolved labor standards orders.
• Localities are demonstrating how to be a high-road employer of municipal employees, including by incorporating labor standards like higher minimum wages and paid sick leave, and enabling or facilitating collective bargaining among workers in local government.
• Active localities and local elected and appointed government leaders are exerting leadership in the public sphere, through education and outreach about labor laws, issuance of reports, convenings and public hearings, and use of the bully pulpit.

Federal—and in some cases state—preemption creates some limitations on what localities can do to expand and protect workers’ rights. Preemption occurs when federal or state law prevents subordinate levels of government (in this case, municipalities) from legislating or acting on a given issue. Still, local governments have considerable opportunity to take meaningful action on behalf of the working people within their jurisdictions.

The time is ripe for local action to advance workers’ rights. Working people are expressing dissatisfaction with worsening working conditions by resigning, forming and joining unions, and demanding change. 

Overview and introduction

Policies and enforcement that protect the rights of workers, ensure that workers are able to meet their basic needs, and support workers’ efforts to organize are foundational to building healthy, thriving, and equitable communities (Bhatia et al. 2013; USC ERI 2020). Working people in the United States today face multiple crisis situations that not only adversely impact their well-being, but also undermine the health and well-being of communities. The COVID-19 pandemic has led to many workplace clusters. Federal and state workplace measures have been varied, yet insufficient, to provide adequate protection from the virus.

Even before the pandemic, working people had been experiencing a multitude of serious challenges. Two widespread challenges are wage theft—the practice of employers failing to pay workers the full wages to which they are legally entitled—and misclassification of workers as independent contractors—the practice of employers labeling workers as independent contractors, rather than employees, to avoid paying unemployment and other taxes on workers and covering them with workers’ compensation insurance. Outdated labor laws are skewed against workers trying to form and join unions, and workers who try often face retaliation and other violations by employers (McNicholas 2019). Public enforcement resources are inadequate, and workers are increasingly unable to bring their claims in court because of forced arbitration (Hamaji et al. 2019). Employers who fail to pay unemployment or other taxes deprive public coffers of resources needed for programs serving important human needs (Erlich 2019). Meanwhile, the labor market itself is skewed—workers’ wages have not kept up with their productivity (Mishel 2021), and corporate concentration along with anti-competitive practices add to workers’ challenges in getting a fair wage (Stansbury 2021). These challenges have fallen hardest on workers of color and workers in low-wage industries.

Federal and state leaders who wish to take action on these thorny and deep-seated issues often face significant obstacles when they seek to pass laws, promulgate regulations, or take other steps responsive to workers’ needs. Such challenges can be even greater in relation to emerging developments in the workplace.

Supreme Court Justice Louis Brandeis famously described states as laboratories of public policy experimentation.2 In relation to workers’ rights, U.S. localities3 have been true laboratories of experimentation in recent years (Diller 2014).4 Historically, the federal government and states have been responsible for workplace regulation; over the years, cities and localities have not generally taken a leading role.5 But in roughly the past decade, cities and localities have become increasingly important actors in expanding and enforcing workers’ rights—what some commentators have called the “municipalization” of labor law (Sarchet 2021).

Cities and localities have introduced cutting-edge laws that do not exist at the federal or state level (including some responsive to newly emerging problems); established new offices devoted to protecting workers; used their contracting, licensing, and permitting powers to drive employer compliance; and implemented new methods of enforcement, including close and even funded partnerships with worker and community organizations. Such action by localities has occurred not only in traditionally worker-friendly regions, but also in progressive cities located within more conservative states. (Efforts in such locales have often, but not always, been met with state-level preemption measures, as noted by Blair et al. 2020 and Wolfe et al. 2021). And in some cases, such as the expansion of paid sick days, policy leadership at the local level has provided proof of concept and helped build momentum for states (and earlier in the pandemic, even the federal government) to take action. Local government action on workers’ rights also often reflects efforts to address local conditions when it comes to cost of living, dominant and emerging industries, and the needs and organizing of specific communities (especially communities of color and immigrant communities).

This report provides both an outline and a road map: an outline of actions that cities and localities have taken in recent years to protect workers, and a road map of possible policy and enforcement options for local leaders, both elected and appointed, to consider.6 Such actions include:

• establishing a dedicated department, office, or subagency within city government focused on worker issues
• creating boards or councils that provide workers with a voice, a role, and/or access to local government
• passing laws that create new and essential rights for workers
• enforcing worker protection laws, including through strategic, innovative, and/or collaborative approaches
• leveraging contracting, licensing, and/or permitting powers to raise and address worker issues
• incorporating high-road employment practices and labor policies in relation to their own municipal workforces
• using soft powers, including community education and outreach, issuance of reports, and other “bully pulpit” vehicles for reaching the community and highlighting worker needs and available resources

Notably, some cities and localities have taken meaningful action to protect workers and advance their rights and well-being during the COVID-19 pandemic; more should follow suit. This report also outlines a number of measures taken at the local level in response to COVID-19.

This report is intended not only for local leaders, but also for labor unions and worker advocates, to help deepen their understanding of policy and enforcement levers at the local government level in order to guide advocacy and collaborative governance efforts. This report can also inspire academics and other researchers to study local efforts to advance workers’ rights. Finally, policymakers at all levels of government should pay attention to the innovative solutions advanced by localities. ​​

At least 20 localities have created or are creating dedicated local labor agencies

A number of localities have created agencies specifically dedicated to enforcing workers’ rights under local ordinances, including laws addressing minimum wages,7 wage theft, paid sick and safe leave, fair scheduling/fair workweek requirements requiring advance notice of scheduling, fair chance hiring laws, gig worker rights, and more. Several of these agencies are also charged with analyzing and potentially proposing local labor policies. In other instances, localities do not have a dedicated stand-alone office, but units of other municipal agencies focus specifically on workers’ rights matters. And some localities without dedicated units have tasked specific government entities with enforcing wage theft or paid sick leave laws, such as a city manager, treasurer, or attorney; office of human rights; unit of the mayor’s office; or other officials (A Better Balance n.d.b.; Boulder 2022; Pinellas OHR n.d.; Miami-Dade WTP n.d.).8

Creation of a dedicated unit within local government focused on workers’ rights can be transformative. It ensures that municipal public servants will be involved in worker protection in a continuous, proactive, ongoing, and in-depth manner. It allows specialized staff to develop expertise on the relevant municipal laws and policies, as well as deep knowledge of issues affecting local workers. Where there is a dedicated worker-focused office in local government, staffers can develop ongoing relationships with relevant stakeholders like worker advocacy groups, unions, immigrant rights advocates or service providers, employment lawyers, and employer associations, as well as other relevant government enforcement agencies at the local, state, and federal levels. A dedicated office also can be mobilized to address emerging needs, including those that arose in the COVID-19 pandemic. Most importantly, establishment of a dedicated office institutionalizes and embeds the work within local government, ensuring the focus on workers and their challenges will continue beyond a particular administration.

Jurisdictions with dedicated agencies, subdivisions, or staff include Berkeley (California), Boston, Chicago, Denver, Duluth (Minnesota), Emeryville (California), Flagstaff (Arizona), Los Angeles City, Los Angeles County, Minneapolis, New York City, Philadelphia, San Francisco, San Jose, Santa Clara County (California), Seattle, St. Paul (Minnesota), and Tacoma (Washington).9 In addition, the San Diego County Board of Supervisors voted in 2021 to create a county labor office, and the San Diego City Council followed suit in 2022 by voting to create a labor enforcement office in a new Compliance Department.10 Tucson, Arizona, voters in 2021 passed a ballot initiative to create a local minimum wage and also a city Department of Labor Standards.11 Numerous Florida localities have created wage theft enforcement or mediation programs of various kinds: Broward County (complaint form), Miami-Dade County, and Pinellas County.12 Via court order, Palm Beach County created a Wage Dispute Division within the county civil court.13

More dedicated units to enforce workers’ rights are likely on the horizon. For example, a legislative proposal resulting from the work of an Earned Sick and Safe Leave Task Force is currently under consideration in Bloomington, Minnesota (population of approximately 90,000), home of the Mall of America.14 The city manager there has stated that two full-time equivalent staffers (one attorney and one paralegal) would be needed for this work.15

Snapshots of several local agencies in cities of varying size:

Berkeley, California (Pop. 124,321): The Workplace Enforcement and Standards Unit was created in 2014. It currently has a single full-time equivalent (FTE) employee, who also holds nonlabor-related responsibilities in addition to enforcing the city’s minimum wage, living wage, paid sick leave, and other laws (U.S. Census Bureau 2022a).

Chicago (Pop. 2.7 million): Chicago’s Office of Labor Standards, housed in the Department of Business Affairs and Consumer Protection, began operating in 2019 (its official launch date was in 2020). As of June 2022, the office has eight FTEs. It enforces the city’s minimum wage, wage theft, paid sick leave, fair workweek, COVID and vaccine anti-retaliation laws, as well as a law effective in January 2022 requiring employers of domestic workers to provide them with written contracts (U.S. Census Bureau 2022b).

Denver (Pop. 715,522): Denver Labor, created in 2019, is a division enforcing wage and hour laws located in the Denver auditor’s office. The office has 25 FTEs, and it enforces the city’s minimum wage laws, as well as a number of laws related to government work: a minimum wage applicable to city contractors, the city’s prevailing wage, the city’s living wage, and more. The office also has a community education emphasis: there are full-time community education staff and an annual outreach/education plan, including radio and internet ads, weekly online training, hundreds of outreach events, and multilingual written materials (U.S. Census Bureau 2022c).

Duluth, Minnesota (Pop. 86,697): Enforcement of Duluth’s earned sick and safe time law (effective in 2020) is handled through the equivalent of one employee housed in the city clerk’s office (U.S. Census Bureau 2022d).

Los Angeles City (Pop. 3.9 million): The Office of Wage Standards in the city of Los Angeles was created in 2015. It is authorized to have 30 FTEs, although in February 2022, this figure included nine vacancies. It enforces the city’s minimum wage, paid sick leave, and fair chance hiring laws (U.S. Census Bureau 2022f). (The county of Los Angeles has a separate enforcement agency that enforces the county’s own workplace laws.)

Minneapolis (Pop. 429,954): The Labor Standards Enforcement Division was created within the city’s Department of Civil Rights in 2016. The office has five FTEs, and it enforces the city’s paid sick and safe time, minimum wage, wage theft, and freelance worker protections laws, as well as a law giving hospitality workers the right of recall, which will sunset one year after the COVID-19 public health emergency (U.S. Census Bureau 2022g).

New York City (Pop. 8.8 million): New York City’s Office of Labor Standards and Policy was created in 2016, and is housed in the Department of Consumer and Worker Protection (DCWP). (That agency was long known as the Department of Consumer Affairs; its name changed in 2019 (Greenbaum 2019) in part to convey the agency’s focus on workers as well as consumers.) In 2021, the office had 33 FTEs. While it lacks jurisdiction to set a city minimum wage, the office enforces the city’s Paid Safe and Sick Leave Law, Freelance Isn’t Free Act, and the Fair Workweek Law in retail and fast-food, as well as several new cutting-edge laws, including a “just cause” termination law giving fast-food employees protections against arbitrary termination, and a law giving food delivery workers greater control over their working conditions and authorizing DCWP to set a minimum pay rate (U.S. Census Bureau 2022h).

Philadelphia (Pop. 1.6 million): In the June 2020 primary election, voters of Philadelphia overwhelmingly approved a ballot question to amend the city charter to create a city department of labor, demonstrating widespread public support for municipal involvement in workers’ rights issues (U.S. Census Bureau 2022i; Ballotpedia n.d.). The head of the Philadelphia Department of Labor is the deputy mayor for labor, holding a high-profile position within city government. The Office of Worker Protections, located within the department, has a total of nine FTEs, and enforces wage theft, paid sick leave, and fair workweek laws; laws covering specific industries (domestic worker bill of rights, wrongful discharge of parking employment, recall and/or retention of hotel, travel and hospitality workers); and more. The office established a domestic worker task force and has been tasked with creating a portable benefits system for domestic workers (Orso 2020), likely to be the nation’s first. In addition, in 2020 and 2021, the office partnered with worker organizations on a citywide effort on the Philadelphia Worker Relief Fund (MF Phila. n.d.; Cox 2020), which distributed more than $2.2 million to 2,820 families left out of COVID-19 government relief (Philadelphia 2020a). The office also collaborated on a referral system with the city health department’s COVID-19 containment unit to mediate paid sick leave when workers reported exposure.

San Francisco (Pop. 873,965): San Francisco’s Office of Labor Standards Enforcement (OLSE) was created nearly 20 years ago (San Francisco n.d.a; SF OLSE n.d.e). The office has 30 FTEs, and currently enforces more than 30 citywide laws, including ordinances on minimum wage, paid sick leave, fair chance employment, scheduling laws, and others, as well as a handful of other laws related to government contracting (SF OLSE n.d.f; U.S. Census Bureau 2022j).

San Jose (Pop. 983,489): San Jose’s Office of Equality Assurance, with a staff of eleven, implements, monitors, and administers the city’s wage policies, including the living wage law applicable to city service contracts, the prevailing wage law which covers public works (construction) projects, and the minimum wage ordinance applicable to employers for work performed within the city. The Office also contracts with a number of neighboring localities to provide minimum wage enforcement services for their own local minimum wages. For example, in 2020, the City of San Jose entered into contracts with the nearby cities of Burlingame, Cupertino, Milpitas, Redwood City, San Carlos, San Mateo, Santa Clara, South San Francisco, and Sunnyvale; maximum compensation under the contracts is $40,000 to $45,000 to cover a period of two and a half to three years. This arrangement allows smaller localities to functionally pool resources in order to have their local laws enforced (San Jose 2020; San Jose n.d.; U.S. Census Bureau 2022k).

Santa Clara County, California (Pop. 1.9 million): The County’s Office of Labor Standards Enforcement was created in 2017. The office has capacity for five FTEs; four were filled as of May 2022. Among other things, the office ensures that recipients of county permits, licenses, and contracts comply with labor laws and satisfy outstanding judgments issued by the California Labor Commissioner’s Office. The office also enforces wage theft prevention and living wage requirements related to contracting, contained in Chapter 5 of the Santa Clara Board of Supervisors Policy Manual (Section 5.5.5.4) (SC BOS 2020). In 2021, the office also enforced a hazard pay ordinance related to COVID-19 (SC OLSE n.d.c; U.S. Census Bureau 2022l).

A deeper dive into Seattle’s local labor agency

Seattle’s Office of Labor Standards has grown rapidly since its creation in 2015 as a division within the Seattle Office of Civil Rights. The Office of Labor Standards became an independent, standalone city agency in 2017, and the breadth and impact of its activities provide a useful example of the potential of municipal labor agencies.

Staffing: As of February 2022, the office had 34 FTEs and one full-time temporary position. These position include a director, deputy director, communications manager, seven outreach positions, four policy-focused positions, three operations and finance positions, and eighteen enforcement officials.

Ordinances: The office enforces 18 city laws. These include laws of broad application (paid sick and safe time, fair chance employment, wage theft, and commuter benefits ordinances); laws targeting specific industries (secure scheduling ordinance for retail and food services workers, as well as ordinances protecting domestic workers, transportation network company drivers, and hotel workers); and laws enacted during the COVID-19 pandemic (paid sick and safe time for gig workers, as well as premium/hazard pay for gig workers/grocery employees) (Seattle OLS 2012, 2013, 2015a, 2015b, 2017, 2020b, 2020d, 2020e, 2020h, 2021a). Finally, on September 1, 2022, the Independent Contractor Protections Ordinance (Seattle OLS 2021b) will take effect; it will require commercial hiring entities to provide certain precontract disclosures and payment disclosures, and also requires timely payment of contracts. See Section 6 for more in-depth discussion.

Enforcement: The office has brought a number of successful enforcement actions, including in fast-food, gig economy, construction, retail, grocery, and other industries. These cases are described in Section 7.

Policymaking: The office has helped develop city labor policy in various ways. The office ran a broad policymaking process to develop two labor standards ordinances for transportation network companies (TNC) drivers, including contracting for a minimum compensation standard study (Reich and Parrott 2020). The office conducted an extensive stakeholder process and drafted the eventual TNC Driver Minimum Compensation Ordinance (Seattle OLS 2020i), which went into effect in 2021 and the TNC Driver Deactivation Rights Ordinance (DRO). The DRO provides drivers protection against unwarranted termination from companies’ platforms, a pathway to resolve deactivation disputes before a neutral arbitrator, and which created a first-in-the-nation Driver Resolution Center to provide consultation and direct representation to drivers facing deactivation, along with culturally relevant outreach and education, and other support. The Office of Labor Standards completed a request for proposal to award an 18-month contract for just more than $5 million to a community organization to get the Driver Resolution Center up and running (Seattle OLS n.d.h).16

In addition, pursuant to a city council resolution and recommendation by the city’s Domestic Workers Standards Board,17 the Office of Labor Standards will be crafting a proposal for portable paid time off for domestic workers.

Pandemic response: The Office of Labor Standards has taken numerous actions in response to the COVID-19 pandemic. In April 2020, following amendment of the city’s Paid Sick and Safe Time Ordinance (PSST) to expand PSST uses in response to COVID-19, the office conducted emergency rulemaking to ease the burden of verification for use of PSST on workers and the health care system. The office provided updated information in more than 11 languages and, with the city’s Department of Neighborhoods, increased access to this information through audio and video recordings, as well as through trainings and town hall meetings. Responding to the increase of domestic violence during the pandemic, the office also partnered on a safe leave training with a local community organization, API Chaya, and the Mayor’s Office on Domestic Violence and Sexual Assault.

The office also assisted in distribution of food vouchers and masks via community-based organizations, including the office’s Community Education and Outreach Fund partners, to workers who experienced structural or institutional barriers to accessing support from government (e.g., language barrier, fear of deportation, experienced domestic violence, did not qualify for other benefits). The community-based organizations enrolled more than 800 workers who had lost their jobs or experienced a decrease in hours or wages due to the pandemic. Each worker received $1,920 in grocery vouchers over a seven-month period.

Finally, along with the mayor’s office and the Office of Immigrant and Refugee Affairs, the Office of Labor Standards worked to increase access to unemployment funds for workers, especially for potentially misclassified gig workers and domestic workers, and also to enhance access to information about unemployment benefits in multiple languages. One effort included contracting with a community organization for three months to provide cultural- and language-specific outreach and referral assistance to transportation network company, taxi, and for-hire vehicle drivers seeking to access COVID-19-related relief resources. The community organization assisted 1,400 workers with their unemployment insurance claims in 12 languages, including Kiswahili, Nuer, Twi, and Hausa. Another effort included partnering with a local civil legal aid organization to provide training on unemployment insurance, and paid sick and safe time.

Several cities have created boards or councils to provide workers with a formal role and/or access to local government

Workers’ boards are bodies established by governments that include worker representation and that typically aim to provide workers with a voice and formal role in setting higher minimum standards for jobs in particular industries. These boards typically investigate challenges facing workers by conducting hearings and outreach activities, issuing reports on findings, and making recommendations regarding minimum wage rates, benefits, and workplace standards. By focusing on workers in specific industries, these boards are able to address industry-specific issues and involve workers and their organizations directly in governance decisions.

Professor Arindrajat Dube, based on his analysis of industry-specific wage boards in Australia, concludes that wage-setting boards “are much better positioned to deliver gains to middle-wage jobs than a single minimum pay standard” (Dube 2018); the local boards described here do not have wage-setting powers, but some may make recommendations. In 2019, the Center for American Progress issued a how-to guide for state and local governments and advocates interested in developing workers’ boards or similar structures (Andrias, Madland, and Wall 2019). The guide’s detailed recommendations include ensuring a broad mandate; requiring representative and democratic selection of members; granting boards authority to gather relevant information through hearings and investigations; granting boards authority to issue recommendations; creation of strong enforcement mechanisms to ensure compliance with new standards; and empowering worker participation in board activities by requiring employers to provide reasonable time to participate and compensating workers for their participation, among other things.

In some states, preemption of local wage or standard-setting limits potential recommendations a board could make that would result in material policy change; however, even then, workers’ boards may be able to impact local government purchasing and contracting policies, workforce development programs, tax abatement and incentive policies, economic development planning and community benefits agreements, distribution of local government funding, and workplace safety trainings. They may also be able to provide independent monitoring of local, state, and federal public health and labor laws, and inclusive economic development planning. Worker boards are a relatively new development, mostly established in the last five years.

The following are examples of several local worker boards or similar structures:

Seattle Domestic Workers Standards Board: In 2019, Seattle passed the Domestic Workers Ordinance, which along with establishing a minimum wage and entitling workers to rest and meal breaks, also created a Domestic Workers Standards Board (Seattle CC 2018). The board, members of which are appointed by the mayor and city council (and one member is appointed by the board itself), requires representation from domestic workers (including workers who are and are no members of worker organizations), employers, and the community (with an emphasis on vulnerable populations like people with disabilities) (Seattle OLS 2018a). The board is empowered to provide recommendations to the city council on workplace safety standards, discrimination and sexual harassment, training for workers and employers, access to leave, wage standards, workers’ compensation, hiring agreements, and other topics, and has been granted funding to implement these recommendations.

Detroit Industry Standards Boards: Detroit passed an ordinance in November 2021 creating a structure for industry standards boards (SEIU Healthcare 2021; Detroit 2021). A standards board in a specific industry can be established under the ordinance by the city council, at the request of the mayor, or by petition of at least 225 workers in a given industry. The standards boards are composed of workers, employer representatives, and other individuals appointed by the mayor and city council. The industry boards are tasked with investigating industry conditions, conducting outreach to workers, making recommendations as to pay, benefits, training opportunities and scheduling, and forwarding complaints to relevant enforcement agencies.

Harris County (Texas) Essential Workers Board: Harris County established an essential workers board in 2021 to advise the county on programs and policies that support essential workers. All members must be “low-income essential workers,” with at least one worker representative from each of the following essential industries: airport or transportation; construction; domestic work or home care; education or child care; grocery, convenience, or drug store; health care or public health; janitorial; food services, hospitality, or leisure services; and retail (Trovall 2021; Harris County 2021). In addition to advising the county on its overall approach to protecting essential workers’ rights and providing a public forum, the board is also tasked with providing feedback on the county’s “purchasing and contracting policies, workforce development programs, tax abatement and incentive policies, community benefits agreements, distribution of federal COVID-19 relief and recovery funds, disaster preparedness and recovery programs, OSHA trainings, independent monitoring of local, state, and federal public health and labor laws, and inclusive economic development planning.”

Durham (North Carolina) Workers’ Rights Commission: In 2019, Durham formed the Workers’ Rights Commission as an advisory body to the city council on working conditions in Durham. Except for a liaison to the city council, all members are workers appointed by the city council and must include workers from the largest employers in Durham, workers in low-wage industries, workers organized in unions, and unorganized workers. The commission aims to provide a public forum for discussion and exploration of workers’ rights, conduct studies, recommend pro-worker policies for the city council’s state legislative agenda, craft a workers’ bill of rights and develop a voluntary recognition program to reward employer compliance, propose standards to encourage all employers within the city to establish a minimum standard, support workers in union campaigns, and provide channels of communication between organized and unorganized workers (Durham WRC n.d.).

Twin Cities’ Workplace Advisory Committees: In 2016, Minneapolis created a Workplace Advisory Committee in connection with passing the city’s safe and sick time ordinance (Minneapolis 2016a). The committee is composed of representatives from organized labor, workers, and employer representatives, among others. The committee is tasked with providing advice on workplace initiatives, recommendations on community engagement, and monitoring and evaluating implementation of workplace policies (Minneapolis 2016a). St. Paul’s Labor Standards Advisory Committee (St. Paul n.d.a) advises and supports the city’s Labor Standards Enforcement and Education Division. The committee includes representatives of employers, employees, and the public, and advises in the development and implementation of policies, procedures, and rules related to the city’s minimum wage and earned sick and safe time ordinances; recommends actions to improve strategic community outreach and education efforts; supports strategic enforcement and strategic outreach; explores and recommends opportunities and resources to help small businesses; assists with community partnerships; and engages business owners, workers, and community stakeholders to gather feedback and recommendations.

Los Angeles County Public Health Councils (LA PHC n.d.): In November 2020, Los Angeles County approved a program establishing public health councils to help ensure that employers follow COVID safety guidelines. Implemented and overseen by the county’s Department of Public Health, the program empowers workers to form public health councils at their worksites to monitor compliance with county health orders in the following industries: food and apparel manufacturing, warehousing and storage, and restaurant (LA County BOS 2020). The Department of Public Health will enlist the help of certified worker organizations to conduct outreach and education to workers interested in forming public health councils.

Localities can serve as model employers in relation to their own workforces

Localities can support working people by creating good working conditions for their own municipal workforces. Nationally, about one-third of state and local employees are paid less than $20 per hour, and more than 15% are paid less than $15 per hour. In 13 states, more than 20% of state and local workers are paid less than $15 per hour (Sawo and Wolfe 2022). Women and Black workers are more likely to be employed by local and state governments, so improving working conditions for local government workers advances important equity goals (Cooper and Wolfe 2020).

A significant portion of local government employees are union members (40.2% in 2021) (BLS 2022); high unionization rates among law enforcement and teachers contribute to these numbers. Working conditions for these employees are established through collective bargaining agreements with the locality. Working conditions of nonunionized municipal workers are governed by applicable federal, state, and local laws, as well as municipal policy.

Localities can support workers by raising labor standards for their own employees regardless of union membership. They can also take steps to allow and facilitate collective bargaining by their employees.

Limited public funds can lead to concerns about the cost of supporting municipal workers in light of other pressing public funding needs. However, in addition to improving municipal job quality as a matter of values and commitment to working people, localities themselves can benefit from doing so. High-road job offerings can help attract better-qualified workers to local government and reduce turnover, both of which enable local governments to provide higher-quality public services, as well as avoiding the cost associated with employee turnover. Municipal employers are often the largest employers in many regions (Hain and Coffin 2020), and thus improved standards for municipal workers can also lead to additional benefits, like public health gains when paid sick leave prevents spread of illness, and stabilizing and stimulating the local economy in times of stagnation or recession. By exemplifying practices of a model employer, local governments also can play a leadership role for private and nonprofit employers, helping create local norms that lift local working standards generally. And collective bargaining in particular can help reduce racial and gender pay gaps, attract workers to local government, and create high-quality jobs (Morrissey and Sherer 2022).

Local governments can also support municipal workers by limiting and resisting privatization, defined as the shifting of governmental functions and responsibilities to the private sector through such activities as contracting out (Local Progress 2019). Privatization of local government functions has proliferated in the recent past, affecting services and infrastructure like water treatment, trash collection, and toll collection (Early 2021; Dutzik, Imus, and Baxandall 2009). Privatization not only denies opportunities to municipal workers who are more likely to be unionized and to have higher job standards, it also undermines democratic accountability. Moreover, projected cost savings from privatization often do not materialize, and service quality often declines under private provision (PWF n.d.b).18

Localities have raised labor standards for municipal employees

A number of localities have raised the minimum wage paid to their own municipal workforce; recent examples include Atlanta; Jersey City, New Jersey; Milwaukee; New Orleans; North Miami Beach, Florida; Tallahassee, Florida; and West New York, New Jersey (Noble 2021; Fox 2021a, 2021b; Atlanta 2017; Miami Times Staff 2021). More than 100 localities have passed paid family or parental leave policies for their municipal employees (NPWF 2020). Many local governments extended emergency paid sick leave to their municipal workers during the pandemic, and some front-loaded the annual sick leave allotment for all employees (Hain, Yadavalli, and Wagner 2020). The city of Austin distributed stipends to some city workers who continued to provide in-person services during the COVID-19 pandemic (Newberry 2020).

Localities can enable and support collective bargaining and union organizing by municipal workers

Localities also can enable or facilitate collective bargaining and unionizing among their municipal workforce. Public employee unions can be stable bargaining partners to local governments, promote labor peace, and ensure the delivery of high-quality services.19 In addition, unions reduce inequality as well as race and gender disparities (EPI 2021; Bivens et al. 2017) and boost democratic participation (McElwee 2015).

Whether or not local government workers can form and join unions varies by state and by the type of municipal worker. Many state statutes expressly authorize collective bargaining by teachers, police officers, and firefighters (Sanes and Schmitt 2014). In some states, local governments are permitted to collectively bargain with all municipal workers (Monroe 2018; Vermont 1973).20 In some states, local governments are prohibited from doing so.21 In states where collective bargaining for local employees is neither guaranteed nor prohibited by state law, localities can facilitate unionizing and collective bargaining by their own workforces by passing local ordinances permitting collective bargaining. Two states where there has been heightened attention to this issue in recent years are Virginia and Colorado. In Virginia, the General Assembly in 2020 passed a law lifting a previous ban, thereby allowing localities to recognize and collectively bargain with unions by passing an ordinance. A number of Virginia localities have since passed collective bargaining ordinances, including the city of Alexandria, Arlington County, Fairfax County, Loudoun County, and the Richmond School Board (Alexandria Magazine Living Staff 2021; Armus 2021; Olivo 2021; Loudoun 2021; Hunter 2021). In 2022, the Colorado state legislature passed a bill granting public employees the right to collectively bargain; previously localities could decide whether to grant such rights, and out of approximately 270 localities in the state, only 16 had collectively bargained contracts with any of their workers (Colorado General Assembly 2022; Miller 2022; Vo 2022; Kenny 2021). For example, Adams County, Colorado, had passed a resolution in 2017 authorizing collective bargaining for county employees.22 In states such as Colorado and Virginia, localities can explicitly grant their municipal workforce the right to collectively bargain. Cities like Louisville, Kentucky, Memphis, Tennessee, Salt Lake City, Utah, and Tulsa, Oklahoma, have recognized and entered into collective bargaining agreements with municipal unions (Louisville HR n.d.; AFSCME 1733 2021; SLC HR n.d.; Tulsa HR n.d.).

In addition, localities can emulate legislative measures taken by certain states to facilitate public employee union access to government workers in response to the Supreme Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al. That case held that requiring public employees to pay union fair share agency fees to cover the costs of collective bargaining violates the First Amendment (McNicholas 2018).23 The decision bars unions from requiring workers who benefit from union representation to pay their fair share of that representation, thereby reducing public employee union resources and potentially their stability. In the wake of the Janus decision, a number of states, including California, Massachusetts, New Jersey, Washington, and several others, passed measures to reduce barriers to public-sector unionization, such as by requiring public employers to allow public employee unions access to new employee orientations, and to provide public employee unions with lists of new and current employees with contact information (NCSL 2019).

Finally, the 2022 Report of the White House Task Force on Worker Organizing and Empowerment (Harris and Walsh 2022) contains a number of recommendations for the federal government to increase unionization rates among federal employees. While some of the measures contained in the report would potentially be preempted by the National Labor Relations Act, many of them could be adopted readily by local governments, such as:

• facilitating exposure to unions during the hiring process for job applicants and onboarding process for new employees, including listing information about whether a position is in a bargaining unit and the relevant union in job opportunity announcements, and encouraging agencies to offer their unions more opportunities to communicate with new hires during onboarding
• developing guidance and labor relations materials for agencies to use in trainings for managers and supervisors regarding unfair labor practices and neutrality in union organizing campaigns
• increasing and visibly supporting workers’ right to organize, including a know-your-rights initiative on the right to organize and collectively bargain

The report contains extensive analysis and practical suggestions about ways to encourage and facilitate collective bargaining.

Localities have enacted worker protection laws on a range of topics

Local governments typically have some authority to initiate legislation, subject to their authority under the relevant state constitution, state statutes, and city charters. In recent years, local governments have increasingly used this power to pass laws to advance workers’ rights.24

Laws setting higher minimum wages

In recent years, localities have often led the nation in policymaking to raise workers’ wages. The Fight for 15 campaign and other worker advocates and organizations have played a key role in seeking increased local minimum wage floors, which has paved the way for more innovative policymaking to advance workers’ rights by local governments (Meyerson 2019).25 Local wage and hour laws exist in a statutory landscape, including the federal Fair Labor Standards Act (FLSA), which establishes a federal minimum wage, overtime pay, record-keeping, and youth employment standards, and state laws that similarly establish their own state-level minimum wage and hour standards. The FLSA, and in some cases state law, acts as a floor, permitting local governments to provide more generous protections for workers. Some states, however, preempt local governments from setting higher local requirements, as discussed in further detail below (EPI 2019).

Currently, 52 cities and counties have local minimum wage laws that raise the minimum wage above the level established by state and federal governments (UC Berkeley Labor Center 2022; Lathrop 2021).26 Local minimum wages aim to keep workers out of poverty and to increase consumer purchasing power to spur economic growth. Such wages sometimes are enacted in metropolitan areas where the costs of living are higher relative to the rest of the state or region. Local minimum wages may vary in terms of wage levels, implementation timelines, and exemptions (for example, based on the size or classification of an employer, such as employers with more than 25 employees or nonprofits). Since 2012, local minimum wage increases have affected more than 4 million workers, more than half of whom are workers of color, and generated more than $33 billion in additional income for these workers each year (Lathrop, Lester, and Wilson 2021).

One way to increase the wages of many service workers without setting a higher minimum rate is for a locality to disallow the lower minimum wage that is permitted in many states and under federal law for workers who customarily and regularly receive tips (USDOL 2022b). Tipped workers are more likely to be women and people of color, and more likely to be subject to sexual harassment (Schweitzer 2021).27 In 2016, the city of Flagstaff eliminated the tipped minimum wage by referendum (Results for America n.d.). Las Cruces, New Mexico, also has enacted a higher tipped minimum wage than the state.28

In some instances, laws setting local minimum wage rates have focused on particular industries. Seattle’s Domestic Workers Ordinance requires domestic workers be paid at least the city’s minimum wage (Seattle OLS 2018a). At least four California cities—Los Angeles, Oakland, Santa Monica, and West Hollywood—have required a higher minimum wage for their hotel workers (LA DPW n.d.; Oakland n.d.; Santa Monica n.d.; West Hollywood n.d.).29

Laws addressing wage theft

Wage theft occurs when employees do not receive wages to which they are legally entitled for their work, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts. Cooper and Kroeger (2017) investigated just minimum wage violations, and found that in the 10 most populous states in the country (California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas), 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Cooper and Kroeger estimate that workers nationwide lose $15 billion annually from minimum wage violations alone. A 2021 study found that more than $3 billion was recovered on behalf of workers by federal and state enforcers and through private litigation (Mangundayao et al. 2021).

In addition to setting up dedicated enforcement agencies and ensuring that these agencies are robustly funded to pursue violations, local governments can pass laws to address the problem of wage theft. For example, Denver passed a wage theft ordinance that classifies wage theft as a criminal misdemeanor and empowers the city attorney’s office to prosecute claims of $2,000 or less and seek restitution (Denver 2021).

In some instances, such measures may be a way for cities preempted from setting minimum wage rates to nonetheless have an impact on wage-related concerns and to protect workers within their jurisdiction from predation and abuse. Numerous localities in Florida have passed ordinances setting up administrative processes that make it easier for workers to file a complaint and recoup stolen wages without retaining a lawyer. In Florida, Miami-Dade County led the way, followed by Alachua County, Broward County, Hillsborough County, Osceola County, Pinellas County, and the city of St. Petersburg (Huizar 2019b). These ordinances set out a procedure for administrative resolution of wage theft claims by first allowing workers with claims of more than $60 in unpaid wages to settle claims with the city’s help. If those claims are not resolved, workers then may proceed to a hearing where the employer may be exposed to additional penalties (Miami-Dade WTP n.d.). An analysis of the Miami-Dade County Wage Theft Program found that between its adoption in 2010 and September 2014, workers recovered $2,039.83 in unpaid wages, on average, an amount researchers found was “well above the average recovered by federal enforcement” (RISEP-FIU 2014).

Finally, more wage theft protections at the city level may be on the horizon. The Austin (Texas) City Council passed a resolution in early 2022 directing the city manager to develop an ordinance on wage theft, with stakeholder input.30 Houston and El Paso, Texas, had previously passed similar resolutions (Ramirez 2022).

Paid sick and safe leave

Presently, 19 cities and counties have laws requiring employers to permit workers to take time to recover from an illness or care for a sick loved one and to be compensated for that time (A Better Balance n.d.b, 2021).31^, 32 Now 14 states and Washington, D.C., also have passed laws requiring paid sick leave (A Better Balance n.d.b), but local governments first led the way. For example, Jersey City, New Jersey, first enacted a paid sick leave ordinance in 2013, followed by 12 additional cities before a statewide law took effect in 2018.33 Research shows that paid sick leave ordinances effectively slow and reduce the spread of contagious illnesses by reducing the likelihood that workers will go to the workplace sick (otherwise referred to as sick presenteeism) (WCEG 2020). Especially for workers in low-wage industries, paid sick leave provides economic security when facing illness. Meanwhile, research has shown that businesses do not find such laws to be particularly burdensome once they are in effect. For example, a study of New York City employers revealed that “[b]y their own account, the vast majority of employers were able to adjust quite easily to the new law, and for most the cost impact was minimal to nonexistent” (Appelbaum and Milkman 2016). Moreover, 86% of the employers surveyed expressed support for the paid sick days law.

Local paid sick leave laws vary—i.e., exemptions for smaller employers, how family and loved ones are defined, the rate at which workers accrue sick time, and when workers start to earn sick time and whether it rolls over. However, many of them were developed with the technical assistance of groups like the nonprofit organization A Better Balance (A Better Balance n.d.a), and therefore have similar features. They generally provide somewhere in the range of 40 to 48 hours of leave annually, and prohibit retaliation against workers for taking leave.

Some of these laws also create a right to “safe leave” for situations in which workers or their family members are victims of domestic violence, stalking, and sexual assault (A Better Balance 2019). Safe leave laws can be used, for example, to obtain a protective order, access social services, or relocate.

Fair scheduling

Eight cities—Chicago; Emeryville, California; New York City; Philadelphia; San Francisco; San Jose, California; SeaTac, Washington; and Seattle—have laws to ensure workers have predictable schedules, more opportunities for existing employees to work, and sufficient periods of rest between shifts (A Better Balance 2022c). This set of policies, which have commonly been referred to as fair workweek or fair scheduling laws, have been championed and implemented because workers, particularly in the service sector, commonly receive their weekly work schedules only a few days in advance, and their scheduled work hours and workdays often change substantially from week to week. Fair workweek laws were first passed at the local level (Fair Workweek Initiative n.d.), paving the way for state-level action; Oregon has now adopted a statewide fair scheduling law.

Research suggests that unstable and unpredictable work scheduling practices undermine workers’ health and well-being and also lead to economic insecurity and income volatility, and that the fair workweek law in Seattle increased not only schedule predictability, but also subjective well-being, sleep quality, and economic security (Harknett, Schneider, and Irwin 2021). Most fair scheduling laws cover specific industries, such as retail or fast-food. They require covered employers to provide an initial estimate of a worker’s schedule upon hiring, advance notice of schedules, and compensation (predictability pay) for employer-initiated schedule changes with less than the requisite notice; workers also typically have the right to decline shifts that do not allow for a requisite period of rest, and the right to request a modified schedule.

In addition, because many workers in the relevant sectors seek additional work hours, fair workweek laws generally require employers to offer additional hours to existing employees before hiring new staff. Such laws also typically include provisions that prohibit employers from retaliating against workers for exercising rights under fair scheduling laws. Fair scheduling laws differ as to which employers are covered (typically limited by size and industry), notice and rest times, the level of predictability pay, and the like. San Francisco’s Family Friendly Workplace Ordinance specifically entitles workers to request a flexible or predictable schedule to assist with caregiving responsibilities, and requires employers to engage in an interactive process with the worker (San Francisco 2013).

Laws governing platform companies in the ‘gig’ economy

Almost all federal and state laws governing the workplace protect employees and not independent contractors. Platform companies in the so-called “gig” economy, in which workers are hired via apps, treat workers as independent contractors instead of as employees, thereby avoiding the obligations of an employer. This practice has led to considerable litigation, including lawsuits by the attorneys general of California and Massachusetts, alleging that such workers are misclassified (Gerstein 2020). Employer misclassification of workers as independent contractors is a longstanding, pervasive problem affecting millions of workers annually (Rhinehart et al. 2021).

New York City and Seattle have both passed ordinances creating various rights and protections for these workers, even as the cities have refrained from determinations about employee status. In 2018, New York City passed legislation34 empowering the relevant regulatory agency, the Taxi and Limousine Commission (TLC), to set minimum pay rates; accordingly, later that year, the TLC issued a rule (NYC TLC 2018) setting a minimum pay standard based on a study it had commissioned (Reich and Parrott 2020). In 2020, Seattle passed a similar ordinance (Seattle OLS 2020i) setting minimum pay for transportation network company drivers. New York City has also passed legislation35 allowing a city agency to set minimum payments for third-party (typically app-based) food delivery and courier providers. A comprehensive proposal to improve pay and transparency about working conditions for such workers was passed in 2022 by the Seattle City Council (Bull 2022, Taylor 2022a).

Seattle also passed a Transportation Network Company (TNC) Driver Deactivation Rights Ordinance (Seattle OLS 2021l), which grants drivers the right to challenge unwarranted deactivations before a neutral arbitrator, and creates a Driver Resolution Center to provide representation for drivers.36

Finally, in 2021, New York City passed a series of policies to protect delivery workers whose precarity was made clear during the COVID-19 pandemic (Figueroa et al. n.d.). An organization of bicycle delivery workers, Los Deliveristas Unidos, played a significant role in advocating for the new law (Los Deliveristas Unidos n.d.; City Staff 2021). The policies include a requirement that restaurants allow delivery workers to use their restrooms as long as they are picking up an order; minimum per-trip payments; transparency for customers and workers about tips (whether the tip goes to workers, in what form, and on what timeline); a prohibition on fees for receiving payment and a requirement that payments are made weekly, including at least one option that does not require a bank account; a prohibition on charging workers for insulated delivery bags; and permission for workers to limit their personal delivery zones (Sugar 2021).

Protections for freelancers or independent contractors

Minneapolis, New York City, and Seattle have passed laws to aid freelancers and independent contractors in securing timely payment for their work. Because such workers are not generally protected by employment law, they often face challenges in securing payment for their work, which is enforced by contract law and therefore typically requires securing legal counsel for any enforcement action (Yang et al. 2020). These local ordinances protecting freelancers require a written contract that includes certain written terms (e.g., pay rate and payment schedule) for a value greater than a minimum amount, require payment within 30 days of completion of the contract, offer protection against retaliation, and set up an administrative enforcement process. In 2022, the New York State legislature passed a state-level Freelance Isn’t Free Act based on New York City’s model (Maher 2022).

Protections against discrimination

Although the focus of this report is labor standards, not discrimination, it is worth noting that local governments have passed laws to expand protections from employment discrimination beyond what is protected under federal and state law. These local laws are typically enforced by local fair employment practices agencies (FEPAs), which are typically separate from agencies that enforce labor laws that regulate workers’ wages, hours, and benefits. For example, at least 330 local governments have passed nondiscrimination ordinances protecting workers from discrimination at work on the basis of sexual orientation, and at least 225 have done so to protect workers from discrimination on the basis of gender identity as well (MAP n.d.; HRC n.d.). Some local ordinances also protect workers from discrimination on the basis of marital or partnership status, family status, immigration status, status as a veteran, credit history, caregiver status, sexual and reproductive health decisions, salary history, weight and height, and status as a victim of domestic violence, stalking, or sex offenses (Vanderbilt 2012; Eidelson 2022; Brown 2002). In addition, federal employment discrimination protections only apply to employers with 15 or more workers, and local ordinances also often cover smaller workplaces (Clampitt n.d.). New York City in 2022 included domestic workers in the law prohibiting workplace discrimination (NYC CHR 2021). In addition, San Francisco in 2017 passed a law requiring employers to provide a reasonable break for a worker desiring to express breast milk for their child and to provide a space for lactation, other than a bathroom, that is shielded from view and intrusion (San Francisco 2017).

Several types of local anti-discrimination laws are described in more detail below.

Fair chance hiring

At least 22 local governments have passed laws requiring private and public employers to consider a candidate’s job qualifications before inquiring about a candidate’s criminal history—commonly referred to as “ban-the-box” or “fair chance” policies (Avery and Lu 2021). They may also prohibit consideration of certain types of past offenses, or require hiring entities to consider evidence of an applicant’s rehabilitation. Even more cities and counties have adopted fair chance hiring for their vendors’ or their own hiring. Fair chance policies vary as to the size of covered employers, when a background check is permitted in the job application and interview process, penalties, and enforcement.

Salary history bans

At least 20 local governments have passed laws prohibiting employers from inquiring about a job applicant’s salary history during the hiring process (HR Dive 2022; AAUW 2022).37 These ordinances seek to remedy systemic pay discrimination against women and people of color by allowing applicants to negotiate a salary based on their qualifications and earning potential, rather than being measured by their previous salary. Some local ordinances apply to private employers operating in the jurisdiction, whereas others apply only to local government hiring processes.

Pay transparency law

In January 2022, New York City became the first city38 to enact a pay transparency law,39 which requires employers to list a minimum and maximum salary for positions located in the city. This type of pay transparency law helps curb pay inequities. The law amends the New York City Human Rights Law (NYCHRL), the city’s ordinance that protects against employment discrimination, and makes any failure to post salary ranges an “unlawful discriminatory practice.” Ithaca, New York also passed a similar pay transparency law in May 2022 that applies to any employer with more than three permanent workers based in Ithaca (Zerez 2022).

Crown Act

Twenty eight municipalities, including New York City, have passed laws prohibiting discrimination based on a worker’s hairstyle or hair texture (NYC CHR 2019). Often known as the Crown Act (NAACP LDEF n.d.), these laws aim to address the impact of natural hair-based discrimination Black workers face in the workplace.

Protections against wrongful termination

Throughout the United States, almost all states have what is known as at-will employment; employers may terminate workers for reasons unrelated to job performance, as long as they are not discriminatory, retaliatory, or otherwise violative of the law. Just cause protections prevent employers from legally firing workers without warning or explanation (Tung, Sonn, and Odessky 2021). Such laws promote economic security and stability for workers and their families; they also protect workers from retaliation for raising concerns about violations of workplace laws.

Both Philadelphia and New York City have adopted ordinances that prohibit employers in certain industries from arbitrarily terminating employees. In Philadelphia, parking workers may only be terminated for just cause (which requires progressive discipline) or a bona fide economic reason (Philadelphia DOL 2021). New York City passed similar legislation applicable to fast-food workers (NYC OM 2021e).40 That legislation was recently upheld in the face of a legal challenge.41

In addition, in the wake of Hurricane Irma in 2017, the Miami-Dade Board of County Commissioners passed an ordinance (Miami-Dade Cty. 2018) prohibiting employers from retaliating or threatening to retaliate against nonessential employees for complying with county evacuation or other county executive orders during a declared state of local emergency.

Worker retention laws

Some localities have passed laws to protect workers’ employment when services are contracted out or when a contract changes hands (see Weil 2014, Weil n.d. on the “fissured workplace”). At least four cities (Hoboken, Newark, New York City, and Philadelphia) have passed laws that generally require successor contractors that operate in those cities to retain employees for at least 90 days, provide written offers of employment, retain employees by seniority, and maintain a preferential hiring list of employees not retained (Keon 2021; Kiefer 2022; Hoboken n.d.b., Jackson Lewis P.C. 2016). These laws differ in the categories of workers that are covered; Philadelphia’s ordinance provides the broadest coverage including security, janitorial, building maintenance, food and beverage, hotel service, and health care services workers (Keon and Sopher 2021). Unlike the policies addressing contractors discussed in Section 8, these ordinances apply to all contractors and subcontractors, not only those contracting with the relevant local government.

Industry-specific protections

Workers in certain industries may be subject to specific harms or be especially vulnerable to violations of the law. As a result, some local governments have passed laws specifically protecting workers in those industries.

Domestic workers

Chicago, Philadelphia, and Seattle have passed laws to provide domestic workers’ rights. In Seattle and Philadelphia, domestic worker bills of rights seek to ensure healthy working hours, sufficient earnings, and protections from sexual harassment and other exploitation. There are 2.2 million domestic workers in the United States—these housekeepers, child care workers, and home care workers are overwhelmingly (91.5%) women and are likely to be people of color, born outside of the United States, and older than other workers (Wolfe et al. 2020). Domestic workers are three times as likely to be living in poverty as other workers, and often are not protected by federal and state labor laws (Wolfe et al. 2020).42 Bill of rights ordinances typically provide domestic workers with meal and rest breaks, paid time off, and protections from sexual harassment and discrimination. Seattle’s law also created a Domestic Workers Standards Board, which provides a forum for employers, domestic workers, worker organizations, and the public to consider, analyze, and make recommendations to the city on other possible legal protections and standards for domestic workers (Seattle OLS 2018a). Chicago and Philadelphia have laws that provide domestic workers with the right to a written contract in English, as well as the language preferred by the worker (Chicago Dept. BACP 2021b; Philadelphia 2021b; Esposito 2021).

Hotel workers

At least seven cities have passed laws requiring hotels to equip workers with panic buttons, GPS-enabled devices that alert security when activated, and other protections (Hotel Tech Report 2022; Oakland OCA 2019). Entering a hotel room occupied by a visitor often places workers at risk of sexual harassment and assault, and data show that women in the hospitality and restaurant industries have the highest rates of sexual harassment on the job (Campbell 2019). In addition to requiring panic buttons, local ordinances typically require notice in each hotel room indicating that workers are equipped with panic buttons, and, in some cases, require hotel employers to develop and comply with a sexual harassment policy, take safeguarding steps after receiving an allegation of harassment, and prohibit retaliation for reporting sexual harassment or assault (UNITE HERE Local 1 2022; West Hollywood CC 2021). At least five cities have also passed laws regulating workloads, including regulation of hours and amount of work denoted in maximum square footage cleaned in a day (Stokes and Sarchet 2018; Santa Monica 2019; Sarchet 2021; Wagner 2020; Seattle OLS 2020f; Emeryville 2022). A few localities require additional payments from employers to increase health care access, and preferential hiring to retain workers when hotel ownership changes (Wagner 2020; Sarchet 2021; Santa Monica 2019).

Fast-food workers

New York City in 2017 passed a law, which is no longer in effect, requiring fast-food employers, upon authorization by an employee, to deduct voluntary contributions from workers’ paychecks and remit them to a nonprofit organization (not a labor union) designated by the employee (NYC n.d.c).43 The voluntary contributions were intended to enable and facilitate such workers having support and assistance from an organization advocating on their behalf, addressing work-related issues and other matters affecting working people.

Grocery workers

Los Angeles, New York City, and San Francisco have grocery worker retention policies that require new grocery store owners to retain employees of the previous owner for a 90-day transitional period after a change in ownership of the grocery store (NYC OLPS n.d.a; PWF n.d.e).44 The ordinances also establish a review process through which workers will be considered for continued employment.

Car wash workers

New York City’s car wash accountability law requires car washes to obtain a license to operate (NYC DCWP n.d.a). In addition to a license application, car washes must provide proof of workers’ compensation insurance, proof of disability benefits insurance, proof of commercial general liability insurance, and proof of unemployment insurance. Notably, car washes must also post a surety bond (also known as a wage bond) to cover potential wage claims as a condition of doing business.

Adult entertainment workers

Minneapolis in 2019 passed an ordinance requiring adult businesses to give workers copies of their contracts, post rules for customer conduct and workers’ rights, and prohibit retaliation against workers who report violations (Otárola 2019). Under the law, managers and owners are also prohibited from taking tips from workers, and workers will be provided security escorts when leaving after a shift. The ordinance also requires businesses to follow standard cleaning procedures, clear tripping hazards, and install security cameras to monitor all areas where entertainers interact with customers.

Wage standards and other requirements for local contractors or license/permit holders

Many localities have placed requirements on their contractors, including prevailing wage laws, living wage laws, and responsible bidder rules. In addition, some localities have created requirements for license or permit holders, in relation to compliance with labor laws or disclosure of past violations. Section 7 contains a detailed discussion of local laws affecting government contractors, and those affecting license and permit applicants and holders.

Higher labor standards for airport workers

Airports throughout the country are owned and operated by public entities—local and state governments, and regional entities composed of such governments (NASEM 2017).45 These public entities have required minimum wages for contractors and vendors at airports as a condition of being permitted to operate there. Many airport workers are low-paid; research has shown declining or stagnant wages, and poor working conditions (Sainato 2018; Editorial Board NYT 2018; Houston n.d.; Dietz, Hall, and Jacobs 2013). The Service Employees International Union (SEIU) has catalyzed airport-driven wage increases as a way to improve the working conditions of poorly paid janitorial, catering, food service, and other workers in airport facilities.

In places where local governments have authority to regulate the airport, many localities have exercised this authority to require all airport contractors to pay a higher minimum wage than the wage broadly required within the surrounding jurisdiction. Counties that have taken such action include Broward County (Fort Lauderdale, Florida) and Miami-Dade County, Florida (Miami-Dade Cty. n.d.a, n.d.b; Broward 2021). Cities taking similar action include Chicago, Denver, Houston, Los Angeles, Oakland, Philadelphia, Portland, Oregon, St. Louis, San Francisco, and San Jose, California (Spielman 2022; SEIU 2019; Houston n.d.; LAWA n.d.; Philadelphia CC 2021b; Holton 2021; Philadelphia CC 2021a; Port of Portland 2020; Port of Oakland 2001, 2021; STL Air Portal n.d.; SF OLSE n.d.d; Aitken 2021). In some instances, additional labor standards are required of airport contractors; for example, San Francisco also applied its health care ordinance to airport workers (San Francisco 2020), and the city of Los Angeles includes a worker retention provision (LAWA n.d.).

Some localities like Miami-Dade County, Philadelphia, and San Francisco, require certain contractors operating at the airport to enter into labor peace agreements with labor unions (LAWA n.d.).46 A labor peace agreement generally requires the employer and union to waive certain rights under federal law with respect to union organizing (for example, neutrality and nonopposition to the union on the employer side and a promise not to strike, picket, or disrupt the employer’s operations on the union side) to ensure uninterrupted workflow or, in the case of government, uninterrupted delivery of public services. In addition, the city of SeaTac, Washington, does not contain Seattle’s airport, but largely surrounds the airport; it passed an ordinance setting minimum employment standards for hospitality and transportation industry employers that requires higher wages for hotels and other businesses in the airport’s immediate vicinity (SeaTac n.d.).

Protecting workers and public health during the COVID-19 pandemic

Local governments have played a crucial role in protecting public health and worker safety during the COVID-19 pandemic. Especially given the failure of the federal government to take actions to protect worker safety in the beginning of the pandemic—and then subsequent action by the U.S. Supreme Court preventing the federal government from implementing a vaccine-or-test standard for workplaces—local and state governments have had to take emergency action to protect workers and public health (Rosenberg 2021; Totenberg 2022). Given that COVID-19 spreads through airborne transmission of respiratory droplets from infected people, protecting workers from contracting and spreading COVID-19 also plays an important role in protecting overall community public health and safety. Moreover, because of racial health disparities and the overrepresentation of people of color as essential workers, Black and Latino workers have been and remain at higher risk of contracting and developing serious complications from COVID-19 (UIC SPH 2021).

Local governments have used myriad authorities and programs to address the challenges facing workers during the pandemic, including emergency authorities often pegged to the duration of a local public health emergency order.47 Local governments—most typically by mayoral executive order—have used these emergency authorities to issue stay-at-home orders, as well as masking, testing, quarantine, and vaccination requirements (Foster n.d.; Kim and Romero 2021). For example, in December 2021, New York City’s mayor issued an order requiring all workers who perform in-person work or who interact with the public to be vaccinated (NYC DOH n.d.). These orders were typically enforced by local public health departments which, in some places, have taken complaints from workers and taken enforcement actions to stop workplace spread. Although these local public health measures are not always tied to the workplace, they are crucial to worker health and safety by ensuring that workers can stay home when necessary and reducing the likelihood of unmasked interactions.

In addition to the specific policies and programs intended to protect workers and public health during the pandemic outlined below, local governments also have established worker boards to hear from workers affected by the pandemic;48 mounted public education campaigns to inform workers, employers, and patrons about COVID safety at work (SAW LA n.d.); provided personal protective equipment (PPE) to employers for distribution to workers (St. Louis 2020); and set up funds for undocumented workers who were excluded from unemployment insurance and other federal funding (MF Phila. n.d.).

Paid sick leave: Modifications, enforcement, and emergency policies

As discussed above, 19 local governments have permanent paid sick leave laws. At least 16 local governments have made clear that paid sick leave may be used when their workplace or their child’s school or child care facility is closed due to a public health emergency (A Better Balance 2020, 2022b).49 Philadelphia, San Francisco, and Seattle temporarily limited employers from requiring a doctor’s note for employees to take sick leave (Philadelphia OMD 2020; SF OLSE 2020; Seattle OLS 2020g).

In addition to clarification and enforcement of permanent paid sick leave policies, local governments have also enacted emergency paid sick leave policies to supplement or extend federal emergency protections.50 For a period, the federal Families First Coronavirus Response Act required employers with fewer than 500 employees to provide workers with paid sick leave or expanded family and medical leave for reasons related to COVID-19, including the need to quarantine, care for an individual in quarantine, or care for a child whose care or schooling has been disrupted by the pandemic. Several local governments have passed paid sick leave legislation that supplements federal protections, for example by applying to employers with more than 500 workers, adding eligibility by permitting workers to take paid leave because they are older than 65 or are particularly vulnerable to COVID-19, and expressly permitting workers to take leave for vaccination-related illness (A Better Balance 2020). Local governments like Burlington, Vermont; Flemington, New Jersey; Shelby County, Tennessee; and Wilmington, North Carolina, enacted such emergency paid sick leave policies for their local government employees (A Better Balance 2020). Philadelphia51 and Seattle52 have passed emergency paid sick leave policies that extend to food delivery and transportation gig workers. Los Angeles County passed legislation requiring employers to provide additional paid leave for vaccination and recovery for workers who had exhausted their paid leave (LA County LED 2021).

Protection against retaliation in connection with workplace safety

Los Angeles County and Philadelphia passed ordinances prohibiting employer retaliation against workers in connection with workplace safety and compliance with COVID-19 public health orders. Los Angeles County’s law prohibits any adverse action by an employer against a worker for blowing the whistle on noncompliance with public health orders; discussing any perceived noncompliance with the county, other employees, or members of a public health council; belonging to a public health council; or informing employees of their rights under this ordinance (LA LED 2020; LA County n.d.). Notably, Los Angeles County’s law does not sunset. Philadelphia’s law53 prohibits employers from taking any adverse action against a worker for refusing to work in unsafe conditions if the worker reasonably believes the employer is operating in violation of a public health order and has notified the employer. An anti-retaliation law passed in Chicago (Chicago Dept. BACP 2022) protects against retaliation in relation to compliance with COVID-19 public health orders.

Hazard and premium pay

More than two dozen local governments in California and in the Seattle metropolitan area passed laws mandating hourly hazard pay bonuses of typically $4 or $5 per hour for grocery store workers (Egan et al. 2021; King 5 Staff 2021). Some laws also cover drugstore employers and vary as to the size of the employer covered (Kinder and Stateler 2021). Seattle also passed an ordinance providing food delivery gig workers premium pay on a per pick-up and drop-off basis (Seattle OLS 2020c).

Right to recall

At least 18 cities (Fair Hotel 2021) have passed laws—commonly referred to as “right to recall” or “right to return” laws—to protect workers in certain affected industries that were laid off during the pandemic. In particular, the leisure and hospitality sector accounts for 39% of total jobs lost due to the pandemic, which disproportionately affected workers of color (Huang 2021). These laws require employers to offer positions that become available first to qualified laid-off workers, typically in order of seniority. The laws vary as to which employers are covered (hospitality, event centers, commercial real estate), and whether laid-off workers can become qualified for the position with the same training that would be provided to a new employee hired into that position, enforcement, and notice. Detroit also passed a resolution in support of the right of recall, but is preempted by the state of Michigan from enacting an ordinance to that effect (DeVito 2021). Five cities have also applied this right to recall to changes in ownership of the employer (Fair Hotel 2021).

Severance

Shortly after emergency federal unemployment insurance relief in response to the COVID-19 pandemic expired, New York City passed a severance law requiring hotels with at least 100 rooms to pay a weekly severance of $500 per employee per week to laid off-employees for up to 30 weeks until the hotel has recalled 25% or more of its employees or reopened to the public (Moss 2022).

Vaccination

In addition to providing emergency paid sick leave for vaccination and recovery, local governments also have partnered with worker organizations to promote vaccination. Philadelphia partnered with the National Domestic Workers Alliance to transport workers to vaccine sites, where city officials addressed concerns by providing information about paid sick leave laws. Houston partnered with SEIU to deliver vaccines to janitors (Gerstein and Salas 2021).

Discrimination

San Francisco ​​enacted an ordinance prohibiting employers from discrimination based on exposure to or having tested positive for COVID-19 (SF OLSE n.d.b). Employers are prohibited from taking any adverse action (i.e., firing, threatening to fire, suspending, disciplining, rescinding an offer) against a worker because the worker tested positive for COVID-19 or is isolating or quarantining due to COVID-19 symptoms or exposure.

Federal and state preemption should be considered but still permit considerable action on workers’ rights matters

Preemption occurs when a higher level of government (for example, the federal or state government) restricts or withdraws the authority of a lower level of government (such as a city council) to act on a particular issue. While a detailed discussion of preemption is beyond the scope of this report, it is important for local governments to consider potential preemption by federal or state law.

Federal preemption

An analysis of federal preemption starts with the question of congressional intent: Did Congress intend to displace state or local law? Federal preemption limits some possibility for local action on workers’ rights, but still leaves significant room for legislation, enforcement, contracting consequences, and other local innovation. Some relevant federal laws and points to consider are as follows:

• The National Labor Relations Act (NLRA) guarantees and regulates the right of private-sector workers to organize into unions, bargain collectively, and take collective action to improve their working conditions. NLRA preemption is quite broad, and for workers covered by the NLRA, local and state governments are preempted from regulating workers’ rights to form and join labor unions or to bargain collectively with their employers, employer speech about unionization, and bargaining rules and obligations (Sachs 2011). Notable exceptions are when a state exercises traditional police powers; also when a state or local government acts as a “market participant,” it enjoys the same freedom to structure its labor policies as a private party and is not limited by NLRA preemption. Thus, local governments can require contracts to honor prehire agreements, for example.57 Moreover, local governments are free to enact labor laws that otherwise would be preempted by the NLRA for workers who are not covered by the law (i.e., farmworkers and domestic workers).
• The Occupational Safety and Health Act (OSH Act) regulates workplace safety nationally. It only preempts local and state action when there is a standard set by the Occupational Safety and Health Administration (OSHA) addressing a particular and specific workplace hazard (Flanagan, Gerstein, and Smith 2020). However, even if there is an OSHA standard, a local law, regulation, order, or government action will not be preempted if it protects the general public; to wit, laws of “general applicability (such as laws regarding traffic safety or fire safety) that do not conflict with OSHA standards and that regulate the conduct of workers and non-workers alike would generally not be pre-empted.”58 For example, a New York City building code provision regulating cranes was found not to be preempted because it protected not only workers, but also the “safety of the general public in the vicinity.”59 In addition, 21 states and Puerto Rico have become OSHA-approved “state plans” (USDOL OSHA n.d.) that regulate private-sector workplace safety and health themselves; they are subject to OSHA oversight and their provisions must be as protective of workers as OSHA standards and regulations (USDOL OSHA n.d.).60 In such states, federal OSHA preemption would not apply.
• There is no preemption of local standards that are more protective of workers under the Fair Labor Standards Act (FLSA), which sets the floor for minimum wage, overtime pay, record-keeping, and youth employment standards nationwide.61 In other words, the FLSA does not preempt higher minimum wages at the state and local levels.
• As a general matter, exercise of traditional police powers (civil or criminal) does not lead to preemption concerns. Longstanding principle in preemption cases requires courts to “start with the assumption that the historic police powers of the states are not to be superseded…unless that was the clear and manifest purpose of Congress.”62 For example, criminal prosecutions of employers, or civil tort lawsuits, for conduct that would also give rise to occupational safety and health violations generally would not be preempted (Flanagan, Gerstein, and Smith 2020).

State preemption

Local policymaking to advance and expand and protect workers’ rights, as well as other progressive causes, is substantially hindered by the emergence of state preemption used in a punitive manner (Briffault 2018).63 In particular, conservative state legislatures have increasingly preempted local efforts to increase the minimum wage, guarantee paid sick leave, require fair scheduling, regulate gig employers, and set prevailing wages for municipal contracts (Wolfe et al. 2021). For example, at least 26 states have passed preemption laws to prohibit local governments from setting minimum wages higher than the state minimum wage (EPI 2019). The preemption of local policies to support workers’ rights is most common in the South and Midwest, where these laws are part of a long history of efforts to limit the rights and freedoms of Black people (Blair et al. 2020; Wolfe et al. 2021). Even a progressive state like Washington recently moved in this problematic direction when the state legislature passed a bill on transportation network companies (like Uber and Lyft) that preempts any local regulation of the industry.64

An encouraging development in this area occurred in Colorado, when the state in 2019 reversed its prior preemption of local labor standards, providing cities and worker advocates in other states with potential lessons in how to do the same elsewhere (Huizar 2019a).

Even in the face of state and local preemption, there are still opportunities for localities and local government leaders to take action to protect workers: passing legislation that is not preempted; setting high standards in relation to local government employees; conducting extensive know-your-rights outreach and public education about workers’ rights; supporting pro-worker state legislation; conducting research and issuing reports on worker issues; documenting the extent of labor violations; promoting labor compliance by local government contractors, permit-holders, and licensees; and advocating for an end to state-level preemption. In addition, the Local Solutions Support Center and National Employment Law Project have created resources to assist localities in making assessments regarding preemption of desired action (Huizar 2021; LSSC 2020a, 2020b).

Enforcing local worker protection laws

This section provides examples of the enforcement cases brought by local labor agencies in recent years. However, it is important to note that the case descriptions are just a sampling of enforcement work performed at the city level, based on publicly available media coverage and press announcements. Only a few city agencies routinely issue news releases or disclose employer information about their investigations. More could recognize news releases as a tool in their worker protection toolkit, given the documented impact (Johnson 2020) of deterring employer violations by issuing press releases in workplace enforcement.

Some office websites include dashboards, posted annual reports, or other compilations of enforcement work, which should be consulted in conjunction with the below case descriptions, in order to obtain a fuller picture of the work being done. For example, Denver Labor, a division of the Denver Auditor’s office created in 2019, posts restitution stories (Denver n.d.b) on its website, summarizing the office’s enforcement work, including industry of employers, type of work, amount of money recovered, and the number of workers involved, although it does not mention specific employer names. The Seattle Office of Labor Standards has a Resolved Investigations (Seattle OLS n.d.e) section of its website, with detailed information about closed cases, and in 2021 released a press announcement (Seattle OLS 2021h) commemorating the office’s six-year anniversary and detailing accomplishments in that time. In addition, a number of offices post annual or periodic reports that include information not only about enforcement actions, but also about legal developments, outreach and public education activities, regulations issued, and more. (See Section 9 for more detail).

In addition to dedicated labor standards offices, it should be noted that city and county attorneys, who represent local government entities in legal proceedings, have sometimes enforced local worker protection laws. Some city and county attorneys have criminal authority to prosecute misdemeanors, but they typically bring and defend civil suits on behalf of local governments. Many city and county attorneys have the authority to enforce local ordinances to protect workers, although such enforcement is uncommon in many jurisdictions. In some states, they also have the authority to enforce select state laws,65 and they also can bring impact litigation on behalf of local governments (Justice Catalyst et al. 2019). In some cases, city or county attorneys have enforced workplace laws, either independently or in conjunction with municipal labor standards offices or other government entities.66 District attorneys, and in some places county or state’s attorneys, are responsible for criminal enforcement, and are increasingly using those powers to prosecute employer crimes involving serious violations of workers’ rights. In some jurisdictions, they have authority to bring civil cases as well.67 Criminal prosecutors have also been increasingly active in bringing charges against employers to protect workers’ rights (Gerstein 2021). In addition, some local auditors and controllers also enforce workplace laws. For example, in New York City, the comptroller plays a significant role in enforcing prevailing wage and other laws within the city (NYC Comptroller n.d.), and the city controller also enforces Pittsburgh’s prevailing wage ordinance (Pittsburgh 2010). Local departments or agencies that focus on contract enforcement may also enforce worker protections and standards in local governments contracts (LA City BCA n.d.). While enforcement action by these various officials is noteworthy, the cases outlined below generally include those brought by local labor standards agencies.

Examples of enforcement

In the compilation of cases below, where the same employer has committed multiple violations of law, to avoid duplication, cases are listed in one category only.

Paid sick leave

Enforcing paid sick leave laws has been a significant focus for many local agencies, particularly since these laws often exist only at the local level. New York and Seattle have been particularly active in this area. Agencies have obtained restitution for workers, as well as reinstatement in some cases. In some instances, settlements have also included crediting workers with additional paid sick leave in the future. New York City required Starbucks to educate the public about paid sick leave laws through posters in public areas, and Minneapolis required a home health agency to train all managers and staff on the relevant law.

New York City’s Department of Consumer and Worker Protection has enforced paid sick leave laws in multiple industries, with noteworthy cases involving fast-food, home care, and airline industry workers.

• The department conducted multiple investigations of paid sick leave violations involving home health agencies, including a 2021 collaborative case with the New York state attorney general’s office resulting in the recovery of up to $18 million for 12,000 home health aides at two agencies that underpaid workers and did not provide paid sick leave. In 2022, the department also reached settlements involving two domestic workers who had been denied paid sick leave (NYC DCA 2018a; NYC OM 2020a, 2021c; NYC DCWP 2022).
• Fast-food industry cases include a $155,000 settlement with a McDonald’s franchisee in 2019 (also involving fair workweek violations); an ongoing case against Chipotle, in the midst of which the city obtained reinstatement for a worker who had been unlawfully terminated; and a 2019 settlement with Starbucks, jointly with the New York state attorney general’s office, in which the company agreed to create a $150,000 restitution fund for employees whose rights had been violated, and to promote public education about the paid sick and safe leave law by requiring Starbucks to post an educational poster about paid sick leave in public locations in all New York City stores (NYC OM 2019b, 2020c NYC OM 2019c).
• The department in 2019 sued American Airlines for violating the paid sick and safe leave law by assigning disciplinary points and thereby illegally retaliating against workers for taking leave. American Airlines later sued New York City challenging the law. The case was ultimately settled in 2021; the airline agreed to pay workers restitution and to comply with the law going forward. The department in 2021 also settled a case involving a Southwest Airlines ground crew worker who was illegally fired for using sick leave; the resolution required reinstatement and payment of restitution. And in 2020, the department settled a case with an American Airlines contractor that staffed wheelchair attendants, customer service representatives, baggage handlers, and cargo agents; the contractor was required to pay more than $100,000 in restitution, and also to credit workers with additional prospective paid sick leave (NYC DCWP 2019b, NYC OM 2021b, 2021d, 2020b).
• In one case involving a law firm that violated the paid sick leave laws, the department obtained a hearing officer decision requiring payment of $172,000 to the worker (NYC DCWP 2019a).
• The Department of Consumer and Worker Protection settled two cases involving domestic workers who were denied paid sick leave (one was fired for using sick leave and for filing a complaint, ultimately losing their housing as a result) (NYC DCWP 2022).
• New York City’s law also requires paid safe leave to be used by those experiencing domestic violence, human trafficking, stalking, or similar offenses; the office in 2020 obtained a $25,000 settlement in its first paid safe leave case (NYC DCWP 2020b).

The Seattle Office of Labor Standards in 2011 recovered (Seattle OLS 2021i) more than $290,000 from a cleaning company for paid sick leave and other violations, including not paying for all hours worked, paying subminimum wages, and making unauthorized deductions from workers’ pay for training and other costs. In 2021, Seattle’s Office of Labor Standards resolved a paid sick and safe leave (Seattle OLS 2021c) involving Compass, a multinational food service company with hundreds of thousands of employees worldwide.

The Labor Standards Enforcement Division of the Minneapolis Department of Civil Rights has brought a number of paid sick leave enforcement cases, including against the national sandwich shop Jimmy John’s (Mahamud 2021) and a local gas station (Minneapolis 2018), as well as a home care business (Du 2021). In that last settlement, the division required the employer to train managers and staff on the relevant law, and to credit all workers with 80 hours of sick leave.

Chicago’s Office of Labor Standards in 2021 reached (Chicago OM 2021) paid sick leave settlements (Channick 2021) with a Burger King franchisee, recovering more than $458,000 in restitution for workers plus $100,000 in city fines, and with global snack food company Mondelēz Global LLC, recovering $476,000 in restitution for workers plus $95,000 in fines.

Wage theft

Some city agencies have authority to enforce municipal minimum wage or other wage-related laws. Wage theft68 cases brought by city enforcement agencies include the following.

Seattle’s Office of Labor Standards has been a national leader in enforcement activities in this area. Cases include:

• a $2 million settlement with a Domino’s franchisee in 2022 based on the employer paying workers below the city’s minimum wage and failing to pay overtime when employees’ work at multiple locations led to workweeks in excess of 40 hours; the case also involved fair scheduling violations (Seattle OLS 2022a)
• a 2022 settlement for more than $250,000 with a national traffic control company that paid below the city’s minimum wage, among other things (Seattle OLS 2022b)
• a finding in 2021 that construction contractors and subcontractors were jointly and individually liable for $2 million in underpayment based on a host of violations, including unauthorized deductions from workers’ paychecks, subminimum wages, uncompensated work time, nonpayment of overtime, and failing to provide paid sick and safe time (Seattle OLS 2021g)
• a 2021 settlement for more than $290,000 with a cleaning company for minimum wage paid sick and safe time violations, and retaliating against workers (Seattle OLS 2021i)
• a 2019 settlement for $182,000 with two Hyatt hotels that were paying a lower minimum wage for small employers instead of the applicable higher wage, and a $686,000 settlement, also in 2019, with a staffing company based on similar violations; the office also reached a $120,000 settlement for underpaid home care providers (Seattle OLS 2019d, 2019c, 2019b)
• after finding wage theft and other violations by two painting contractors, the office provided trainings in 2018 to the industry trade association
• the office also recovered more than $40,000 on behalf of workers with disabilities after the city eliminated a previously existing subminimum wage for such workers
• in one 2018 case involving a restaurant that had retained workers’ tips and failed to provide paid sick time, the employer apologized to employees (Seattle OLS 2018c, 2018d, 2018b)

Other local enforcement actions include a 2018 settlement (Minneapolis 2018) for $20,000 with McDonald’s by the Labor Standards Enforcement Division of the Minneapolis Department of Civil Rights, and a 2021 lawsuit (Chicago Dept. BACP 2021c) by the city of Chicago against DoorDash that focused on other legal issues, but also contained allegations that the company illegally retained workers’ tips.

In addition, Denver Labor reported (Denver OA 2021a) multiple successful enforcement actions in 2021 involving cases under the city’s minimum wage law, contractor minimum wage law, and prevailing wage law. Minimum wage cases included investigations involving a local restaurant, home improvement sales workers, a national retailer, a janitorial company, a fast-food chain, and a hair salon; sample prevailing wage cases involved a custodial contractor at the Denver Zoo, a crane contractor on a federal prevailing wage project, and solar power contractors at Denver International Airport.

COVID-19 pandemic-related enforcement

Seattle’s Office of Labor Standards has brought several actions enforcing the city’s gig worker paid sick and safe time law passed in June 2020. These enforcement actions have resulted in a $3.4 million settlement with Uber (Seattle OLS 2021d), a nearly $1 million settlement (Seattle OLS 2021e) with Postmates, and a $160,000 settlement (Seattle OLS 2021f) with DoorDash, all in 2021. In addition, the office recovered (Seattle OLS 2021j) more than $330,000 for 101 wine and alcohol shop workers who did not receive hazard pay as required by city law, as well as more than $100,000 (Seattle OLS n.d.g) for workers for the gig delivery company Go Puff. Los Angeles County also took enforcement (LA County CBA 2021b) actions against a number of employers based on pandemic-specific workplace protections, including a grocery store that failed to pay “hero pay” (also known as premium pay during the pandemic), and a construction company that terminated a worker for requesting indoor use of face coverings. Pursuant to New York City’s Grocery Worker Retention Act, the city’s Department of Consumer and Worker Protection filed a case (NYC DCWP 2020c) against a Bronx supermarket in 2020 and resolved it several months later (NYC DCWP 2021a) with payment of restitution and reinstatement of most of the discharged workers.

Protections for gig workers and freelancers

The broader issue of classification of workers for app-based driving and delivery companies generally has been playing out at the federal and state, and not local, level. The issue has emerged, for example, in relation to state laws on wages, workers’ compensation, and unemployment insurance (NELP 2019).69 However, there have been some instances of localities challenging misclassification of such workers as independent contractors rather than as employees. In other cases, several cities have created municipal-level wage, paid sick leave, or other protections that apply broadly, including for so-called gig workers, and have taken action to enforce those municipal laws in relation to app-based companies.

In addition to the COVID-19-related cases brought by Seattle described above, other cases include a civil lawsuit (SF ODA 2021) against the cleaning company Handy filed in 2021 by the district attorneys of Los Angeles and San Francisco, as well as a 2021 letter inquiry (Fox, Marchese, and Shimko 2021) regarding Handy’s potential misclassification, sent by the Seattle and Chicago Offices of Labor Standards and the Philadelphia Office of Worker Protections. Also, in 2021, the San Francisco city attorney, San Francisco Office of Labor Standards and Enforcement (OLSE) and a city supervisor announced (SF OCA 2021) a $5.3 million settlement with DoorDash, the largest in the OLSE’s history, after an investigation into allegations of violations of San Francisco’s paid sick leave law and a separate health care security ordinance (SF OLSE 2022), which creates an employer spending requirement to fund health care benefits (health insurance, dental, or vision coverage) for employees in the city. In 2020, OLSE reached a settlement of nearly $750,000 with grocery delivery company Instacart (Said 2020).

In addition, New York City agencies have taken action to enforce the city’s Freelance Isn’t Free Act (NYC DCWP n.d.e), which gives freelance workers (NYC DCA 2018c) the legal right to written contracts, timely payment, and freedom from retaliation. In late 2021, the New York City Law Department and Department of Consumer and Worker Protection announced (NYC OM 2021f) a lawsuit (NY Supreme Court 2021) against French global fashion media company L’Officiel, based on a pattern of failing to pay freelancers on time or at all, including writers, editors, photographers, videographers, graphic designers, and illustrators. According to DCWP, the agency has received 2,024 complaints from freelancers since the law’s inception in 2017, and has helped freelancers recover more than $2.1 million in owed compensation for their work.

Fair scheduling laws

Several cities have fair scheduling or fair workweek laws, which require employers in certain industries (usually retail and/or fast-food) to provide workers with their schedules with advance notice. These laws ensure that workers can plan for child care, elder care, education, second jobs, and other responsibilities, without having the insecurity of unstable and unpredictable schedules. In some cases, fair workweek laws also require employers to offer current part-time workers additional hours before hiring new employees, thereby increasing opportunities for full-time employment.

Seattle’s Office of Labor Standards has resolved a number of investigations under its secure scheduling ordinance, including recovery (Seattle OLS n.d.f) in 2020 of nearly $2 million from Macy’s in a case involving more than 800 workers, and recovery (Seattle OLS 2020a) that same year of more than $600,000 from Fred Meyer’s supermarkets in a case involving approximately 750 workers. In 2019, Seattle resolved a secure scheduling case (Seattle OLS 2019a) involving two franchises operating nine Jack in the Box locations and employing more than 500 workers.

New York City’s fair workweek law applies only to fast-food employers, and the Department of Consumer and Worker Protection has brought a number of actions. Most notably, in 2021, the department sued (Scheiber 2021) fast-food chain Chipotle for extensive and ongoing violations at several dozen stores, alleging that workers are owed $150 million as a result. The 2021 filing followed a prior case (NYC OM 2019a) in 2019. New York City also enforced its fair workweek law in cases involving McDonald’s and Pizza Hut (NYC OM 2021a) locations, the owner of 30 KFC stores (NYC DCA 2018b), and multiple other fast-food employers (NYC DCWP 2020a).

Philadelphia’s fair workweek law covers service, retail, and hospitality workers. A 2021 case involved the resolution (Reyes 2021a) of allegations of violations by a local Target.

Additional cases: Just cause termination rights, health care, and consumer protection

In addition to the broad categories described above, offices also have brought cases under other laws to protect workers and consumers. For example, in 2021, the New York City Department of Consumer and Worker Protection announced (NYC DCWP 2021b) the resolution of its first investigation of a termination of two Subway workers in violation of a new city law (NYC OM 2021e) protecting fast-food workers from being fired without just cause or for a bona fide economic reason. And in a consumer-related case, the department settled charges against (NYC DCA 2017) a large New York City parking garage company that began charging monthly customers an additional “living wage fee” after an increase in the city’s minimum wage under state law. The San Francisco city attorney has worked with the Office of Labor Standards in bringing cases under the city’s health care security ordinance, including a 2019 lawsuit (SF OCA 2019) against a tour bus company, and recovery in 2014 of $1.34 million from a janitorial company (SF OCA 2014).

Funded strategic enforcement partnerships with worker organizations

Some local labor agencies have explicitly and formally included worker organizations in aspects of the labor law enforcement process, by contracting with community organizations to support community partnerships that conduct public education and outreach, and refer violations to the enforcement agencies. Such relationships are sometimes referred to, most commonly by worker advocates, as “co-enforcement.”

This model has long existed at the federal level: The Occupational Safety and Health Administration (OSHA)’s Susan Harwood Training Grant Program since 1978 has awarded grants to nongovernmental entities, including worker organizations, “to provide training and education programs for employers and workers on the recognition, avoidance, and prevention of safety and health hazards in their workplaces and to inform workers of their rights and employers of their responsibilities” under the Occupational Safety and Health Act.

Several local agencies in more recent years have created similar formal, funded partnerships with worker organizations, including unions, worker centers, and community-based organizations. Some of these organizations played a role in advocating for what is now the longest-standing local program of this type, in San Francisco (Patel and Fisk 2017). The city was a forerunner in creating its community partners program was established under a 2006 amendment to the city’s minimum wage law, requiring the Office of Labor Standards Enforcement to create a community-based education and outreach program focused on workers in particular industries (San Francisco 2011).

The Office of Labor Standards in Seattle has a Community Outreach and Education Fund that grants money to community organizations focused on workers who experience high rates of workplace violations, including women, workers of color, immigrants and refugee workers, LGBTQ workers, workers with disabilities, veterans, and youth workers. The most recent round of grants was announced (Seattle OLS 2021k) in December 2021; nearly $3 million in funding will be provided over two years to nine organizations that will provide outreach, education, and support to low-wage workers. The office also has a Business Outreach and Education Fund (Seattle OLS n.d.a), which provides assistance and outreach to small businesses owned by low-income and historically disenfranchised communities, in order to increase their compliance with city labor laws. For the two-year period starting in January 2021, the fund committed $1.1 million to five organizational grantees. In 2021, the office also granted $50,000 to an organization to provide outreach to domestic employers about their obligations.

In 2021, the Chicago Office of Labor Standards announced (Chicago Dept. BACP 2021a) a $100,000 grant, funded in part by the city and in part by the Chicago Foundation for Women, to the nonprofit Arise Chicago. The funding is for outreach and education on city labor laws, with additional activities focused on domestic workers: providing trilingual trainings in developing contracts, and offering template contracts in Spanish, Polish, and English, among other things.

A Minneapolis ordinance requires the development and implementation of “a multilingual and culturally specific outreach and community engagement program to educate employees and employers about their rights and obligations under this chapter…[with] media, trainings and materials accessible to the diversity of employees and employers in the city.”70 Accordingly, the Office of Labor Standards has devoted $300,000 annually to contracting with community organizations for these purposes. The Centro de Trabajadores Unidos en La Lucha (CTUL)(CTUL n.d.) is a grantee and also helps administer the contract; in 2021, CTUL subcontracted also to Awood (a worker center serving the East African community) (Awood n.d.) and the local chapter of Restaurant Opportunities Centers United (ROC-United n.d.; Walsh 2021).

Finally, the Santa Clara County Office of Labor Standards Enforcement also provides funding for education and outreach to community-based organizations providing services to workers and businesses in Santa Clara County (SC OLSE n.d.e, n.d.b, and n.d.a).

Localities have created labor standard requirements and consequences for their government contractors, and for applicants/holders of licenses and permits

A considerable number of businesses interact with localities not just as regulated entities, but also as government contractors or vendors, or as holders of local government-issued permits or licenses. These relationships present opportunities for localities to improve working conditions or drive compliance with worker protection laws. Local governments may have more ability or leverage to positively affect employer conduct in these situations, when businesses are actively seeking approval, funding,71 or a contract from the government.

In relation to contractors or vendors, localities may wish to ensure their contracting funds family-supporting employment, not low-road, underpaid, precarious jobs. They may wish to ensure contractors do not win contracts through a race to the bottom on working conditions. They may also be aware of the practical benefits of contracting with companies that employ highly skilled unionized workers, where turnover and job disruptions may be reduced and product quality may be higher. Or they may wish to ensure their contractors—even if they are not high-road employers—at the very least do not have a history of violating basic workplace and other laws. This report provides a general overview of some options, but localities wishing to achieve these goals should consult more comprehensive and informative resources on this topic (Walter and Madland 2015; Walter, Rowell, and Wall 2020; IIIFFC 2017).

Before approving license/permit applications or renewals, localities may wish to ensure that applicants and license/permit holders are financially responsible, and that they are at least in compliance with the basic applicable workplace statutes.

In relation to contracts, permits, and licenses, localities also may wish to have laws and operations in place to allow termination of such relationships in the event of established and unremedied violations.

Accordingly, localities have passed laws and taken other actions in relation to their contractors, as well as license and permit holders.

Localities have imposed requirements related to public projects or projects seeing public approvals

Localities have imposed prevailing wage and living wage requirements on contractors, passed responsible bidder ordinances, and used project labor and community benefits agreements

Prevailing wage

Prevailing wage laws require covered government contractors to pay a wage and benefit rate based on similarly employed workers in a given geographic region (ILEPI n.d.a; Mahalia 2008). Sometimes ordinances also will require payment of prevailing wages by entities like developers and owners that receive local subsidies or tax abatements. These laws can help make sure that public funds support good jobs, and that bidders do not win government contracts through race-to-the-bottom labor practices. The federal prevailing wage laws (the Davis-Bacon and Service Contract Acts) cover federally funded construction and service contracts. Roughly half of U.S. states (USDOL 2022a) have prevailing wage laws. A number of localities do as well; for example, New York City requires payment of prevailing wage on city-contracted construction projects, to service workers (such as security guards) working for city contractors, and to service workers in residential projects that receive more than $1 million in city financial assistance with 120 or more residential units (Wall, Walter, and Madland 2020; NYC DHPD n.d.). In early 2022, San Diego County passed the “Working Families Ordinance,” which requires contractors for construction projects on county land working on projects of more than $1 million to use skilled, trained workers and pay prevailing wages. It also requires employers on county-leased land to provide paid sick leave. (Brennan 2022). Local prevailing wage laws more commonly cover construction of “public works,” or public buildings, roads, and structures, but they also may be enacted to cover service contracts with the locality as well (Walter, Rowell, and Wall 2020). Studies have found that prevailing wage laws have an overall positive economic impact, and also that costs savings were not realized in jurisdictions where such laws were repealed (Manzo IV 2018). The Center for American Progress in 2020 published a how-to guide with information for states and localities wishing to enact or expand prevailing wage laws within their jurisdictions (Walter, Rowell, and Wall 2020).

Living wage

Living wage laws require employers who receive contracts, tax benefits, or government subsidies from a locality to pay their workers a higher-than-minimum wage (PWF n.d.d; Bernstein 2002). These policies are meant to cover the cost of living, and the wage rates are often calculated based on ensuring that a family would be raised to or above the poverty threshold. Living wage policies in some cases establish different wage levels for employers who provide health insurance and those who do not. A 2011 compilation by the National Employment Law Project (NELP 2011) reported there were more than 120 localities with living wage requirements at that time.

As an example, Boston’s living wage law, enacted in the late 1990s, has as its purpose “to assure that employees of vendors who contract with the City of Boston to provide services earn an hourly wage that is sufficient for a family of four (4) to live at or above the Federal poverty level. This Chapter is also designed to maximize access for low- and moderate-income Bostonians to the jobs that are created, maintained or subsidized through service contracts with the City of Boston.”73 It covers city vendors and beneficiaries of city financial assistance. The law defines financial assistance broadly (Boston n.d.a),74 and covers any employer with at least 25 employees who has been awarded a service contract or subcontract with the city (Boston n.d.a).75 The law contains employee notice and employer reporting requirements, and a mechanism for enforcement, with potential penalties and remedies including fines, restitution, suspension of ongoing contracts and subcontract payments, and ineligibility for future city contracts for three years or until all penalties and restitution have been fully paid (Boston n.d.b).76 Companies bidding or negotiating on a service contract must complete an affidavit regarding the living wage (Boston 2022) prior to the awarding of the contract.

A major shortcoming of Boston’s law is that its formula for calculating the living wage can result in a relatively low dollar amount (the 2022 living wage is $15.87 per hour (Boston OWD n.d.), compared with the state’s 2022 minimum wage (Massachusetts n.d.b) of $14.25.

By contrast, the County of Santa Clara for 2021–2022 has a living wage set at $25.31 per hour (SC OCE n.d.) for employers who do not provide health or retirement benefits; employers who provide such benefits may pay a lower rate ($23.31 per hour with either health or retirement benefits; $21.31 per hour with both). In addition, Santa Clara County’s living wage requires77 provision of up to 12 paid days off to be used either as paid sick leave for the worker or for that worker to care for a family member or designated person.

Some city living wage laws incorporate other kinds of requirements, such as worker retention policies (PWF n.d.e). Hoboken, New Jersey, recently enacted a living wage ordinance for building service workers that includes both a monetary wage component and paid leave requirements.78 The city also passed an ordinance requiring contractors or subcontractors with a service contract in the city to ensure that when there is a change in employer, the successor employer must retain building service workers for 90 days.79 In 2022, the Newark (New Jersey) City Council passed an ordinance (TAPinto Staff 2022) to protect subcontracted janitors, security officers, and door attendants from losing their jobs for 90 days when a contract changes hands through no fault of workers.

Responsible contractor requirements

Numerous local governments have passed laws requiring contractors bidding for public projects (above a certain value) to meet certain “responsible contractor” criteria (ILEPI n.d.b). A responsible bidder ordinance is a policy that sets minimal requirements for all contractors bidding on publicly funded projects in a given political jurisdiction.

Criteria may include, for example, previous compliance with worker protection laws (i.e., laws prohibiting wage theft, misclassification. etc.), appropriate insurance coverage (i.e., for workers’ compensation), participation in a registered apprenticeship training program, and appropriate professional licenses (ILEPI n.d.b). While such requirements are based in commonsense and noncontroversial approaches, they do diverge from the frequently taken approach of awarding contracts to the lowest bidder based solely on price alone (IIIFFC n.d.d).

The Indiana, Illinois, Iowa Foundation for Fair Contracting has developed a Responsible Bidder Toolkit (IIIFFC 2017) providing guidance to municipalities wishing to pass such measures; the organization also compiled a list of nearly 50 responsible contractor ordinances in municipalities within those three states (IIIFFC n.d.a, IIIFFC n.d.b; IIIFFC n.d.c). Other localities are considering such requirements. New Orleans, for example, passed (New Orleans MO 2021) a responsible contractor ordinance after the collapse of the Hard Rock Hotel, which was under construction; three workers died in the accident. New Orleans also specified that the primary contractor would be responsible for any subcontractor violations.

Seattle’s minimum wage ordinance contains a provision disallowing employers from bidding on city contracts if they are the subject of a final order and have not paid all money owed; if an employer has been the subject of a final order twice or more within five years, the contractor cannot bid on city contracts for two years.80 Most of the city’s other labor ordinances contain similar language.

San Diego’s municipal code requires city contractors, during the term of a contract, to “comply with all applicable local, state, and federal laws, including health and safety, labor and employment, and licensing laws, that affect the employees, the worksite or performance of the contract.”81

Minneapolis bars the city from contracting with entities included on a list of companies with outstanding violations of the city’s wage theft law (Minneapolis n.d.c). The city of Omaha, Nebraska, sets contractor rules for contracts greater than $500,000. These rules include a “bid incentive” for contractors to use apprenticeship training programs (allowing them to be competitive while submitting slightly higher bids), and also require proof of workers’ compensation insurance, proper classification of workers as employees, and disclosure of subcontractors; penalties for noncompliance include withholding by the city of any payments still owed to the contractor, as well as a year of being debarred from bidding on contracts if there are two violations (Omaha n.d.).

Toledo, Ohio, has a municipal code that requires payment of prevailing wages for contracts of $10,000 or more, and prohibits awards of such contracts to bidders who have been convicted or found liable under the city’s wage-related law in the previous two years. For construction projects of more than $100,000, city law sets criteria, including continuity and experience of the workforce, local hiring, whether there is an apprenticeship program, and whether the employer provides benefits (health insurance and retirement or pension plan), as well as the bidder’s record of compliance with tax, wage and hour, and unemployment laws (Toledo n.d.b).

Other cities that disqualify contractors with a history of wage theft and other labor standards violations from winning city contracts include Cincinnati (Hussein and Coolidge 2016); Columbus, Ohio (Columbus n.d.a, n.d.b); Coralville, Iowa (Zaluska 2021); El Paso, Texas; and Houston.

In 2021, New York City amended its law to include a requirement, currently being challenged in litigation, that human services contractors and subcontractors must agree to labor peace agreements as a condition to being able to win or renew a city service contract with city agencies. Among other things, they must file an attestation that the employer has entered into a labor peace agreement with a labor union, or that no union has sought to represent their workers, and if a union seeks to represent their employees during a contract, they must enter a labor peace agreement within a set period of time (NYC n.d.a).82

Local and targeted hiring policies

Local and targeting hiring programs require or incentivize businesses that receive public dollars to hire workers from the local community, or from targeted populations in the community. Local hiring creates hiring preferences for people who live in a specific geographic area, which can be as large as an entire city or county, or as small as specific zip codes or neighborhoods. Targeted hiring refers to hiring preferences based on a range of worker characteristics, such as veteran status, gender, race or ethnicity (where allowed), residency in a low-income neighborhood, having been formerly incarcerated, having a disability, or being long-term unemployed (Gross and PolicyLink 2019). Local and targeted hiring policies can be implemented by ordinance, as part of responsible contractor standards, or negotiated as part of project labor agreements or community benefits agreements (UCLA Labor Center 2014). Baltimore’s local hire law, for example, requires compliance by vendors, contractors, and subcontractors who do business with the city, and is applicable to city-awarded contracts of more than $300,000, and city-subsidized projects of more than $5 million. The law requires businesses and all of their subcontractors to post new jobs with the mayor’s Office of Economic Development exclusively for a period of seven days, that 51% of all new hires are Baltimore residents, and for businesses and subcontractors to submit monthly reports (Baltimore OED n.d.).

Project labor and community benefits agreements

Project labor agreements (PLAs) are used primarily in the construction industry to establish the terms of employment for all workers on a project. Generally, PLAs specify workers’ wages and benefits, and may include provisions requiring contractors to hire workers through union hiring halls, otherwise establish a unionized workforce, or develop procedures for resolving employment disputes. PLA terms often also prevent workers from striking, and employers from locking workers out, during the project (Mangundayao, McNicholas, and Poydock 2022). PLAs can help eliminate costly delays caused by labor conflicts or shortages of skilled workers. While many states have policies that promote PLA use in state-funded projects, some states restrict or disallow them (Brubeck 2018; FC and SLC 2018; Von Wilpert 2017). Local governments such as those in Boston, Los Angeles, and New York City have successfully used PLAs for years; more localities could use PLAs on major projects.

Community benefits agreements are made between developers of a commercial and/or residential project and representatives of community groups where the project is being developed (PWF n.d.a). Communities can stipulate certain requirements for the projects, such as hiring from the local community, or guaranteed financial or social benefit from the project; in return, the developer receives the community’s support for the project (Island Institute 2021). Major development often occurs on city land, receives public funding or tax breaks that can accrue value to the developer, and in almost all cases require land use approvals that require the support of local government officials (PWF and LP 2019). Consequently, local governments are sometimes parties to community benefits agreements directly, may have a separate agreement with developers that is also part of negotiations, or may otherwise leverage their land use or funding powers as a part of these community benefits agreement negotiations.

Some examples of community benefits and labor peace agreements are as follows:

• In 2012, a community coalition and the city of Oakland negotiated a community benefits agreement that included requirements for local and targeted hire, living wages, fair chance hiring, limitations on the use of temporary workers, and community oversight and enforcement (PWF n.d.c).
• In 2018, the city of Nashville supported a community coalition in winning a community benefits agreement that included requirements for local hire, a $15.50/hour minimum wage, mandatory worker safety training for construction workers and supervisors, and workforce development (Porterfield 2021).
• A 2008 community benefits agreement regarding the development of the Bayview-Hunters Point neighborhood of San Francisco included a labor peace agreement in key industries related to the project (PWF n.d.c).
• Pittsburgh also has an ordinance from 1999 that requires hotel contractors and employers to sign labor peace agreements when city financing has been involved in the development of the hotel (Pittsburgh 1999).

Some localities created compliance requirements to obtain, retain, or renew permits or licenses; however, limited enforcement lessens deterrence

The licensing and permitting process can be used to drive improved labor standards and conditions; accordingly, some localities have incorporated labor-related requirements into these processes (Madland and Rowell 2017). This can take the form of requiring disclosures or evidence of compliance as part of the application or renewal process, or imposing potential permitting or licensing consequences in the event of certain established violations.

One caveat regarding the numerous laws that have been passed in this area: lack of media reports suggests very limited exercise of these powers by localities that have passed them. As with any law, the effectiveness of these provisions depends in large part on enforcement. Economists have observed that “employers will not comply with the law if the expected penalties are small either because it is easy to escape detection or because assessed penalties are small” (Ashenfelter and Smith 1979). Licensing and permitting consequences change both parts of the equation—the ease of escaping detection, and the scale of the assessed penalties. In addition, as discussed in Section 9 below, media coverage of these consequences would likely significantly drive deterrence.

Localities face several challenges in operationalizing these requirements. First, there is the need for at least some dedicated staff time on the local level to make the program work. There is also the logistical challenge of ensuring that local licensing or permitting agencies learn about serious violations, which will require proactive outreach and research. In addition, unless they are given very clear direction or mandates from the ordinance and/or from their chain of command, licensing or permitting agencies may be reluctant or resistant to imposing consequences based on workplace violations (even those that are proven and unremedied), seeing these issues as outside of their substantive purview.

There also may be concerns about revocation of a license or permit possibly leaving workers out of jobs. However, licensing and permitting provisions generally provide ample opportunities to cure, as well as a range of consequences—not only the most severe—including a period of temporary suspension for a license or permit, or a probationary period. In addition, the existence of licensing or permitting consequences could permit an agency to reach a negotiated settlement with terms to ensure future compliance, such as requiring an employer to engage an independent monitor. Such negotiated settlements or less punitive measures could in many cases be preferential to revocation.

In addition, it is likely that even one or two well-selected, well-publicized uses of these powers would achieve much of the desired deterrence in a given industry or neighborhood. Further, the limited available examples suggest that these consequences work: as described below, the Santa Clara County Office of Labor Standards Enforcement has operationalized food permit consequences for restaurants with unpaid wage-related determinations from the state labor commissioner. In response, almost all employers involved have paid what they owed in order to avoid further consequences.

In short, this tool appears to be underutilized despite its apparent untapped potential in terms of deterring violations. Localities without these laws might consider passing them, along with required annual reports on activities. Localities with such laws might wish to systematically enforce them through leveraging the license application and renewal process, and through scheduled routine checks with local, state, and federal labor enforcers, and routine searches of court filings.

Sample legislative language

Even without language specifically addressing wage theft or other labor conditions, licensing or permitting laws may contain general language with catch-all provisions that may be used for the purposes of ensuring licensees or permit holders comply with workplace laws. The Minneapolis Code (Minneapolis n.d.d) section on business license holders provides several examples of this:

• It requires license holders to“maintain and operate the business in compliance with all applicable laws and ordinances, including the zoning, fire, environmental health, environmental management, license, food, liquor, housing and building codes” (emphasis added).83 The “all applicable laws and ordinances” provides a basis for taking adverse action against a licensee based on proven violations of wage or other workplace laws.
• It requires license holders to “pay all delinquent court judgments arising out of their business and business operations.”84 This provision could provide a basis for adverse action in a situation where a judgment related to wage, discrimination, or other workplace violations remains unsatisfied.
• Finally, the code states, “The provisions of this section are not exclusive. Adverse license action, inclusive of, but not limited to, revocation, may be based upon good cause at any time upon proper notice and hearing. This section shall not preclude the enforcement of any other provisions of this Code or state and federal laws and regulations.”85 This broad “good cause” language again provides an opening for action based on workplace practices, such as persistent ongoing violations or egregious infractions.

In addition to potential use of this type of general language, some city laws specifically reference working conditions and labor violations in relation to issuance or revocation of permits and licenses.

For example, Philadelphia’s city code allows the city to “deny, suspend, or revoke any license or permit issued or pending” for a period of up to one year if the applicant or licensee was found guilty, liable, or responsible for violating the city’s anti-wage theft ordinance. In addition, all applicants for a commercial or business license must certify that they have not been found guilty, liable, or responsible for violating wage theft laws within the past three years (Philadelphia n.d.b). Similarly, Jersey City, New Jersey’s wage theft prevention law prohibits issuance or renewal of a license or permit to an applicant or entity that has been found liable for wage theft and has not come into compliance within 90 days of any final judgment. It also requires disclosure of wage theft cases within the two years prior to license or permit application, and requires the city to make an annual request to the state labor department for any wage claims (and associated documents) filed against licensees in the past two years (Jersey City n.d.).

Permits

Some localities have used the permitting process to drive labor compliance. Prior to issuance of a permit for construction of a building above a threshold size, the city of Milpitas, California, requires applicants to sign a form (Milpitas n.d.) acknowledging responsibility for complying with certain state and local labor laws. They must also sign a form certifying compliance before a certificate of occupancy will be issued for the project (Milpitas n.d.). For issuance of a special construction permit under the Quincy, Massachusetts, city code, all levels of entities involved in the project (construction manager, lead contractor, contractor, subcontractor, etc.) must comply with wage payment-related laws; if not, the city’s measures to achieve compliance include issuance of a stop-work order until there is compliance.86

Michigan City, Indiana, creates requirements for issuance of building permits for construction projects of more than $250,000, including that in the past three years, the contractor must not have been barred from bidding on public work because of, or been found to have committed, legal violations pertaining to wages, taxes, workers’ compensation, or misclassification. It also requires contractors who receive permits to comply with these laws as well, and requires the property owner applying for a building permit to use their best efforts to require all contractors to comply with these obligations. The law contains serious potential consequences, including suspension of the permit (requiring stoppage of work), or even revocation (Indiana n.d.).

The Better Builder Program in Austin, Texas, uses a carrot instead of a stick. The program, in partnership with the Workers Defense Project (WDP n.d.), provides an innovative example of creating permit-related incentives for employers willing to commit to higher labor standards. In the program, construction companies willing to ensure certain protections for construction workers on commercial projects may receive expedited handling of their permits (Austin n.d., Hasan 2017; Anderson 2017).

Licenses

A number of localities incorporate wage theft and labor compliance into their business licensing laws and practices. For example, the city of Toledo prohibits issuance of a license to any applicant who has found liable or been convicted pursuant to the city’s anti-wage theft laws or any other wage-related provisions of local, state, or federal law within the previous two years.87 The Seattle municipal code empowers the Department of Finance and Administrative Services to deny, refuse to renew, or revoke an employer’s business license, if requested to do so by the Office of Labor Standards as a result of an unsatisfied settlement or order.88

In Boston, a 2017 executive order allows the city’s licensing board to take into consideration whether a licensee has been found to have violated state or federal wage laws in determining whether to reissue, modify, suspend, or revoke a license (Boston MO 2017). A number of localities in Massachusetts have similar provisions. In Northampton, the License Commission has authority over issuance and administration of licenses for a range of types of businesses: service and sale of alcoholic beverages; operation of restaurants, hotels, inns, and lodging houses; indoor and outdoor entertainment for licensed and nonlicensed premises; car dealers; and more. When issuing a new license or a renewal, the License Commission requires completion of a Fair Wage Compliance Certificate (NLC n.d.), attesting that the business is not subject to a judgment or final determination resulting from a violation of state or federal wage protection laws. If they do not certify as such, they may be required to provide a wage bond for the time period covered by the license (Northampton n.d.). The media reported on a case in which this wage bond requirement could potentially be triggered, based on citations issued by the Massachusetts attorney general’s office (Fieldman 2021).

The Santa Clara County (California) Office of Labor Standards Enforcement is an agency that has begun to meaningfully operationalize permitting consequences for violators of labor standards laws. Data from the California Division of Labor Standards Enforcement showed that Santa Clara County workers filed the highest number of wage theft claims in the state: over a nearly five-year period, retail food vendors were found to owe nearly $5 million in back wages, an estimated $2,900 per employee. In addition, worker advocates reported on (Gleeson, Taube, and Noss 2014) the high incidence of wage theft and highlighted potential responses by local government. Accordingly, the county established a food permit enforcement program (SC OLSE n.d.d) to encourage payment of existing judgments by conditioning the issuance, renewal, or retention of food facility permits on compliance with labor standards.

If a retail food vendor is determined to be in violation of a judgment for nonpayment, the county may elect to temporarily suspend or revoke the vendor’s food health permit. The program, which is being rolled out gradually to all zip codes in the county, contains graduated measures to encourage payment of outstanding wages: the county sends three notices (a notice of outstanding judgment, notice to comply, and notice of violation, with 15 days to respond to each), and ultimately, continued nonresponsiveness or noncompliance will lead to a food permit suspension of at least five days (with notice provided to the public regarding the reason for the suspension). The county created a flow chart to explain the process, contained in Figure A. One noteworthy aspect of this process that may increase its likelihood of success and effectiveness is its focus on only one industry (restaurants), and its gradual rollout plan, based on zip codes. This kind of approach—targeting a problem industry and gradual implementation—could readily be replicated elsewhere. The county also added ongoing wage theft violation information to its “SCCDineOut” app, which allows county diners to view restaurants’ food safety records on their smartphones (Ochavillo 2019).

Figure A

Retail food vendors may have food health permit suspended or revoked for noncompliance. In addition, in 2010, the San Francisco Department of Public Health, recognizing the socioeconomic determinants of health and the poor health outcomes resulting from labor violations, incorporated certain labor elements into its restaurant permit review process, including requiring proof of workers’ compensation insurance by all applicants, as well as successfully leveraging the permitting process in relation to unremedied serious labor violations by several employers (Bhatia et al. 2013).

Localities can support workers through exercise of public leadership: education and outreach, issuing reports, holding hearings, and general advocacy

Localities have leveraged their soft powers to support workers’ rights and organizing. Local agencies devoted to protecting workers’ rights have used a range of tools to educate workers about their rights, inform employers about their obligations, and share information with the broader community about issues affecting workers. They have issued reports, conducted extensive public education and outreach, made materials available on their websites, garnered media coverage, and more. Localities without dedicated labor agencies can also use these soft powers to promote public and worker education. Moreover, local elected officials—whether individually or collectively alongside other officials and community labor groups—can use their public platforms and convening authority to provide public education and support workers, including those who are actively forming and joining unions.

Strategic communications, including use of media, is particularly important in educating workers about their rights and deterring violations. Media coverage increases employers’ knowledge about their legal obligations; it also increases their perceptions about the likelihood and cost of detection of violations. A recent study showed that press releases about OSHA enforcement of workplace safety violations deterred other workplace safety violations, an effect likely applicable to other labor standards laws as well (Johnson 2020). In addition, many workers, especially low-wage workers, have limited knowledge about the laws that affect them (Rankin and Lew 2018; Miller and Tankersley 2020). There are numerous communications tools that localities can use to reach the public (Gerstein and Goldman 2020).

Many local labor agencies have issued reports on worker issues or on their activities supporting workers

Several local agencies have issued regular reports on their activities or on the state of workers’ rights within their jurisdiction. Annual reports generally provide a comprehensive overview of an office’s work. In some jurisdictions, such as Chicago, Duluth, and St. Paul, annual reports are required by statute, a beneficial requirement that ensures transparency and continued focus on the labor offices’ work (Chicago n.d.c; Duluth n.d.; St. Paul n.d.c). In other jurisdictions, such as New York and Seattle, there are not annual report requirements per se, but other mandates for regular report-backs; Seattle’s ordinance requires an annual report regarding required funding for the Office of Labor Standards (Seattle n.d.a) (which necessarily requires an accounting of the past year’s activities), and individual laws in New York City have their own specific reporting requirements (NYC n.d.b).

Here’s a look at some local reports:

• The Chicago Office of Labor Standards issued annual reports covering its activities in 2019 (Chicago OLS 2019), 2020 (Chicago OLS 2020), and 2021 (Chicago OLS n.d.).
• The Denver auditor issues an annual report (Denver OA 2021a), and the 2021 version has a section (Denver OA 2021b) on wage-related enforcement.
• The city of Los Angeles issued a milestone report (LA City OWS 2022) in January 2022, detailing its activities and accomplishments since 2016.
• The Minneapolis Labor Standards Enforcement Division has a running dashboard (Minneapolis n.d.a) on its website, with data about the division’s activities, and issues an annual report (Minneapolis 2020).
• St. Paul includes labor enforcement data in the annual report (St. Paul 2020) of the Department of Human Rights and Equal Opportunity.
• The New York City Department of Consumer and Worker Protection has issued annual reports (NYC n.d.d) on the state of workers’ rights since 2017. The department in 2018 issued a report (NYC 2018) specifically on paid care workers.
• The Philadelphia Department of Labor issued annual labor policy and compliance reports (Philadelphia OLS & OWP n.d.) in 2019, 2020, and 2021. In addition, the department issued a report (Cox 2020) in 2020 on the Philadelphia Worker Relief Fund, which provided foundation and city-funded cash assistance to workers excluded from unemployment insurance and pandemic-related stimulus, through distributions via 14 community-based organizations.
• The San Francisco Office of Labor Standards has issued three annual reports (SF OLSE n.d.a).
• The Santa Clara County Office of Labor Standards Enforcement has issued several reports, including an annual report (SC OLSE 2020) in 2020.
• The Seattle Office of Labor Standards has an extremely detailed interactive dashboard (Seattle OLS n.d.b).

Local labor agencies have launched campaigns to educate communities about workers’ rights

Many local labor offices are extremely active in reaching out to the public and educating workers about their rights as workers. The New York City Department of Consumer and Worker Protection has engaged in a number of targeted campaigns, including educating the public about the city’s paid sick leave law when it first took effect, introducing the agency’s new name (NYC 2019c) to include the word “worker,” and reaching out to nail salon workers (NYC 2019b). During the early months of the COVID-19 pandemic, the department set up a hot line (NYC 2020a) for workers with questions about the city’s reopening.

The Minneapolis Labor Standards Enforcement Division held a workshop to help employers plan for a minimum wage increase, (Minneapolis 2018), as well as a workshop on paid sick and safe time for immigrant-owned small businesses (Minneapolis 2017). The Philadelphia Department of Labor has extensive know-your-rights resources on its web page (Philadelphia DOL n.d.), including access to a video (Philadelphia 2021a) about city worker protections during the COVID-19 pandemic.

The Chicago Office of Labor Standards and Denver Labor are both relatively new offices that have taken considerable action to educate the public in their cities. In Chicago, the Department of Business Affairs and Consumer Protection, within which the Office of Labor Standards is located, has its own YouTube channel, and the Office of Labor Standards has posted numerous webinars there on a wide range of labor-related topics (Chicago Dept. BACP n.d.; Chicago n.d.b). The office also created a “Your Home is Someone’s Workplace” campaign focused on domestic workers, and has a web page specifically focused on this workforce, as shown in Figure B (Chicago n.d.a). 

Figure B

The Chicago Office of Labor Standards also engaged in an outreach campaign about a new law giving domestic workers the right to a written contract from their employer (Chicago n.d.a; Chicago Dept. BACP 2021b). Some outreach took place in conjunction with the nonprofit worker organization Arise Chicago, which provided trilingual (English, Spanish, and Polish) sample contracts for employers’ use (Arise Chicago n.d.).

Los Angeles County announced a similar “Your Home is Someone’s Workplace” campaign to educate employers about domestic workers’ rights, and the Philadelphia Labor Department conducted a fair workweek survey in English and Spanish (LA County CBA 2021a; Chewning 2021b, 2021a).

Denver Labor has an extensive outreach and public education function. The office holds “Wages Wednesday” live on Wednesdays on the Denver Labor Facebook page, including programs in English and Spanish (Denver 2022b, n.d.a). The office held nearly 50 live Facebook trainings in 2021, and had bilingual (English and Spanish) staff available to answer questions (Denver OA n.d.a). The office web page highlights restitution stories, and contains online resources for small businesses about compliance (Denver n.d.b, n.d.c). It also contains tools for workers and employers: a regional address finder to assess whether work performed was in the relevant local boundaries, and a minimum wage and tip calculator, among other things. Also, the office launched an “Earned It, Deserved It” campaign to raise awareness of the city’s minimum wage ordinance, with bilingual ads at regional bus stops, and on radio, television, and social media platforms (Denver OA 2021a, p. 16).

Local labor agencies have highlighted worker issues in their jurisdictions through advocacy, hearings, and convenings

Several city labor agencies have gotten involved in various worker advocacy efforts.

In 2021, officials from several local enforcement agencies, including Chicago, New York City, Philadelphia, Seattle, and the district attorneys of Suffolk County, Massachusetts, and Washtenaw County, Michigan, all signed a joint letter (NYC DCWP 2021), along with 11 state attorneys general, to the U.S. Department of Homeland Security (DHS) supporting the agency’s plan to change its approach to worksite enforcement to support labor rights, and recommending changes to DHS policies and practices to facilitate the ability of state and local labor officials to enforce workplace laws. The letter was in response to a recent DHS memorandum (USDHS 2021) to Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and U.S. Citizenship and Immigration Services (USCIS), directing them to adopt practices and policies to deliver more severe consequences to exploitative employers, and increase workers’ willingness to report violations of worker protection laws.

In March 2020, agency officials in four cities (Chicago, New York, Philadelphia, and Seattle) called on (NYC 2020b) FedEx, UPS, and XPO to improve their policies in response to the then-new pandemic, particularly in relation to paid sick leave. Also in 2020, four localities (Chicago, New York, Philadelphia, and Pittsburgh) joined (NY AG 2020) a coalition of 24 state attorneys general in submitting a comment letter (NY AG et al. 2020) to the U.S. Department of Labor opposing a proposed regulation that would make it easier for employers to classify workers as independent contractors instead of as employees.

Finally, the New York City Department of Consumer and Worker Protection has held a number of hearings and convenings. For example, in 2017, it held a public hearing (NYC 2017) on the state of workers’ rights in the city, along with the Mayor’s Office of Immigrant Affairs and the New York City Commission on Human Rights, and in 2019, the same three agencies, along with partner organizations, held a convening (NYC 2019a) focused on immigrant workers.

Making know-your-rights resources, labor law posters, and other materials widely available, including in multiple languages

Some local agencies have been particularly aware of the need to reach the broad range of workers within their jurisdictions, and have translated materials into multiple languages. Cities and counties operate on the ground serving diverse communities, and may sometimes be more attentive to language access concerns than agencies at other levels of government.

The New York City Department of Consumer and Worker Protection has produced workers’ bill of rights booklets in 15 languages and audio files in five indigenous languages (Garifuna, K’iche, Kichwa, Mixteco, and Nahuatl), as well as an animated video. The animated video and audio files also enhance access for people with varying literacy levels. The Philadelphia Department of Labor web page (Philadelphia DOL n.d.) contains workers’ rights resources in 12 languages. Los Angeles City has minimum wage and paid sick leave posters available in 13 languages (LA City OWS n.d.a). Santa Clara County’s Office of Labor Standards’ web page provides information (SC OLSE n.d.f) in five languages. Even smaller jurisdictions, like Emeryville, California, with a 2020 population (U.S. Census Bureau 2022e) of less than 13,000, offers minimum wage and paid sick leave notices and posters (Emeryville n.d.) in six languages.

Local labor agencies have generated media coverage about worker issues

In addition to issuing press releases and reports, some offices have been effective in helping to catalyze coverage of workers’ rights issues in the local press. The Philadelphia Department of Labor has been especially effective in this regard, helping place news stories about workers’ rights under the city’s fair workweek law when it was first enacted, about its issuance of an annual report that would shame employers with records of violations, and about the Philadelphia Worker Relief Fund for workers excluded from other public assistance during the pandemic (Dorfman 2021; Reyes 2021b, 2020; Marin 2020).

The Santa Clara County Office of Labor Standards received coverage (Reese 2021) on a county contracts enforcement pilot program, in which the office reviews judgments and orders from state and federal labor authorities to determine whether a contractor should be disqualified from working with the county. The office also received coverage (Telemundo n.d.) on Telemundo about its enforcement program related to county food permits.

Finally, workers themselves can catalyze coverage of enforcement actions by local labor enforcement agencies, as when a worker whose case was handled by the San Francisco Office of Labor Standards gave a TEDx Talk (Winner 2019) and was featured in a PBS NewsHour program (Nawaz and Carlson 2021) about the city’s fair chance ordinance, which requires employers to consider mitigating circumstances and rehabilitation evidence for job applicants with a criminal record.

Local elected officials have used their public platforms and convening authority to support workers

Local elected officials have used their public platforms to demonstrate their support for working people in many ways. Such officials have shown up at rallies, events, and actions (including strikes (Aponte 2021) and walking workers back to work after days of action). Local elected officials have also written opinion pieces (op-eds) in support of worker advocacy and to bring attention to harms and challenges experienced by workers (Rosenthal 2021), and have written and signed letters to employers expressing concerns about worker treatment. Moreover, local elected officials can hold hearings, which allow workers an opportunity to share about their experiences and for officials to ask employers relevant questions.

Local elected officials can also show support for ongoing worker organizing campaigns. For example, in 2022, New York City Comptroller Brad Lander, as a public pension fund trustee, led a shareholder effort to address high injury rates and turnover at Amazon warehouses (Newman 2022). Also in 2022, the Seattle and Philadelphia city councils both passed resolutions supporting Starbucks workers seeking to unionize (Taylor 2022b; Valentine 2022). A Local Progress website provides additional ideas and resources for local elected officials wishing to show support for the Starbucks worker organizing campaign (Local Progress, n.d.b.).  

Conclusion: Localities throughout the country can adopt supporting workers’ rights as among the core functions they perform for their communities

There is a wealth of possibilities for localities that wish to get involved in expanding and enforcing workers’ rights. While some recent local action emerged in response to the Trump administration’s hostility to workers’ interests, much of cities’ work in this area pre-dated 2016. Accordingly, the local role in protecting working people continues to be relevant and critically important, even in the context of a worker-friendly federal administration.

Localities have been key innovators on labor matters, piloting new laws on such issues as paid sick leave and fair workweek; with proof of concept at the local level, such laws are later adopted at the state level (and perhaps eventually at the federal level as well). Creation of worker boards, strategic community enforcement partnerships, and using permits to drive compliance are also local innovations that help move the field forward. In addition, expansion and robust enforcement of workers’ rights at the local level serves as a hedge in our federal system, helping ensure at least some continued protection of workers in times when federal or state government is unfriendly to workers or insufficiently effective in protecting them. Moreover, public enforcement of workers’ rights is of even greater urgency when skyrocketing use of forced arbitration blocks workers from bringing their cases in court.

Localities in states without preemption of local laws may undertake any and all of the actions described above. However, even localities facing serious legal, political, or financial constraints in relation to their involvement in worker issues still can take action that will have a meaningful impact on workers’ lives.

Specifically, even in states with preemption:

• Localities can offer high-road standards to their own workforces, including enabling or facilitating collective bargaining where permitted, as well as sufficient minimum wage and paid sick/family leave for municipal employees.
• Localities can consider enacting laws that may not be preempted, such as those that do not set labor standards. These might include anti-wage theft ordinances that do not set a local minimum wage, but simply enforce existing rates; responsible bidder ordinances; ordinances concerning licensing or permitting consequences or incentives; or laws on salary transparency, for example. Local leaders can examine their state’s preemption law to assess the realistic possibilities.
• Localities can assess whether there is authority to require increased labor standards at the local airport.
• Localities can establish a worker advisory board to create a vehicle for open lines of communication and opportunities for worker leaders to raise newly emerging issues that the locality may be able to help address.
• Localities can establish a dedicated labor office or at the very least, a dedicated labor liaison at the local level. Even in a state with strong preemption, such an office could likely do some or all of the following:
  • Conduct outreach and public education on workers’ rights. Create a workers’ rights landing page on the locality website (in languages commonly used in the locality), with information about federal, state, and local workers’ rights applicable within the jurisdiction, (however expansive or limited they may be), as well as hyperlinks to relevant government agencies and other worker-oriented resources. Conduct outreach and include basic workers’ rights information in community outreach by existing local officials (such as by Fair Employment Practices Agencies, where they exist).
  • Review contracting, licensing, permitting standards, especially in industries with high rates of violation. Consider whether new laws are needed in order to impose compliance prerequisites or consequences for violations of labor laws. If so, try to enact them. In either case, routinely review labor compliance records of recipients of local government contracts, permits, or licenses, and consider whether action can be taken by contracting, licensing, or permitting agencies.
  • Review forms used for contracting, permitting, and licensing. Incorporate workplace law information about employer responsibilities on application forms and require signed certification by bidders or applicants that they will comply with these laws.
  • Research working conditions within the locality (possibly in conjunction with local or state academics), and issue and publicize reports on findings
  • Hold convenings or hearings to uncover and highlight problems facing workers, and to generate media coverage of these issues.
  • Create a comprehensive complaint form for workers and become a one-stop shop for reporting violations, serving as a gateway to help workers navigate other agencies and resources.
  • Publish enforcement data and stories to demonstrate effectiveness and deter violations.
  • Enlist and/or organize local resources, such as law school clinics or the local bar, to address worker issues. For example, the Massachusetts attorney general’s office holds a monthly wage theft clinic for cases it cannot handle, with nonprofit organizations, pro bono lawyers, legal services offices, lawyers who can take contingency cases, etc. (Massachusetts n.d.a). Along similar lines but addressing a problem unrelated to labor, the California Attorney General’s office in 2015 convened a roundtable of law firms and immigrants’ rights advocates about the legal needs of unaccompanied minors fleeing Central America; these efforts led to the legal representation of more children in immigration cases (CA DOJ 2015).

Localities in states without preemption, in locales more friendly to workers’ rights, can consider enacting any and all of the above measures. In addition, they have even more leeway to act, since they can:

• enact higher labor standards for all workers within their jurisdiction
  • minimum wage, overtime, paid sick and safe leave, fair workweek, expansive anti-discrimination laws, strong anti-retaliation protections
  • protections needed in particular industries: domestic workers, hotel, retail, fast-food, car wash workers, freelancers, etc.
  • cutting-edge worker protections such as just cause termination, gig worker pay or termination standards, salary transparency, and more
• meet with local worker organizations to learn what issues they identify as pressing
• create, fund, and empower a robust local office of labor standards with
  • enforcement power, including subpoena power
  • the ability to inform the administration and legislators on policy matters
  • a strategic enforcement approach
  • a funded community partnership model
• enact and enforce job quality standards (prevailing wage, living wage) and responsible bidder ordinances for local government contractors
• enact and fully operationalize workplace law compliance prerequisites and consequences for applicants and holders of locally issued permits and licenses.

In all localities—those in states hostile to workers, friendly to workers, and in between—there are opportunities to stand up for working people and take action.

Acknowledgments

The authors would like to thank Daniel Perez and Katherine DeCourcy, who provided excellent research assistance.

About the authors

Terri Gerstein is the director of the State and Local Enforcement Project at the Harvard Law School Labor and Worklife Program and a senior fellow at the Economic Policy Institute. She was recently an Open Society Foundations Leadership in Government Fellow. Previously, Terri was the labor bureau chief in the New York State Attorney General’s Office and a deputy commissioner in the New York State Department of Labor. Before her government service, Gerstein was a nonprofit lawyer in Miami, Florida, where she represented immigrant workers and co-hosted a Spanish language radio show on workers’ rights. She was a law clerk for Judge Mary Johnson Lowe of the U.S. District Court for the Southern District of New York. Her writing on workers’ rights issues has appeared in numerous outlets, including the New York Times, Washington Post, NBC News Think, The American Prospect, Politico, Slate, The Nation, and more; a complete listing is available at www.terrigerstein.com. She is a graduate of Harvard College and Harvard Law School.

LiJia Gong is the policy and legal director at Local Progress. She leads the development of Local Progress’ policy and research capacity to support members, and drives the development and growth of national program areas. Gong is an attorney with more than a decade of experience in policy, litigation, and political strategy. Prior to joining Local Progress, she served as counsel at Public Rights Project, an organization that empowers local and state governments to advance civil rights, worker and consumer rights, and environmental justice. At Public Rights Project, she launched a partnership with Local Solutions Support Center to fight abusive state preemption of local policymaking. Gong worked on the 2018 campaign to re-elect Sen. Elizabeth Warren of Massachusetts and served as a law clerk for Judge Kiyo Matsumoto of the U.S. District Court for the Eastern District of New York. Prior to becoming a lawyer, Gong worked as a research assistant at the Federal Reserve Board of Governors. LiJia earned her J.D. from Georgetown University Law Center and her B.S.F.S. from Georgetown University.

Endnotes

1. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J, dissenting).

2. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

3. This report uses the terms “localities” and “local governments” as an umbrella term for political subdivisions of a state that include, for example, counties, cities, townships, villages, and school districts. Local government decision-making structures and authorities vary significantly–in some localities the executive has far more authority than the legislative body (often referred to as “strong mayor” systems as applied to cities), while in some localities significant control rests with appointed offices like a city manager. Localities also vary tremendously in terms of size–some towns have only a few hundred or thousand residents, whereas Los Angeles County has more than 10 million residents. Accordingly, the capacity for policymaking and enforcement among localities also varies greatly. Due to this diversity across localities, this report uses “localities” and “local governments” generally to refer to powers that may belong to the local executive, legislature, administrative agencies, or some combination thereof in a given jurisdiction.

4. Diller argues that cities’ smaller scale, concentrated political preferences, and streamlined lawmaking processes facilitate public health innovation.

5. Many localities have longstanding agencies that enforce human rights, civil rights, or other anti-discrimination laws; this report touches on the work of such agencies, but they are not the focus. 

6. Because in its employment-related lawmaking and enforcement, Washington, D.C., operates more akin to a state than a city, it is not included in this report. For more information for enforcement actions taken by D.C.’s attorney general, please see Gerstein 2020.

7. The federal government sets the federal minimum wage; that rate serves as a national floor. Under the federal minimum wage law, the Fair Labor Standards Act, states and localities may pass minimum wages that are higher. Many, but not all states, also allow localities to require pay higher than the state minimum wage.

8. The advocacy group “A Better Balance” has an option on its website that enables filtered searches of enforcement agencies handling paid sick day enforcement (A Better Balance n.d.b). Several localities assign this function to their offices of community relations or of human rights (Boulder 2022; Montgomery n.d.; Pinellas OHR). In Duluth, Minnesota, the city clerk has authority to enforce the law (Duluth 2022b). In Miami-Dade County, a consumer mediation center handles wage disputes (Miami-Dade WTP). This list is illustrative but not exhaustive.

9. UC Berkeley 2022; Boston OWD n.d.; Chicago OLS 2022; Denver 2022a; Duluth 2022a; Emeryville 2022; Flagstaff 2022; LA City OWS n.d.a; LA City BCA n.d.; Minneapolis n.d.b; NYC OLPS n.d.b; Philadelphia n.d.a; SF OLSE n.d.c; Santa Clara n.d.a; SJ 2022; Seattle OLS n.d.d; St. Paul n.d.b; Tacoma n.d.

10. Brennan 2021; San Diego 2022.

11. Kelty 2022; Ludden 2021.

12. Miami-Dade WTP n.d.; Pinellas OHR n.d.; Broward OPSHR n.d.; Broward OIAPS 2022.

13. In re: Palm Beach County Wage Dispute Docket and Creation of “WD” Division, Administrative Order No. 3.907-3/15, March 9, 2015. Fifteenth Judicial Circuit Court in and for Palm Beach County, Florida. See Palm Beach 2015.

14. Bloomington n.d.

15. Bloomington 2022.

16. In March 2022, a Washington state bill was signed into law that will preempt Seattle’s local regulations of TNCs HB 2076, 2021–22 House of Rep., Reg. Sess. (Wash. 2022). See Washington 2022.

17. Res. 32038, 2021 City Council, Seattle (Seattle 2021). See Seattle CC 2021.

18. For an in-depth analysis of privatization generally, see Cohen and Mikaelian 2021.

19. Brief for the States of New York, Alaska, Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, and the District of Columbia as Amici Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018); see also Brief for the City of New York as Amicus Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018); Brief of Mayor Eric Garcetti, County Executive Dow Constantine, Mayor Jenny Durkan, Mayor Rahm Emmanuel, Mayor James Kenney, and Mayor Bill de Blasio as Amici Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018).

20. See, e.g., Louisiana (Louisiana Revised Statute 44:67.1(a), Davis v. Henry, 555 So.2d 457, 459 (La., 1990).

21. See, e.g., North Carolina (N.C. Gen. Stat. Ann. § 95–9).

22. Res. 2017–259 2017, Adams County Board of County Commissioners (Colo. 2017). See Adams Cty. BOC 2017.

23. Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018).

24. This authority typically derives from the “police power”—as in the power to promote the health, safety, welfare, and morals of the community—among the powers delegated to local governments. See, for example, Utah Const. art. XI, § 5 (delegating “the authority to adopt, and enforce within its limits, local police, sanitary, and similar regulations”).

25. Before 2012—the beginning of the Fight for 15 movement—only five local governments had minimum wage laws (UC Berkeley Labor Center 2022).

26. Birmingham, Alabama; Johnson, Lee, Linn, Polk, and Wapello counties, Iowa; Kansas City, Missouri; Louisville and Lexington, Kentucky; Miami Beach, Florida; and St. Louis, Missouri, passed local minimum wages that were higher than the state minimums, but they were subsequently preempted by state legislation, thereby rendering the local ordinances ineffective (UC Berkeley Labor Center 2022).

27. Dependency on tips often makes workers more vulnerable to sexual harassment.

28. Council Bill 18–008, 2018, Las Cruces City Cncl. (N.M. 2018). See Las Cruces 2018.

29. Oakland’s hotel minimum wage is higher than the citywide minimum wage for hotel workers who do not receive employer benefits.

30. Res. No. 20220127–053, 2022, Austin City Cncl. (Texas 2022). See Austin 2022.

31. There is a distinction between paid sick leave, and paid family and medical leave laws. Paid sick day laws require employers to pay workers for a modest number of days out of work for the short-term health needs of themselves and their families, while paid family and medical leave laws establish social insurance programs, typically funded by employer contributions and employee payroll deductions, to be used for longer-term medical issues, care for a new child, or care for a family member who is ill. This discussion addresses paid sick leave. Paid family and medical leave has been generally addressed in the United States at the state level, although some local governments do provide paid family and medical leave for their own employees. See Onuma 2015.

32. Austin, Dallas, and San Antonio passed paid sick leave laws that subsequently were found to be preempted in litigation. The laws were challenged by business groups arguing that the local ordinances were preempted by a Texas law that prohibits localities from enacting a minimum wage higher than the state’s. As a result, workers in these three cities lack the legal right to paid sick time. See A Better Balance 2021.

33. The state law in New Jersey mooted and preempted the numerous local paid sick leave laws.

34. Law 2018/150, 2018, New York City Cncl. (N.Y. 2018). See NY City Council 2018.

35. Law 2021/aa5, 2021, New York City Cncl. (N.Y. 2021). See NY City Council 2021.

36. Seattle’s local regulations of transportation network companies will be preempted pursuant to a state law passed in March 2022. See Washington 2022.

37. These localities include Albany County (New York), Atlanta, Chicago, Cincinnati, Columbia (South Carolina), Jackson (Mississippi), Kansas City (Missouri), Louisville, Montgomery County (Maryland), New Orleans, New York City, Philadelphia, Pittsburgh, Richland County (South Carolina), Salt Lake City, San Francisco, St. Louis, Suffolk County (New York), Toledo, and Westchester County (New York).

38. Colorado had passed a similar law in 2021. S.B. 19-085, 2019 Gen. Assemb., Reg. Sess.

39. Law 2022/031, 2022, New York City Cncl. (N.Y. 2022). See NY City Council 2022.

40. N.Y.C. Admin. Code § 20–1271 et seq.

41. Rest. Law Ctr. v. City of New York, 2022 U.S. Dist. LEXIS 24268, __ F. Supp. 3d __, 2022 WL 409190.

42. Rest. Law Ctr. v. City of New York, 2022 U.S. Dist. LEXIS 24268, __ F. Supp. 3d __, 2022 WL 409190.

43. N.Y.C. Admin. Code § 20–1301 et seq.

44. City of Los Angeles Municipal Code Chapter XVIII § 181.00 et seq.; San Francisco Police Code Article 33D.

45. A 2003 survey conducted by Airports Council International-North America concluded that city ownership accounts for 38%, followed by regional airports at 25%, single county at 17%, and multijurisdictional at 9%.

46. 8 Phila. Code § 18–201(8); Miami-Dade Cty. Res. No. R–148–07 (Feb. 6, 2007); Rules and Regulations, San Francisco Airport, Rule 12.1.

47. By using a state’s grant of local emergency authority, local governments might plausibly be able to adopt temporary emergency policies even when state law preempts such policies under normal circumstances (Haddow, Davidson, and Huizar 2020).

48. See discussion in Section 4.

49. These local governments include Chicago; Cook County, Ilinois; Duluth, Minnesota; Emeryville, California; Los Angeles; Minneapolis; Montgomery County, Maryland; New York City; Philadelphia; Pittsburgh; San Diego; San Francisco; Seattle; St. Paul, Minnesota; Tacoma, Washington; and Westchester County, New York. In general, this clarification of existing paid leave laws was permanent.

50. Many of these ordinances are no longer in effect, and the remainder that are still in effect are set to sunset on a specified date or after the conclusion of the relevant COVID-19 emergency order.

51. Bill No. 200303, 2020, Philadelphia City Cncl., (Pa., 2020). See Philadelphia CC 2020a.

52. CB 119793, 2020, Seattle City Cncl., (Wash., 2020).

53. Bill No. 200328, 2020, Philadelphia City Cncl. (Pa., 2020) See Philadelphia CC 2020b.

54. Coronavirus State and Local Fiscal Recovery Funds [rule], 87 Fed. Reg. 4338–4454 (January 27, 2022).

55. Minneapolis n.d.e.

56. The nonprofit organization Good Jobs First has lamented the lack of transparency in relation to state use of ARPA funds; it is likely that similar concerns exist in relation to local decision-making. See Furtado 2021.

57. Building & Construction Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993).

58. Gade v. National Solid Wastes Management Association, 505 U.S. 88, 99–100 (1992).

59. Steel Inst. of New York v. City of New York, 716 F.3d 31, 34 (2d Cir. 2013).

60. In addition, five state plans cover only local and state government workers.

61. 29 USC § 218 (“No provision of this [Act] shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this [Act] or a maximum work week lower than the maximum workweek established under this chapter.”)

62. Wyeth v. Levine, 555 U.S. 555 (2009).

63. Also referred to as the “new preemption” or “abusive preemption” by some legal scholars.

64. HB 2076, 2021–22 House of Rep., Reg. Sess. (Wash. 2022). See Washington 2022.

65. For example, many state consumer protection and public nuisance laws empower city, county, and district attorneys to bring actions to enforce those laws. See, e.g., N.C. Gen. Stat. §§ 160A–193, 153A–140 (providing cities and counties with authority to abate public nuisances); Cal. Bus. & Prof. Code § 17204 (2019) (providing city and county attorneys in local jurisdictions with more than 750,000 residents the authority to bring unfair competition claims).

66. The Oakland city attorney’s office brought a case alleging wage and hour violations alongside a civil legal services organization to vindicate the rights of hotel cleaners (Oakland OCA 2018). In 2019, the San Diego city attorney’s office brought suit against Instacart alleging misclassification of its shoppers who obtain and deliver groceries and obtained an injunction, which was rendered inoperative by the passage of Proposition 22 in 2020 (Allsup and Mulvaney 2021).

67. In Alabama, California, Colorado, Florida, Kansas, Kentucky, Michigan, Minnesota, Missouri, and Montana, district attorneys have civil authority to enforce the state unfair deceptive acts and practices (UDAP) law. Ala. Code § 8–19–4, 8–19–8 (2019); Cal. Bus. & Prof. Code § 17204 (2019); Colo. Rev. Stat. § 6–1–103 (2018); Fla. Stat. § 501.203, 501.207 (2019); Kan. Stat. Ann. § 50–626(a)–632(a)(3) (2018); Ky. Rev. Stat. Ann. § 367.300 (West 2019); Wayne Cty. Prosecutor v. Wayne Cty. Bd. of Comm’rs, 93 Mich. App. 114, 127 (1979); Minn. Stat. § 325F.67, 325F.70 (2019); Mo. Rev. Stat. § 407.020 (2018); Mont. Code Ann. § 30—14–121 (2019).

68. Wage theft is the practice of employers failing to pay workers the full wages to which they are legally entitled. It includes situations in which employers refuse to pay promised wages, pay less than legally mandated minimums, fail to pay for all hours worked, keep worker tips or deductions intended for worker benefits, or do not pay overtime. In some states, the term “wage theft” is defined in the law, but more commonly it is used as a colloquial and descriptive term to refer to a set of practices. See Rosado Marzán 2020 for a detailed description of wage theft.

69. See also, In re Vega, 2020 N.Y. Slip Op. 02094 (N.Y. Court of Appeals March 26, 2020).

70. Minneapolis Code 40.110.

71. Localities also may provide conditions on grants to improve worker standards. For example, Boston funded a pilot program to support small restaurants and their workers during the COVID-19 pandemic. The grants were conditioned on the small businesses paying workers $12.75 an hour, as compared with the $5.55 tipped minimum wage under Massachusetts law (Edwards n.d.).

72. Somerville Code of Ordinances, Chapter 9, Article III, Division 2. See Somerville n.d.

73. City of Boston Municipal Code Chapter 24. See Boston n.d.a, n.d.b.

74. “Assistance shall mean any grant, loan, tax incentive, bond financing, subsidy, or other form of assistance of one hundred thousand ($100,000.00) dollars or more realized by or through the authority or approval of the City of Boston, including, but not limited to industrial development bonds, Community Development Block Grant (CDBG) loans and Federal Enhanced Enterprise Community designations awarded after the effective date of this Chapter. The forgiveness of a loan shall be regarded as financial assistance. A loan shall be regarded as financial assistance to the extent of any differential between the amount of the loan and the present value of the payments thereunder, discounted over the life of the loan by the applicable Federal rate as used in 26 U.S.C., Section 1274(d) 7872(f). A recipient of assistance shall not be deemed to include leases and subleases.” City of Boston Municipal Code Chapter 24 § 24-2(a).

75. City of Boston Municipal Code Chapter 24 § 24-2(e). See Boston n.d.a.

76. City of Boston Municipal Code Chapter 24 § 24-11(a). See Boston n.d.b.

77. Res. BOS-2016-196, 2016 Board of Supervisors, Santa Clara County (Santa Clara 2016). See Santa Clara n.d.c.

78. Hoboken Municipal Code Chapter 23. See Hoboken n.d.a.

79. Hoboken Municipal Code Chapter 199. See Hoboken n.d.b.

80. Seattle Municipal Code § 14.19.080 (I). See Seattle n.d.b.

81. San Diego Municipal Code Article 2 Division 30 § 22.3004(c). See San Diego n.d.

82. Social service agencies have filed a lawsuit challenging this law. See Blau 2022. 

83. Minneapolis City Code § 259.250 (2). See Minneapolis n.d.d.

84. Minneapolis City Code § 259.250 (5). See Minneapolis n.d.d.

85. Minneapolis City Code § 259.250 (5). See Minneapolis n.d.d.

86. City of Quincy, Massachusetts, Code § 9.4.9-9.4.10. See Quincy n.d.

87. City of Toledo, Ohio, Municipal Code § 701.04 (b). See Toledo n.d.a.

88. Seattle Municipal Code 14.19.100 (A) (4). See Seattle n.d.b.

References

Court Decisions and Orders

Building & Construction Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993).

Florida, Palm Beach County, Fifteenth Judicial Circuit Court, Administrative Order No. 3.907-3/15.

Gade v. National Solid Wastes Management Association, 505 U.S. 88, 99–100 (1992).

New State Ice Co. v. Liebmann. 285 U.S. 262, 311 (1932).

Restaurant Law Center v. City of New York, U.S. District Court, S.D.N.Y., Case 1:21-cv-04801-DLC, Document 68, Filed 02/10/11, Opinion and Order.

Steel Inst. of New York v. City of New York, 716 F.3d 31, 34 (2d Cir. 2013).

Wyeth v. Levine, 555 U.S. 555 (2009).

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What this report finds: There are many potential paths for cannabis workers under broader cannabis legalization likely to come. Under the low-road scenario outlined in this report, cannabis workers are subject to the same harmful practices inflicted on nonunionized workers in agriculture and other industries with parallels to cannabis: low wages, few workplace benefits, unprotected statuses as contract workers, and erratic scheduling. Under the high-road scenario, unionization ensures that cannabis jobs are good jobs. Cannabis workers in the high-road scenario could make an estimated $2,810 to $8,690 more per year than under the low-road scenario.

Why it matters: Many proposals for federal legalization have rightly noted the need to prioritize revenues, investments, and opportunities from a newly legalized industry for communities of color harmed most by the war on drugs. But if policymakers do not include measures protecting job quality in cannabis, workers—particularly workers of color—will suffer.

What we can do about it: Protecting workers’ collective bargaining rights in any broader legalization of cannabis is the best way to ensure cannabis jobs are good jobs. State and federal lawmakers should follow the lead of states that require or encourage the use of labor peace agreements (LPAs) when issuing cannabis business licenses. These agreements help protect workers’ collective bargaining rights, allowing them to choose—without employer interference—whether they want to form a union.

Introduction, summary, and key findings

Federal legalization of the cannabis industry appears likely to happen within the next few years. Since California’s authorization of medical marijuana use in 1996, public support for cannabis legalization has steadily grown, with more than two-thirds of Americans now supportive of legalization (Brenan 2020). A majority of states allow some form of cannabis use, and several decriminalization and industry-supportive bills have gained bipartisan support in Congress. In July, the majority leader in the U.S. Senate released a discussion draft legalization bill, and in late 2020 the House of Representatives passed a legalization bill with strong social equity provisions. Although the industry has been taking shape for years in many states, this change in federal legal status for cannabis will be a watershed moment. Forecasters expect rapid growth, with the potential for large numbers of new cannabis jobs and businesses to be formed.

As the authors of federal legalization legislation have noted, legalizing and regulating cannabis also presents a tremendous opportunity to shape the contours of the industry from its early days: Specifically, establishing structures within the industry can help repair the harm caused by the criminalization of communities of color, predominantly Black and Latinx communities, in the war on drugs.1 Several recent federal cannabis legalization bills include provisions for the reinvestment of new federal revenues from cannabis into services and supports for communities most harmed by the war on drugs, and measures to support entrepreneurship in the industry by individuals previously convicted for cannabis-related offenses.

While many policy discussions around cannabis have rightly noted the need to channel investment and entrepreneurial opportunities in this new industry to the communities harmed by the war on drugs, very little has been said about ensuring that jobs in the cannabis industry are good jobs.2 Ensuring equitable access to business licenses and proper supports for entrepreneurs is essential, but insufficient. No matter how many business owners of color the industry creates, there will be many multiples more rank-and-file workers in the industry. Policies must be put in place at the outset to ensure that cannabis employees share equitably in the growth of the industry, with good-paying, safe, family- and community-sustaining jobs. Moreover, as with any new business, the needs and best practices for training, workplace safety, and efficient operations will all be evolving as the industry matures. Success will require that workers have a voice in informing that evolution.

The risks of inaction are high: Without proper structures and safeguards in place at the outset, cannabis could end up looking like many other U.S. industries—dominated by strictly profit-maximizing firms that treat workers as expendable cogs or simply another cost to be minimized, employing myriad strategies to keep wages low and undermine worker power.3 As cannabis is legalized, lawmakers have a unique opportunity to decide whether the industry will be allowed to take this low-road path, or whether guardrails and incentives will make cannabis an industry of high-quality careers and worker-driven success.

In this report we describe what is at stake in this policy choice, quantifying, to the extent possible, the potential outcomes of allowing the cannabis industry to adopt low-road practices common in other industries versus putting in place high-road structures—specifically, supporting workers’ ability to organize—that ensure not only better pay and benefits, but higher standards (safety, etc.) and job quality.

Key findings from this report show that unionization is key to ensuring that the emerging cannabis industry provides safe, good-paying, and community-sustaining jobs:

• The best means of ensuring that workers in cannabis have a voice on the job and can share in the rewards of a newly legalized industry is to safeguard and strengthen the fundamental rights of workers to organize collectively in a union. Existing unionized cannabis businesses in states with legal cannabis provide examples of how formalizing workers’ rights and participation in company decision-making has led to both business success and more remunerative jobs for those in the industry.
• Labor peace agreements, which prevent union-busting by employers in exchange for workers’ pledge not to strike, have shown to be a viable means of protecting workers’ organizing rights in the six states with statutes encouraging or requiring the adoption of LPAs for licensed cannabis businesses. Formalizing workers’ collective bargaining rights with broader adoption of LPA language in statutes would help ensure high-road business practices for the cannabis industry. Failing to formalize those rights would put cannabis workers at risk of declining job quality and the same low-road employment practices common in existing industries.
• Cannabis cultivation workers could, on average, make an estimated $7,030 more in annual wages under a high-road scenario than under a low-road scenario. Cannabis cultivation workers who are union members have negotiated strong wage floors, regularly scheduled wage increases, and a slew of workplace benefits that are largely absent in most farmworker jobs, which are largely nonunionized. Under a high-road scenario, they retain those rights. But under a low-road scenario, they become more like workers in agriculture, who are often contract workers paid per piece by outsourcing firms, and who are subject to wage theft, unpaid overtime, subminimum wages, and other abusive wage and hour practices, in part because the federal labor laws and administrative structures that are supposed to protect them are in desperate need of reform.
• Cannabis processing workers could, on average, make an estimated $8,690 more in annual wages under a high-road scenario than under a low-road scenario. Unionized workers in traditional manufacturing jobs similar to cannabis processing and extraction roles have wages, on average, 23.6%–28.0% higher than similar nonunion workers. For the average full-time, nonunion worker in these jobs, this implies an earnings increase of nearly $8,700 from unionization. Furthermore, manufacturing jobs generally provide greater access to workplace benefits than jobs in other occupations—a legacy, in part, of unions’ ability to set standards in manufacturing industries.
• Cannabis retail workers could, on average, make an estimated $2,810 more in annual wages under a high-road scenario than under a low-road scenario. Most traditional retail jobs pay very low wages and offer few benefits. The exception to that rule occurs where employers have intentionally adopted high road strategies, where states or localities have adopted strong job quality standards, or where retail workers are unionized. Unionized retail workers in jobs similar to cannabis retail jobs are paid wages, on average, 7.6%–10.7% higher than similar nonunionized retail workers. This equates to about a $2,800 annual pay difference for the average nonunion retail worker.
• Cannabis workers of color would likely get an even bigger wage boost from unionization than cannabis workers who are white. The union wage premium for workers of color in cannabis “proxy” processing and retail jobs is even larger than the union premium overall. Union workers of color in processing jobs earn wages, on average, 26.4%–32.4% higher than wages of similar nonunion staff. Union workers of color in retail are paid, on average, 10.8%–13.5% more than similar nonunion retail employees. As such, unions offer a powerful mechanism for promoting greater racial equity within cannabis.
• Acting early to safeguard cannabis workers’ organizing rights could help counteract any wage declines as the industry becomes less stigmatized and as formerly incarcerated individuals enter the industry. A significant risk in failing to act early in the process of legalization is the prospect that any current wage premium being paid by cannabis employers to overcome stigma around cannabis could diminish with federal legalization, leading to lower, not higher, wages in the sector. At the same time, the stigma of past incarceration likely will still hinder labor market bargaining power for individuals released from the criminal justice system as part of federal legalization legislation. Unions provide an effective structure to counteract both phenomena—protecting any wage premiums that currently exist and providing pathways into the industry for previously incarcerated individuals in a way that ensures equitable treatment.

A brief history of cannabis policy federally and in the states

Regulation and criminalization of cannabis in the United States is inextricably linked to racist and anti-immigrant sentiment. Although cannabis products had been consumed in this country since the 19th century, Mexican immigrants in the 1910s and 1920s were most likely the first to popularize smoking of the plant (Campos 2018; Thompson 2013). Smoking cannabis also became popular in jazz culture throughout the 1920s and 1930s. Fears about the drug and the people smoking it were stoked through sensationalized news coverage that fabricated connections between the drug, mental illness, and acts of violence. Fear of cannabis led 26 states to ban cannabis between 1914 and 1925. At the federal level, the Uniform State Narcotics Act of 1932 and Marijuana Tax Act of 1937 effectively criminalized cannabis (Siff 2014). The wave of criminalization continued in the 1950s through the introduction of mandatory sentences for drug offenses, including cannabis (Lamb 2015).

Beginning in the 1960s, the counterculture movement and other cultural changes significantly changed the demographics of cannabis consumption. For the first time, large numbers of white middle-class people began smoking and consuming cannabis (Siff 2014). Simultaneously, a growing body of evidence showed that cannabis criminalization was costly and ineffective at reducing consumption. These evolving views on cannabis led 10 states to decriminalize small amounts of cannabis possession throughout the 1970s, and in that decade, Congress repealed most of the mandatory penalties that had been created in the 1950s.4

However, anti-cannabis views remained widespread and had a powerful champion in President Richard Nixon. As part of his “law and order” political strategy and a personal belief that drugs were contributing to social decay, Nixon sought to criminalize drug use by Black people and left-leaning whites (Hodge 2021; Lopez 2014). The war on drugs saw cannabis codified as a Schedule I drug by the Controlled Substance Act of 1970, which meant that cannabis was considered to have no accepted medical use and a high potential for abuse and addiction. This restrictive classification was maintained despite the conclusion by Nixon’s own administration that the drug did not warrant criminalization. In a 1972 report, the National Commission on Marihuana and Drug Abuse—commonly known as the “Shafer Commission” for its chairman, former Pennsylvania Republican Gov. Raymond Shafer—which Nixon had convened, concluded that cannabis should be decriminalized (Downs 2016). Nixon ignored the commission’s recommendations. Nixon’s war on drugs also significantly increased the role of law enforcement in cannabis enforcement by introducing no-knock warrants and creating the Drug Enforcement Administration (DEA) (Kelly and Balko 2020; Downs 2016).

During the Reagan and Bush administrations, the drug war transformed both in scale and level of hysteria. The criminalization of cannabis helped motivate and facilitate the creation of the system of mass incarceration that characterizes the U.S criminal justice system and has done immeasurable harm to communities of color. Fueled by racist narratives of who drug users are and their criminality, lawmakers in the 1980s dramatically increased the penalties for drug use and possession, and offered law enforcement increased funding designed to incentivize more drug arrests. The Comprehensive Crime Control Act of 1984 and Anti-Drug Abuse Act of 1986 created a regime of mandatory minimums and “three strikes” rules for drug offenses that vastly increased the number of people incarcerated for drug charges. These laws, in combination with police targeting of communities of color, led to an unprecedented increase in the number of Black and Latinx Americans who were in prison. Cannabis arrests continued to increase during the 1990s under both the Bush and Clinton presidencies (King and Mauer 2006). The damage caused by the war on drugs is incalculable. It has seen millions of people, mostly men from communities of color, subjected to a criminal justice system that violates their rights and causes deep psychological, economic, and physical harm.

Even as an ever-growing number of Americans were incarcerated because of cannabis usage, several states pursued avenues toward legalization.5 In 1996, California became the first state to legalize cannabis for medical use.6 By the end of 2000, six more states had legalized medical cannabis, and by 2010, the number had grown to 12 states. Colorado was the first state to legalize recreational usage for adults in 2014. As of July 1, 2021, recreational usage is legal in 19 states and in the District of Columbia, as shown in Figure A.

Figure A

There have also been steps in many states to decriminalize possession of cannabis and limit the harm of the war on drugs. Twenty-three states and the District of Columbia have some form of cannabis decriminalization law, meaning that for possessing a small amount of cannabis, a person can only be charged a civil fine but not with prison time. However, these laws vary significantly, both in terms of the amount of cannabis that an individual can possess and in the equity of their implementation. Even in states where decriminalization and legalization have occurred, racial disparities in cannabis arrests persist. In every state that legalized cannabis between 2010 and 2018, Black people are more likely to be arrested for cannabis than white people.7 Although most states experienced a decrease in cannabis arrest disparities after legalization, some states, such as Maine and Massachusetts, saw their arrest disparities increase (ACLU 2020).

Several states that maintain laws prohibiting cannabis possession and usage have legalized the use of low-THC cannabis products, such as CBD oils.8 However, many of these laws are still highly restrictive–some make low-THC products solely available to individuals with particular medical conditions; some restrict severely the level of THC allowable in a product; and some allow possession, but not production or purchasing of low-THC products in-state (Sacco et al. 2017).

In sum, the legality and consequences of cannabis use, possession, production, and distribution in the United States today varies enormously across states; notably, it also varies greatly between communities and racial groups, even within states. Cannabis in the United States in 2021 is at once a $17 billion to $21 billion industry, where as many as 300,000 workers are employed, and an illicit substance, possession of which can mean years of prison time in some places. In 2019, cannabis possession led to more than 540,000 arrests (NORML 2020).

Change on the horizon? A summary of recent federal cannabis legislation

In recent years, as recreational cannabis use—and the laws governing that use—has proliferated across many states, there has been growing pressure for a change in federal cannabis policy. Lawmakers in both parties have introduced bills of varying scope to alter federal treatment of cannabis, cannabis businesses, and individuals convicted of cannabis-related crimes. In the follow section, we briefly describe some of most notable proposals before discussing how the federally legal cannabis industry could take shape. Importantly, none of the federal cannabis legislative proposals noted here include significant provisions governing employment conditions or workers’ rights in the cannabis industry.

The Marijuana Opportunity, Reinvestment and Expungement (MORE) Act

First introduced by then-Sen. Kamala Harris (D-Calif.) and Rep. Jerrold Nadler (D-N.Y.) in 2019 and reintroduced in the House in 2021, the MORE Act would fully legalize cannabis under federal law, removing marijuana and THC from the schedules of controlled substances under the Controlled Substance Act (CSA). The MORE Act would apply retroactively, requiring expungement of all federal convictions and juvenile delinquency adjudications on cannabis-related offenses, and resentencing for people convicted of marijuana-related offenses in connection to other federal crimes. It would also explicitly restore eligibility to all federal programs and benefits that are currently denied to individuals convicted of federal crimes, and prohibit denial of any federal benefit or program to otherwise qualifying businesses operating in the cannabis industry.9

The MORE Act would levy a 5% tax on sales of cannabis products and direct the revenues from that tax to support several grant programs:

• the Community Reinvestment Grant Program, which would provide individuals most harmed by the war on drugs with such services as job training, substance abuse treatment, health education, and mentoring
• the Cannabis Opportunity Program, which would provide funding for states to offer low- or no-interest loans to small businesses in the cannabis industry owned by “socially and economically disadvantaged individuals”
• the Equitable Licensing Grant Program, which would support states in implementing equitable cannabis licensing programs that reduce barriers to licensing and employment for individuals harmed by the war on drugs

The act would also direct federal statistical agencies, such as the Bureau of Labor Statistics, to begin collecting data on the cannabis industry.

The MORE Act was passed by the U.S. House of Representatives in December 2020, but no action was taken on the measure in the Senate. The reintroduced version of the bill has yet to receive a vote in either chamber.

The Secure and Fair Enforcement (SAFE) Banking Act

Because of marijuana’s status as a Schedule I drug, banks and financial institutions currently cannot provide services to cannabis-related businesses without risking seizure of any proceeds by federal authorities, and potential criminal and civil liability for supporting business activities currently prohibited under federal law—even if legal under state law.

The SAFE Banking Act, introduced in March 2021 by Sen. Jeff Merkley (D-Ore.) in the Senate and Rep. Ed Perlmutter (D-Colo.) in the House, would allow banks and other financial services institutions to provide services to cannabis-related businesses by prohibiting federal regulators from penalizing a depository institution from providing banking services to a cannabis-related business. The act also specifies that proceeds from cannabis businesses operating lawfully under state law shall not be considered proceeds from unlawful activity—thereby making those funds no longer subject to federal anti-money-laundering laws and not at risk of asset seizure by federal law enforcement agencies.

The SAFE Banking Act has passed in the U.S. House of Representatives three times, most recently in April 2021. The Senate has not yet taken up the measure.

The Cannabis Administration and Opportunity Act

The Cannabis Administration and Opportunity Act discussion draft, released in July 2021 by Senate Majority Leader Chuck Schumer (D-N.Y.), and Sens. Cory Booker (D-N.J.), and Ron Wyden (D-Ore.), would do many of the same things as the MORE Act, including de-scheduling cannabis from the list of controlled substances and making cannabis possession and sale legal under federal law. Under the act, states would still be able to set their own legal status for cannabis, although the law would establish a nationwide minimum age for cannabis possession and set sales restrictions intended to prevent people from trafficking cannabis from one state to another to dodge more restrictive state-level cannabis laws.

Like the MORE Act, the Cannabis Administration and Opportunity Act would expunge federal cannabis conviction records and bar past cannabis-related convictions from impacting immigration status or eligibility for any federal program or benefit.

Also like the MORE Act, the Schumer-Booker-Wyden measure would levy a tax on cannabis sales, and would direct revenues from the tax to fund the same types of community investment and small business supports described in the MORE Act section above. The funding would be aimed at providing new public services, resources, and cannabis business opportunities to individuals and communities harmed by the war on drugs.10

Understanding the opportunity and risk for workers in each segment of the cannabis industry

As more and more states have legalized medical and recreational use of marijuana, the cannabis industry has grown rapidly. According to Barcott, Whitney, and Bailey (2021), the industry’s revenue has increased by more than 25% every year since 2017. Despite the economic effects of the pandemic, the cannabis industry grossed between $17.5 billion and $21.3 billion in revenue in 2020 (Yakowicz 2021; Lukas 2021). Industry revenue is expected to grow to $41 billion by 2026 (Yakowicz 2021). In states where cannabis is legal, sales from the industry have raised significant tax revenue. In 2020, California collected $1.032 billion in cannabis taxes, while Washington collected $614 million. Colorado, Illinois, Massachusetts, Nevada, and Oregon all also collected more than $100 million each in taxes. Perhaps the strongest indicator of cannabis’s growing economic significance is the number of workers in the industry. In 2020, cannabis provided between 240,000 and 321,000 full-time equivalent (FTE) jobs (Stelton-Holtmeier 2020; Barcott, Whitney, and Bailey 2021). This means that there are roughly as many cannabis workers in states with legal markets as there are professional firefighters (294,520) in the entire United States (BLS-OES 2020).

Cannabis businesses can be segmented into three broad categories: 1) the cultivation of raw material, 2) the processing of that material into goods, and 3) the distribution and sale of those goods to consumers. As more states have legalized use of cannabis, the industry has developed a diversity of products and applications for the cannabis plant, varying from recreational smoking, vaping, and edible products to therapeutic oils, creams, sprays, and patches. For all of these products, the tasks required of cannabis workers is similar to that of workers in other established industries.

In the following sections, we briefly describe each of the major segments of the cannabis industry, the work typically performed in each, and present data on what the quality of jobs in those segments could be following federal legalization under two scenarios. Under the first scenario, the cannabis industry is opened with few safeguards to protect job quality and workers’ rights (i.e., the low-road model already employed in many industries today). Under the second scenario, policy is enacted at the outset to ensure workers have adequate protections and bargaining power.

Because of cannabis’s classification as a Schedule I drug, official government statistics and data on cannabis businesses and workers do not exist. Thus, in this report, when describing the current cannabis industry, we rely on data from job-posting websites, cannabis industry groups and consultants, and union contracts (collective bargaining agreements or CBAs) at unionized cannabis firms. When assessing job quality under the two hypothetical scenarios for the industry, we consider wages and working conditions in existing legal industries—for which official data do exist—that can serve as proxies for a fully legal and mature cannabis industry. For each, we note how the adequacy (or inadequacy) of worker safeguards and the prevalence of unions have affected wages and job quality within those proxy industries.

Opportunities and risks in cultivation

Commercial cannabis plants are cultivated at varying scales, although as the industry has grown and consolidated in the states with legal recreational markets, mass cultivation sites have become more common. In some areas, cannabis is cultivated in outdoor “grows”— with the largest concentrations of outdoor grows located in northern California, Oregon, and Washington. More common, however is cultivation in greenhouses and warehouses, as these settings allow for tighter control over growing conditions and make cannabis viable in places where the climate is otherwise not suitable. Commercial indoor grows exist throughout the country in the states that have legalized cannabis cultivation.

Because of cannabis’s use in medicinal and therapeutic applications, commercial growers must maintain strict standards for consistency; even minor changes in growing conditions can change levels of cannabinoids in a plant. This is also why commercial cannabis plants are typically cloned, not planted from seed. Testing by regulators also requires exacting standards, as any product made for consumption must be tested for contaminants, heavy metals, and pesticides (Owens 2019).

The work performed in cannabis grows is similar in many ways to other crop production, but as noted, often with demanding requirements for consistency, strict rules for product quality and safety compliance, as well as chain-of-custody record-keeping on all cannabis materials. Typical cannabis jobs in a cultivation setting include growers, horticulturalists, and cultivation technicians. These workers manage the planting, maintenance, and health of the plants; regulate growing conditions; and oversee the sanitation and upkeep of the cultivation site. Ensuring safe and sanitary conditions is particularly important in greenhouse and indoor grows, both for the quality of the crop and for worker health. Peak cannabis growth requires high humidity levels, which—without proper ventilation and sanitation procedures—can make mold, yeast, and fungi growth a common problem. Exposure, particularly mold exposure, can be a dangerous health risk for cultivation workers (see Otañez and Grewal 2021).

The other most common positions in cannabis cultivation are trimmers and post-harvesters, who hand-trim the cannabis flower from plants, remove excess leaves, and prepare the harvested material for curing and processing. Trimming is an entry-level position similar to other crop harvesting roles in that it is primarily repetitive manual labor, requiring dexterity and efficiency, with workers sometimes being paid on a piecemeal basis. Worker health evaluations of cannabis cultivation sites have noted concerns about potential long-term musculoskeletal disorders that could result from extensive periods or tenure in manual cannabis trimming work (Victory et al. 2018).

Cultivation sites will often also dry and cure the harvested cannabis material, depending on its intended use. Dried and cured cannabis flower or “bud” is distributed directly to dispensaries for sale, or to labs, processors, and manufacturers for conversion into some cannabis-infused products.

When commercial cannabis cultivation is legalized more broadly, how might industry practices and working conditions evolve?

Reviewing different scenarios, our analysis describes how the policy path taken under broader cannabis legalization could have a dramatic impact on cannabis cultivation workers, for better or for worse—with the low-road scenario leading to a range of negative outcomes for workers, including an estimated $7,030 cut in annual wages alone.

The low-road scenario

Jobs in commercial agriculture today are arguably some of the lowest-quality, worst-compensated jobs in the United States, despite being extremely difficult and often dangerous. As Costa (2021) describes, the more than 2 million farmworkers essential to maintaining the country’s food supply typically earn far lower wages than workers in nonagricultural jobs, and they are subject to significantly higher rates of wage theft and other abuses. The average hourly wage of nonsupervisory farmworkers in 2020 was $14.62—roughly three-fifths the $24.67 average wage of nonsupervisory, production workers outside of agriculture, and lower than the average wage of all workers with less than a high school diploma (or equivalent education) in nonagricultural industries. According to the hourly Bureau of Labor Statistics’s Occupational Employment Statistics, in May 2020, the median hourly wage for Crop, Nursery, and Greenhouse workers was $13.78.11 Importantly, these wage rates are—in many cases—not guaranteed hourly pay rates; many farmworkers are paid per-piece rates (a set amount per crop picked or pruned), and these are the implied hourly equivalent of typical piece-rate earnings over the course of a day. Wages for certain categories of farmworkers and in some parts of the country are even lower, as explained later.

Farmworkers suffer workplace abuse and injury more often than workers in other industries. Cooper and Kroeger (2017) note that nearly 10% of workers in agriculture report being paid less than the minimum wage. Costa, Martin, and Rutledge (2020) explain that the vast majority of federal labor standards investigations of farms detect violations—workers not being paid appropriately or being given inadequate housing. Data from BLS (2020) show that workers in agriculture have above-average rates of workplace injuries. In addition, workers in agriculture rarely have any sort of nonwage benefits common to other industries, such as paid vacations, paid leave, medical insurance, or retirement contributions.

Poor job quality in agriculture today stems from racist policy choices in the early 20th century that have never been corrected. When Congress enacted the Fair Labor Standards Act (FLSA) of 1938—the law that established basic labor standards such as the minimum wage and overtime pay—conservative Southern Democrats agreed to support the legislation only if agriculture and several other industries that were the dominant employers for Black workers were exempted from its protections (Malthuap 2020). Subsequent amendments to the FLSA did expand partial coverage to agriculture workers at larger farms, but the exemptions are still enormous. Most workers in agriculture are still not entitled to overtime, and many are exempt from the minimum wage.

Agricultural laborers were also largely exempted from the worker organizing protections of the National Labor Relations Act (NLRA), which sets the rules for how and which private-sector workers can organize a union.

Without fixing the glaring loopholes in existing labor law that make agriculture jobs so poor, federally legalizing cannabis cultivation could effectively mean replacing one harmful, racist policy regime—the war on drugs—with another.

Today, most farmworkers in the United States are immigrants. Costa (2021) explains that according to the most recent data, half of crop farmworkers are unauthorized immigrants, and another 10% are migrant workers on H-2A agricultural temporary work visas. Unauthorized immigrants have little bargaining power to demand higher pay, better working conditions, or to speak out against abuse—a lack of power owing to the fear that employers will question their immigration status. Moreover, the H-2A visa program—intended to allow domestic employers to hire “guestworkers” if they anticipate a shortage of U.S. workers to fill temporary or seasonal jobs—has been described by the Southern Poverty Law Center as modern-day indentured servitude (Bauer and Stewart 2013). H-2A workers are prone to mistreatment, have no ability to change employers, and their wages are set by a federal formula at as little as $11.71 per hour (Costa 2021).

Making matters worse, agricultural employers increasingly use using farm labor contractors (FLCs), staffing firms contracted to supply workers typically at rates below what the farms pay direct employees. Costa and Martin (2017) find that FLC workers in California were paid 10% less per hour than directly hired staff. FLCs undermine worker rights and bargaining power in the same way that contractors, temping, and domestic outsourcing—the so-called “fissuring” of the labor market—suppresses wages and weakens job quality in nonagricultural sectors (Mishel and Bivens 2021; Weil 2014).

It’s entirely conceivable that in a federally legal cannabis industry, firms might explore how they could employ these practices in cannabis cultivation—employing agriculture loopholes in labor law to avoid overtime and undermine organizing efforts, using guestworker programs and employing FLCs to staff entry-level positions, and contracting out sanitation or other functions to contractors. If lawmakers want the cannabis industry to provide good jobs that offer restorative opportunities to people harmed by the war on drugs, allowing the industry to adopt typical U.S. agriculture labor practices would be counterproductive. Without fixing the glaring loopholes in existing labor law that make agriculture jobs so poor, federally legalizing cannabis cultivation could effectively mean replacing one harmful, racist policy regime—the war on drugs—with another.

The high-road, equity-promoting scenario

Although much of the work performed in cannabis cultivation is similar to other crop production, job quality in cannabis cultivation—at least for now—is noticeably better than traditional agriculture. Table 1 reports wage data for a variety of cannabis jobs. According to data from Vangst 2020, a cannabis industry staffing and networking firm, entry-level wages for growers and horticulturalists typically range from $16 to $22 per hour, and for trimmers and post-harvesters from $14.50 to $16 per hour. Indeed.com reports wage information for various cannabis jobs posted on its site with typical hourly rates for growers ranging from $15.50 to $20.00, harvesters from $14.00 to $19.00, and trimmers from $14.00 to $19.00.12 These starting wage rates are modestly higher than the $14.62 average wage of all nonsupervisory farmworkers reported previously.

Table 1

One structure that is likely helping to boost wages among cannabis cultivation workers is the growing presence of unions in the industry. Unions tend to raise wages and job quality across a sector, even at nonunionized firms, since nonunion employers must compete with unionized ones to attract and retain staff (McNicholas et al. 2020). Because of the lack of official statistics on the cannabis industry, it is impossible to know how much of the current industry is unionized. However, of the 36 states that have legalized either medical or recreational cannabis, six have language in their cannabis statutes that either encourage or require the adoption of labor peace agreements (LPAs) for licensed cannabis businesses (the six states are California, Illinois, Pennsylvania, New York, New Jersey, and Virginia). Such agreements stave off labor unrest at covered businesses by stipulating that employers will remain neutral with regard to any union election at the firm, and employees will not engage in any strikes, work stoppages, boycotts, or any other coordinated activity that would interfere with the firm’s business. LPAs tend to increase the success of union elections, as one of the biggest obstacles to organizing campaigns is employer interference (McNicholas et al. 2019).

Unionization in U.S. agriculture jobs is not common, as agriculture laborers are typically exempt from the organizing rights provided in the NLRA. However, unionization is possible for some cannabis workers because much of the cannabis industry is characterized by vertical integration, meaning that the same firm operates every stage of cultivation, processing, distribution, and sales. A single union at a vertically integrated cannabis firm can represent a wide array of workers, from growers performing agricultural tasks to customer service representatives in retail.

Cannabis unions have secured strong wage floors for even the lowest-paid industry jobs, often with automatic annual wage increases and increases based on length of tenure. For example, cannabis unions in Minnesota, New Jersey, New York, and Pennsylvania have established wage floors for trimmers, horticulturists, cultivators, and cultivation technicians ranging from $15 to $21 an hour—also shown in Table 1.13 In every cannabis industry job tracked, the union-negotiated wage floor is at least $3 above the state minimum wage, and in some cases as much as $8 above the state minimum wage.14

In addition, nearly every cannabis collective bargaining agreement (CBA)—the contract between the union and the employer—stipulates annual wage increases ranging from $1 to $3 per hour, and some also spell out job ladders with additional wage increases for workers reaching higher classifications in their roles.

The wage levels established in these contracts imply a significant annual earnings premium over traditional U.S. agriculture. Because of the lack of data on cannabis jobs, it is not possible to calculate an average or median wage among current cannabis cultivation workers. However, if we simply compare wages for someone at the midpoint of the range of starting salaries in these contracts ($18.00 per hour) with the average wage of farmworkers in traditional agriculture noted above ($14.62 per hour), the difference in annual earnings for a regular full-time, year-round worker would be $7,030.

Cannabis unions have also secured their members an array of benefits they might not receive in a nonunionized workplace, including health insurance, paid sick leave, paid vacation, and retirement benefits.15 In the overall workforce, unionized workers are much more likely to have medical benefits, retirement benefits, and paid time off than their nonunion peers (see Table 3 in the next section). Importantly, most union contracts also include commitments by the employer to maintain a safe and healthy workplace and to comply with state and local safety regulations, with mechanisms for workers to report any hazards. Some contracts also include commitments to racial equity in the workplace and participation in certified apprenticeship programs to grow and train a skilled cannabis workforce.

There is clearly a dramatic contrast in job quality between unionized cannabis cultivation workers and traditional U.S. agricultural workers.

There is clearly a dramatic contrast in job quality between unionized cannabis cultivation workers and traditional U.S. agricultural workers. Right now, with the industry still relatively small, unions likely have meaningful influence on sectoral pay and practices, at least in the states where cannabis unions have significant membership. To help maintain high standards across the industry when it gains federal acceptance, policymakers must ensure that workers at cultivation sites have a fair opportunity to decide whether they would like a union. With their collective bargaining rights safeguarded, workers would either unionize and have more bargaining power to negotiate better compensation, or employers would raise standards preemptively to ward off unionization efforts.

Opportunities and risks in processing (extraction, distillation, infusion, and product manufacturing)

The cannabis industry today already produces a wide range of products beyond the well-known smokable flower. Cannabis concentrates and oils are produced in various forms for “infusion” in edibles, beverages, or other forms of consumption. Cannabidiol or CBD—a nonintoxicating compound in cannabis thought to have anti-inflammatory, anti-anxiety, and pain-reducing effects—has become a popular ingredient in a wide range of oils, creams, pills, oral sprays, and other therapeutic products. The FDA has also approved one cannabis-derived anti-seizure medication.16

To produce this wide range of goods, processing typically involves extracting compounds from the cannabis plant—either the psychoactive compounds, primarily tetrahydrocannabinol (THC), or the nonpsychoactive ones, primarily CBD. This extraction is done in a multitude of ways with varying degrees of complexity, and frequently involves the use of chemical solvents that can be flammable and dangerous. Complex distillation methods are also sometimes employed to further concentrate or refine extracted material. As a result, cannabis extraction requires substantial training and demands strict compliance with process safeguards to produce quality extracts and protect workers’ safety. Workers in this part of the industry typically hold positions such as extraction technicians, lab technicians, and scientists.

Cannabis processing also includes the production of edibles, with workers in “kitchens” of varying scale using cannabis extracts and oils to manufacture everything from chocolates, gummies, and other foods to cannabis-infused oils and beverages. These workers typically hold positions such as edibles specialists, edibles chefs, and production or manufacturing technicians. Manufacturers sometimes also employ packagers who prepare pre-weighed cannabis containers and pre-rolled joints.

Cannabis products are warehoused and distributed like any other wholesale good, with warehousing jobs such as warehouse technicians and inventory control, wholesale distribution jobs, and delivery and courier staff. These jobs can be somewhat more challenging in cannabis, however, as most states with legal cannabis have strict chain-of-custody requirements for all cannabis material.17

When commercial cannabis processing is legalized more broadly, how might industry practices and working conditions evolve?

Reviewing different scenarios, our analysis shows how the policy path taken under broader cannabis legalization could have a significant impact on the lives of cannabis processing workers, for better or for worse—with the low-road scenario leading to a range of negative outcomes for workers, including an estimated $8,690 cut in annual wages alone.

The low-road scenario

As noted above, cannabis processing involves complicated chemical procedures that require specialized training and skills. As a result, we would expect that cannabis processing jobs are likely to remain relatively better compensated than positions in the industry requiring less specialized knowledge. Nevertheless, there is significant variation in job quality and wage levels across different segments of the broad manufacturing sector with implications for cannabis. Moreover, changing business practices that have weakened job quality in traditional manufacturing offer lessons for how an expanding cannabis processing sector might evolve, and how that evolution could erode the gains in pay and job quality that the nascent unions in cannabis have won for their workers.

Because of the variety of products already being produced by cannabis processors, it is difficult to identify a single segment of traditional manufacturing industries that is directly analogous to cannabis. We examined wage levels from multiple data sources in a wide range of goods-producing industries that share features with cannabis, including tobacco manufacturing, beverage manufacturing, crop production, nonretail bakeries, and specialty food manufacturing. We also looked at pharmaceutical and medicine manufacturing; soap, cleaning compound, and cosmetic manufacturing; and miscellaneous manufacturing.

In the industries that offer the closest parallels to cannabis, there is considerable variation in typical wages. For example, data from the Bureau of Labor Statistics Occupational Employment Statistics (BLS-OES)—shown in Table 2—reveal that hourly median wages for production workers in food manufacturing ($15.66) are significantly lower than wages in beverage and tobacco product manufacturing ($19.61) and chemical manufacturing ($20.86).18 How closely each specific cannabis product manufacturing role hews to the positions within these traditional manufacturing subsectors will obviously influence pay for those cannabis jobs. It is worth noting, however, that of these industries, only beverage, tobacco, and chemical manufacturing have wages like those in the durable goods manufacturing industries that are often held up as models of good, middle-class jobs.19 Median wages for several of these durable goods industries are also listed in Table 2.

Table 2

The occupations within the industries with parallels to cannabis are also diverse. There are analogues to agriculture and food science technicians; chemical technicians; food and tobacco roasting, baking, and drying machine operators and tenders; food batchmakers and processors; packers and packagers; inspectors, testers, sorters, samplers and weighers; and a variety of wholesale, freight, and inventory occupations, among others.

To try to understand how the occupational composition of cannabis might affect wage levels for the processing segment of the industry, we analyzed wage data from the Bureau of Labor Statistics Current Population Survey (BLS-CPS) for the wide range of occupations similar to cannabis roles in the various industries noted above—hereafter referred to as our cannabis processing proxy jobs.20 As shown in Figure B, wages for these jobs are modest at best. Over the period from 2010 to 2019, the median wage of these cannabis processing proxy jobs overall was $14.32 in 2019 dollars—a level that would have put them between the 30th and 36th percentile of all wage-earners in the economy.21

Figure B

However, the overall median masks considerable variation across demographic groups, with important equity implications for cannabis. In particular, Figure B shows that median wages are noticeably lower than the overall median of $14.32 for women ($13.24), Black workers ($14.39), Latinx workers ($12.48), Asian American/Pacific Islander (AAPI) workers ($13.84), and noncitizen immigrant workers ($11.50), and that all of these groups have lower median wages than do men ($15.06) and white workers ($16.47).

Without some intentional equity-promoting interventions, there is no reason to expect racial and gender wage dynamics in cannabis to be any different than the inequities we see in the broader economy.

As noted, cannabis processing proxy jobs cover a wide range of occupations and, not surprisingly, there is nontrivial variation in wages across the different occupations.22 Some of this variation in wage levels across demographic groups is a function of the occupational segregation that drives a large portion of gender and racial pay gaps.23 Without some intentional equity-promoting interventions, there is no reason to expect racial and gender wage dynamics in cannabis to be any different than the inequities we see in the broader economy.

Traditional manufacturing jobs have been more likely than many other jobs to provide nonwage benefits. Table 3 shows higher benefit access rates for the broad category of “production occupations,” relative to private-sector workers overall for most common workplace benefits. Unfortunately, data are not available to disaggregate to specific manufacturing industries or occupations, making it impossible to assess whether benefit access rates are similar for cannabis processing proxy jobs.

Table 3

Lastly, to the extent that manufacturing does generally provide a higher standard of living than many other industries, this feature is not fixed and inevitable. Mishel (2018) explains that traditional manufacturing jobs still exhibit a meaningful compensation premium compared with other industries, but that the premium has shrunk by roughly one quarter since the 1980s. He notes that this decline results, at least in part, from manufacturing companies’ increased use of temporary help and staffing services agencies to outsource traditional manufacturing jobs to lower-paid contract workers. It is impossible to know the extent to which such practices could be applied in cannabis, but as noted in the section on agriculture, such “fissuring”—the outsourcing of jobs to lower-paid contract workers that degrades wages and job quality more broadly—is increasingly prevalent throughout the economy in the absence of policies or mechanisms to prevent it.

“Fissuring”—the outsourcing of jobs to lower-paid contract workers that degrades wages and job quality more broadly—is increasingly prevalent throughout the economy in the absence of policies or mechanisms to prevent it.

Absent policy choices that proactively bolster and maintain high job quality, wages in cannabis processing could easily trend toward the lower-paying segments of traditional manufacturing—such as food manufacturing—and not the higher-paying ones. The racial and gender inequities already present in cannabis processing proxy jobs could manifest in cannabis, and firms could adopt fissuring strategies to cut costs and degrade job quality for cannabis processing workers.

The high-road, equity-promoting scenario

As noted, the manufacturing sector is often touted as offering opportunity into the middle class—particularly for workers with less than a four-year college degree—with generally higher wages and job quality than many other industries. One of the reasons why manufacturing has historically offered better jobs than many other sectors has been the strength of manufacturing unions, and their ability to set standards for the industry. As Rhinehart and McNicholas (2020) describe, for decades, unions representing workers at some of the largest auto, appliance, equipment, and component manufacturers negotiated contracts that set standards for workers across much of the sector—at both union and nonunion employers. Although unionization rates in manufacturing have declined, the sector still has higher union density than most other industries and the private sector overall.24

The effect of unions on job quality is evident among the cannabis processing proxy jobs we examine in this report. Table 4 shows that, on average, workers in our cannabis product-manufacturing proxy jobs who are unionized earn between 23.6% and 28.0% more in hourly wages than nonunion workers with similar characteristics in the same positions.25 Separate regression estimates for workers of color and Latinx workers, in particular, in these roles show an even stronger union wage-boosting effect. For Black workers in these cannabis processing proxy jobs, unions boost pay by 21.8% to 22.0%; for Latinx workers, by 30.6% to 38.5%; and for all workers of color as a group, by 26.4% to 32.4%.

Table 4

This substantial union wage premium for workers in these proxy jobs suggests that ensuring worker organizing rights in cannabis would help promote and ensure decent, middle-class earnings for industry production workers, particularly for women and workers of color. Table 5 translates the union wage premium from Table 4 into annual earnings changes, by applying the union wage premium to the average hourly wages of each group of nonunion workers in cannabis product manufacturing proxy jobs.26

Table 5

The table shows that if the average nonunion worker were unionized, their hourly pay rate would rise by $4.18 per hour. For full-time workers, this translates to an increase in annual earnings of nearly $8,700. The table also reports the annual earnings increase that would occur for the lowest- and highest-paid workers in our cannabis processing proxy jobs, with packers and packagers getting nearly $7,000 and agricultural and food science technicians receiving more than $12,600 in additional annual pay. Women working full time in our cannabis product manufacturing proxy jobs would gain nearly $7,200 in annual earnings if they were unionized. Black workers and Latinx workers in full-time positions would experience pay gains of roughly $7,000 and $10,000, respectively.

As previously noted, manufacturing jobs often provide many common nonwage benefits—in large part because of the historical strength of unions in the sector. However, it is worth noting that workers covered by union contracts today—across all occupations and industries—have even higher rates of benefit access than workers in production occupations. Table 3 shows that private-sector union workers have equal or higher benefit access rates than workers in production occupations for every benefit listed. Bivens et al. (2017) also note that union employers contribute more toward employee health care benefits and paid vacations than do nonunion employers.

Unions could also help the industry mitigate and avoid health and safety threats. Cannabis extraction processes often involve the use of dangerous and flammable solvents, including butane, propane, and ethanol. Rainey (2019) reports that explosions at cannabis processing facilities have already occurred in at least 10 different processing facilities in states with legal cannabis industries, with worker injuries resulting in nearly every instance. Rainey notes that, thus far, there has been only limited health and safety oversight by regulators, and that many states with legal cannabis industries do not have any health and safety requirements for cannabis processing.

With federal legalization, the industry likely would come under federal Occupational Health and Safety Administration (OSHA) oversight, but it will take time for the agency, and any state health and safety agencies, to develop appropriate guidelines, protocols, and inspection processes. Unions offer an established and effective vehicle for regulators to understand the industry needs and best practices for worker safety, to provide adequate training, and to ensure employer compliance. Bivens et al. (2017) summarize a breadth of research and examples showing that unions have created safer workplaces— encouraging employer investments in training and giving workers protection from repercussions when they report safety hazards. Unions also have a strong track record in providing specialized training and apprenticeship programs to develop workers’ skills to prepare them for challenging and dangerous jobs, including in manufacturing.27 As described in a report on apprenticeships (COWS 2018), union apprenticeships also have effectively been used to advance equity in job placement, providing greater opportunities to women and people of color.

Though lawmakers often celebrate manufacturing as a source of well-paying jobs and middle-class opportunity, what they are really celebrating is the labor movement’s success in setting and sustaining job-quality norms for broad swaths of the sector.

Unions’ ability to set high job quality standards in much of manufacturing offers an important lesson for cannabis. Though lawmakers often celebrate manufacturing as a source of well-paying jobs and middle-class opportunity, what they are really celebrating is the labor movement’s success in setting and sustaining job-quality norms for broad swaths of the sector. Similar norms and standards around compensation, apprenticeship and training, and worker health and safety could also be established in cannabis if workers in the industry have ample bargaining power and structures, like unions, to propagate and sustain job-quality gains across the industry.

Opportunities and risks in cannabis retail sales

Most legal cannabis products are sold through dispensaries—retailers licensed specifically to sell cannabis and cannabis-related products. The most common nonmanagerial job at dispensaries is the “budtender,” a sales associate that interacts directly with customers to understand their needs and guide their purchasing. In states that only allow medical cannabis or at dispensaries that focus on medicinal cannabis applications, similar jobs may also be called patient care representatives and medical consultants.

Because of the wide array of cannabis strains and products with varying effects, levels of cannabinoids, recommended dosages, applications, and potential risks to users, cannabis sales roles require substantial training and specialized knowledge. In this way, dispensaries have more in common with pharmacies than traditional merchandise retailers. Indeed, some states require that medical cannabis dispensaries either employ or contract with licensed pharmacists (Nathman 2018). Other states have established education and certification requirements even for recreational cannabis dispensary staff. Some states also allow delivery service for registered medical marijuana users, with dispensaries employing couriers and delivery workers.

Security roles are also an important part of the cannabis distribution and sales workforce. Because of cannabis’ Schedule 1 status under federal law, banks and credit card companies are effectively prohibited from providing traditional financial services to cannabis businesses. This includes holding deposits and credit card processing of sales. Consequently, nearly all cannabis retailers and delivery services must operate entirely on a cash-only basis. This leaves cannabis businesses facing heightened risk of robbery and theft, both because of the large amounts of cash involved and the fact that there is still a thriving black market for cannabis.

When retail sale of cannabis is legalized federally, how might industry practices and working conditions evolve?

In developing different scenarios, our analysis shows how the policy path taken under broader cannabis legalization could have a large impact on the lives of cannabis retail workers, for better or for worse—with the low-road scenario leading to a range of negative outcomes for workers, including an estimated $2,810 cut in annual wages alone.

The low-road scenario

Like agriculture, the retail sector in the United States features arguably some of the lowest job quality in the U.S. economy. Nonsupervisory retail jobs tend to be very low paying, offer few benefits, and can be subject to inadequate and irregular work schedules that have harmful consequences on workers’ lives and families (Covert 2018.) Of course, not all retail jobs are bad jobs; there is variation in job quality across occupations, employers, and subsectors within retail. There is also variation across geography, as differences in state and local labor laws—such as minimum wage and fair scheduling laws—have a disproportionate effect on conditions in retail. Overall, however, retail jobs tend to be difficult jobs that are often viewed as the most in need of policy-driven reform.

For understanding what the cannabis industry could look like if it adopted practices similar to most U.S. retail, we analyzed data on the subset of retail jobs that are most analogous to sales and distribution jobs in cannabis. (Appendix Table 3 lists the specific proxy retail subsectors and occupations included in our analysis.) Figure C reports wage data for these nonsupervisory retail workers, broken out for various demographic groups. Over the period from 2010 to 2019, the median wage of retail jobs similar in function to cannabis retail jobs was just $10.80 in 2019 dollars. Wages were even lower for Black workers ($10.35) and immigrant workers ($10.65) in these retail jobs.

Figure C

Workers in traditional U.S. retail jobs are also less likely to have access to important workplace benefits. Figure D presents data—also available in Table 3—from the Bureau of Labor Statistics National Compensations Survey (NCS) on access to benefits for various groups of workers (BLS 2019). The data show that retail workers, in general, are less likely to have access to paid vacations (73%) than private-sector workers overall (79%). They are less likely to have access to paid sick leave (64% versus 73%), and significantly less likely to have employer-provided health insurance (55% versus 69%).

Figure D

Importantly, these data describe benefit access for all occupations in retail, including supervisors and high-level managers. It is likely that benefit access for front-line sales representatives is lower. Figure D also reports benefit access for workers in the lowest 25% of wage earners—a category that likely captures most nonsupervisory retail workers.28 Among these workers, just over half get paid vacation (55%) and paid holidays (56%), only a third (36%) get health insurance, and less than half have access to paid sick leave (47%) or any retirement benefits (43%).

Lastly, as Golden (2015) describes, retail jobs are more likely than jobs in most other industries to be characterized by irregular and unpredictable schedules. The proliferation of “just-in-time” staffing models, in which computer algorithms are employed to predict hourly customer demand, result in workers being called in or sent home on short notice. Many workers who would prefer full-time schedules only receive part-time hours, with shifts changing from week to week. Retail workers are told to be “on call,” ready to come into work on short notice, and thus are unable to make plans with friends or family, schedule child care, take class, or work a side job. Workers subject to these scheduling practices report higher levels of income instability, mental stress, and work-life conflict (Golden 2015).

Irregular schedules are particularly harmful for workers with children. Morsy and Rothstein (2015) explain that children of parents with nonstandard work schedules are more likely to experience developmental problems and have inferior cognitive and behavioral outcomes.

Were the cannabis industry to be federally authorized, dispensaries would become more common, interstate dispensary companies would grow, and the industry’s sales arm could easily start to look more like many other traditional U.S. retailers. Indeed, it is not far-fetched to think that a Walmart supercenter might someday include a dispensary. When that happens, those cannabis dispensary workers could easily find themselves facing the same economic precarity that is common among many retail workers today.

The high-road, equity-promoting scenario

As noted, not all front-line retail jobs are bad jobs. In some cases, retail employers have adopted high-road practices, or what MIT business professor Zeynep Ton calls the “Good Jobs Strategy.” Ton (2014) explains that some retailers—such as Costco and Trader Joe’s—choose to provide higher than average wages and benefits in order to attract, motivate, and retain high-quality staff. By doing so, these companies cut down on turnover costs, provide higher-quality customer services, and garner a devoted customer base—all of which results in a more profitable business, she explains. While this strategy certainly can and should be adopted by cannabis retailers, it is not guaranteed that most will.

Other retail jobs have been improved by the enactment of strong state and local labor standards. As of July 2021, 11 states and 39 cities and counties have adopted $15 minimum wages (EPI 2021b). Fourteen states, the District of Columbia, and 22 cities and counties have laws requiring provision of paid sick days (NPWF 2021). Eight states plus the District of Columbia have paid family leave requirements or public programs (NCSL 2020). Six cities and Oregon have also adopted ‘fair workweek’ policies that curb the use of harmful scheduling practices (Wolfe, Jones, and Cooper 2018; Reyes 2018). However, these policies do not currently exist at the federal level, and absent major federal labor standards reform, it is likely that many states will not take up these worker protections on their own.29

As with the industries described in previous sections, unions are the other primary structure that can consistently improve job quality, including in retail. Roughly 12% of workers in the proxy retail jobs that are similar to cannabis retail jobs are union members. As shown previously in Figure C, though the overall median wage for retail workers in these jobs is only $10.80, the median wage for unionized workers in those same positions is $12.52—nearly 16% higher.

This difference in medians is driven partially by other characteristics, including the fact that unionized retail workers are more likely to be in states with higher minimum wages. But even controlling for these potential outside factors, the union wage premium in retail is still significant. Table 6 shows that, on average, union workers in retail earn between 7.6% and 10.7% more than nonunion retail workers with similar characteristics.30 Separate regression models for women, Black, Latinx, and workers of color overall show an even stronger wage-boosting effect for these groups. For women in retail, unions boost pay by 8.4% to 10.2%; for Black workers, by 9.1% to 9.4%; for Latinx workers, by 13.5% to 17.4%; and for all workers of color as a group, by 10.8% to 13.5%.

Table 6

Once again, this union wage premium implies a meaningful difference in annual earnings for retail workers, with important implications for the cannabis retail workforce. Table 7 presents the implied union effect on annual earnings for nonunion workers in our cannabis retail proxy positions. It shows that the average nonunion retail worker, working full time would earn an additional $2,800 annually if unionized. The table also shows implied annual wage increases for the lowest-paid (packers and packagers) and highest-paid (health technologist) positions in our sample, with annual pay increases ranging from roughly $2,400 to $3,600. Nonunion women working full time in these roles stand to gain $2,600 from being represented by a union, Black workers would gain $2,300, and Latinx workers would gain $4,400. (The packager position exists in both cannabis retail and processing.)

Table 7

Unions of cannabis workers in Minnesota, New Jersey, New York, Pennsylvania, Washington, and the District of Columbia have already set wage standards for front-line cannabis sales jobs significantly higher than local minimum wages, and higher than in traditional front-line retail jobs. Starting wages for budtenders, patient care representatives, receptionists, and security workers in these unions range from $15 to $22 an hour, with most contracts stipulating annual across-the-board wage increases, and higher wage floors for “lead” workers in these roles. As with jobs in cannabis cultivation, the standards set by union cannabis contracts likely affect broader wage levels in the industry—at least in states where cannabis unions have a meaningful presence. Data from Vangst 2020 and Indeed.com 2021 describe typical budtender wages ranging between $14.50 and $17.00 an hour.

As discussed previously, cannabis unions that currently exist have secured a variety of workplace benefits for their members: paid vacations, paid sick days, health insurance, retirement programs, and employee discounts. Most notably for cannabis dispensary workers, cannabis union collective bargaining agreements often include provisions guaranteeing fair scheduling practices—e.g., advance notice of schedules, a guaranteed number of hours paid per shift, guaranteed breaks and time off, additional compensation on holidays or when called in from a day off, and a preference for providing full-time employment for those want it in lieu of hiring additional part-time staff.

As in the other sectors of the cannabis industry, unionization offers a clear means of ensuring high job quality for workers in cannabis retail roles. Encouraging business adoption of “good jobs” models and setting strong labor standards would be helpful, but they are less likely to be achieved and in the case of labor standards, less flexible than simply ensuring that workers at cannabis firms can fairly negotiate with their employers.

The effect of stigma

To the extent that current cannabis jobs do demonstrate higher job quality than similar jobs in traditional sectors, it should not be assumed that these features will remain when cannabis is legalized throughout the country. In fact, one factor that could be driving higher wages in cannabis now is the lingering stigma around cannabis use and the potential labor market consequences for industry workers who may ultimately move on from cannabis into other industries. Workers considering entering employment at a dispensary or a cultivation site may question how their cannabis work history will affect future career options, particularly as the drug is still illegal under federal law and cannabis work sites—legal under state laws—have been raided by federal law enforcement as recently as last year (Sambides 2020). When cannabis is legalized federally, whatever premium cannabis employers are paying to overcome that stigma could diminish, particularly as cannabis dispensaries and product sales become more commonplace.

Moreover, if federal legalizing legislation also expunges past convictions for cannabis-related offenses and aims to create pathways into the industry for previously incarcerated individuals—as it should—the need for structures to promote and preserve high job quality will become even more important. All else equal, an increase in the supply of potential cannabis workers, spurred by individuals’ release from detention and criminal record expungement, would put downward pressure on cannabis worker wages. And even as the stigma associated with cannabis declines, it would be naive to think that the stigma associated with past incarceration—even for expunged cannabis-related convictions—will easily go away. Individuals entering or reentering the labor force from incarceration have severely diminished bargaining power in the labor market—a reality that will affect their ability to secure good jobs and decent pay, even in cannabis, without countervailing structures such as a union.31

Unions have an established record in helping previously incarcerated individuals overcome stigma and secure good jobs. As described in NELP and In the Public Interest 2016, unions have partnered with in-prison vocational programs and reentry agencies to train and place formerly incarcerated individuals in union apprenticeship programs—largely, though not exclusively, in the building trades.32 The NELP report goes on to note, “With their long-standing expertise in the workplace and workforce development, and a well-defined infrastructure of local, regional, and national networks, labor unions are perfectly positioned to take small-scale local efforts to connect the formerly incarcerated to high-quality unionized jobs and replicate them nationally.” Indeed, funding from cannabis tax revenues aimed at aiding reentry for formerly incarcerated individuals could be used to set up training, certification, and placement programs with existing unionized cannabis businesses in states with legal markets. Unions are an ideal institution to then scale those programs to other states.

Conclusion

The recent release of the Cannabis Administration and Opportunity Act discussion draft by Senate Majority Leader Chuck Schumer (D-N.Y.) illustrates the significant momentum growing for a change in federal treatment of cannabis. That legislation, along with other federal and state proposals, would do many good things, rightly aimed at repairing some of the enormous harm caused by the war on drugs. But so far, all of these proposals have a glaring hole: namely, any articulation of standards or structures to ensure that cannabis jobs are good jobs. Their common focus on equitable business licensing and supporting entrepreneurship among people of color is good, but woefully insufficient. The vast majority of individuals who will make their careers in a legal cannabis industry will not be business owners; they will be rank-and-file employees, many of whom could be particularly vulnerable to exploitation in the labor market for having—or at least once having—a criminal record.

Various other proposals to strengthen and reform federal labor law would certainly help. The Raise the Wage Act, which would raise the federal minimum wage to $15, is long overdue.33 The Protecting the Right to Organize (PRO) Act would protect workers who want to form a union and simplify the process for them to do so.34 The Fairness for Farm Workers Act would expand basic overtime and minimum wage protections to farmworkers, finally ending these glaring exemptions in the Fair Labor Standards Act.35

But in the absence of wholesale reform of federal labor law, the simplest way for lawmakers to ensure that a newly legalized cannabis industry provides opportunity, safety, and fairly compensated work is to support worker organizing from the outset. The six states that either require or encourage labor peace agreements as part of cannabis business licensing requirements offer a useful model. Simply ensuring that workers have a fair opportunity to consider joining a union, without interference or retribution from their employers, would go a long way toward giving cannabis workers a voice and a fair stake in the industry’s success.

There are lofty hopes among lawmakers, business owners, investors, and communities for what federal legalization of cannabis could provide in terms of new revenues, profits, jobs, business opportunities, and repair for the tremendous harm caused by the war on drugs. But if the welfare of workers in the industry is not also factored into legalization discussions, then the industry will never truly live up to those hopes.

Appendix: Cannabis union wage premium methodology

Due to a lack of nationally representative, publicly available data, it is impossible to directly measure the union wage premium—the percent by which the wages of union workers exceed their nonunion counterparts—for cannabis workers. To estimate the premium, we create proxy groups for the different production segments of the cannabis industry. These segments are referred to in the paper as cultivation36, processing, and retail sales. For the processing and sales segments, we identified a set of industries and occupations that are similar to the functions and tasks of workers in that segment of the cannabis industry. We then use regression models to estimate a union wage premium for these proxy groups.

This report’s analysis of the union wage premiums uses pooled, inflation-adjusted 2010–2019 microdata from the Outgoing Rotation Group of the Bureau of Labor Statistics (BLS) Current Population Survey, collected and harmonized in EPI (2021a). Our sample omits observations with imputed earnings. BLS wage imputation does not account for union status, meaning that including imputed results unreasonably shrinks an estimation of a union premium (Hirsch and Schumacher 2004).

Our processing proxy group estimates the union wage premium for cannabis roles such as extraction technicians, production technicians, packagers, and edibles specialists. The sales proxy group represents cannabis workers who are budtenders, customer service representatives, delivery drivers, and security guards. Descriptions of each role are in Appendix Table 1.

Our proxy samples for the two cannabis industry segments were constructed using the industry and occupations delineated in Appendix Tables 2 and 3. The industry and occupation names used for the proxy groups are derived from the U.S. Census Bureau’s classification of the primary job of the respondent. For each group, we include all workers ages 16 and older who reported being employed at the time of the Current Population Survey with valid wage information. Separate sets of regressions were conducted for each proxy group.

The regression model is based on Allegretto and Mishel’s 2019 analysis of the teacher wage penalty and Morrissey’s 2021 analysis of the public sector pay gap, with some modifications. The dependent variable is the natural log of weekly earnings. The coefficient of interest is the pay difference for union-represented workers. The analysis controls for age (including a quadratic to capture diminishing returns to experience), the year, state, and educational attainment (less than high school; high school; some college; bachelor’s degree; more than a bachelor’s degree). The regression also controls for full-time and part-time work status, as well as usual weekly hours worked.

We report results from regression models both with and without controls for race, ethnicity, gender, marital status, and citizenship status. These controls are not included in our preferred estimation of the union wage difference used to calculate implied annual earnings differences. While such demographic characteristics are associated with differences in pay, these differences often reflect labor market discrimination rather than differences in job skills and qualifications. However, because pay differences associated with race, ethnicity, and gender may also reflect unobserved differences in work experience or other job qualifications, some researchers prefer to include these demographic controls as proxies for these unobserved differences. The findings of this report are robust to the inclusion of these demographic characteristics, although the overall union wage premium effect diminishes (see Tables 4 and 6).

Additional regressions estimate the union wage premium for women workers, Black workers, and Latinx workers specifically.

Appendix Table 1

Appendix Table 2

Appendix Table 3

Endnotes

1. For example, see Nadler 2020. As the Drug Policy Alliance (2021) notes, Native Americans have also been unfairly targeted by police.

2. Good examples of calls for channeling investment and entrepreneurship opportunities include Crawford 2021 and Henry-Nickie and Hudak 2020.

3. Mishel and Bivens (2021) provide a good summary of these worker disempowerment strategies and their effects.

4. The 10 states are California, Colorado, Maine, Minnesota, Mississippi, Nebraska, New York, North Carolina, Ohio, and Oregon. Alaska’s Supreme Court decriminalized cannabis, but the decision was overturned by the legislature in 1975.

5. Seven states passed medical marijuana by the end of 2000: Alaska (1998), California (1996), Colorado (2000), Maine (1999), Nevada (2000), Oregon (1998), Washington (1998). King and Mauer (2006) demonstrate that cannabis arrests increased during the 1990s. FBI Uniform Crime Reporting data show that from 1985–2019, marijuana accounted for the largest share of drug arrests, except for in 1988–1994, when it was second to forms of cocaine.

6. In the 1970s and 1980s, 17 states used formal research programs through the FDA called Investigational New Drug applications to create small and limited medical cannabis programs. Each of these programs eventually collapsed due to federal obfuscation and bureaucratic hurdles (Grinspoon 2005).

7. Cannabis laws include a legal limit to the amount of cannabis an individual can possess legally. Possession beyond this limit can still result in arrest even in states where cannabis is fully legalized.

8. THC refers to tetrahydrocannabinol, the primary psychoactive chemical in cannabis that can affect mood and mental activity. CBD refers to cannabidiol, a nonintoxicating compound in cannabis thought to have anti-inflammatory, anti-anxiety, and pain-reducing effects.

9. In many states, individuals convicted of felonies are banned from receiving benefits from a variety of federal and state programs, including the Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and various work training and placement programs. See Thompson and Burnside 2021 for more detail.

10. For more information, see Booker, Wyden, and Schumer 2021.

11. See BLS-OES 2020.

12. Indeed.com reports wage ranges and averages from job postings listed on its site, updating values regularly as postings change. As a result, Table 1 reports the approximate ranges observed in August 2021.

13. Values taken from a dozen collective bargaining agreements at cannabis firms provided to the authors by the United Food and Commercial Workers (UFCW). Wage floors reflect negotiated levels for 2021.

14. Authors’ analysis of union contracts cannabis unions in California, the District of Columbia, Minnesota, New Jersey, New York, Pennsylvania, and Washington provided to the authors by the UFCW, and Economic Policy Institute 2021b.

15. Union contracts from cannabis unions in California, the District of Columbia, Minnesota, New Jersey, New York, Pennsylvania, and Washington provided to the authors by the UFCW all include provisions for paid sick days, paid time off, retirement benefits, and health insurance (or a stipend in lieu of health insurance).

16. The FDA has approved the use of Epidiolex, a CBD-based medication, to treat a rare form of epilepsy. See USFDA 2018.

17. Chain-of-custody requirements refers to state regulations requiring cannabis processors to document the transport, handling, storage, testing, sales, and destruction of all cannabis materials—identifying dates, locations, and the employees having custody of uniquely identifiable cannabis materials at all times.

18. Data are from BLS-OES 2020. Values are deflated from 2020 to 2019 dollars for comparability with the subsequent values from the Current Population Survey Outgoing Rotation Group (CPS-ORG).

19. For example, see Mishel 2018.

20. Authors’ calculation using CPS-ORG microdata from EPI 2021a. Details on the specific industry codes and occupation codes are listed in the Appendix.

21. Authors’ calculation using CPS-ORG microdata from EPI 2021a.

22. Sample size limitations make it difficult to estimate precise wage values for each individual occupation, but we can say that median wages for these occupations range from $11.21 for packagers to $23.38 for agricultural and food science technicians.

23. See Matthews and Wilson 2018 and Hamilton, Austin, and Darity 2011.

24. Data from Hirsch and Macpherson (2021) show that in the late 1970s, almost 40% of manufacturing workers were unionized, compared with about one quarter of the private sector overall. As of 2020, 9.3% of manufacturing workers were represented by a union, compared with only 7.2% of private-sector workers overall.

25. We present these results as the range produced by three different regression model specifications. See the Appendix for details.

26. For these estimates, we use the union premium from model no. 3 in Table 4, our preferred specification, which controls for age, educational attainment, work hours, state, industry, and occupation.

27. See Berth, Dresser, and Ubert 2017.

28. CPS-ORG microdata indicate that in 2019, the 25th percentile wage was roughly $13.50, and averaged $12.40 from 2010 to 2019—in both cases, well above the median wage of the nonsupervisory retail jobs analyzed in this paper.

29. To this day, five states have no state minimum wage whatsoever and two have minimum wages of only $5.15; the $7.25 federal minimum wage applies to most workers in these seven states. Another 13 states have state minimum wages set explicitly to the federal minimum wage of $7.25. Nearly all of these 20 prohibit local governments from establishing minimum wages higher than the state or federal minimum. See EPI 2021b and Blair et al. 2020.

30. We present these results as the range produced by three different regression model specifications. See the Appendix for details.

31. See Warner, Kaiser, and Houle 2020, Western 2002, and Randall 2012.

32. See also Antelope Valley Times Staff 2018.

33. See Cooper, Mokhiber, and Zipperer 2021 for details.

34. See McNicholas, Poydock, and Rhinehart 2021 for details.

35. See Grijalva 2021.

36. The tasks and occupations found in the cultivation segment of cannabis are most similar to jobs in agriculture. However, unionization rates are extremely low for most agricultural workers, in large part because agricultural laborers are excluded as employees under the National Labor Relations Act. The low number of unionized agriculture workers makes it difficult to extract meaningful data on the effects of unionization. As a result of this limitation, we did not calculate a separate union wage premium for cannabis cultivation workers.

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Introduction

The determination of whether an individual performing services is treated as an employee or an independent contractor carries significant consequences for workers, businesses, and governments. In the United States, workers who are classified as independent contractors:

• are not covered by worker protection laws such as wage and hour laws, anti-discrimination laws, and laws providing collective bargaining rights
• do not receive unemployment benefits when temporarily jobless
• do not receive workers’ compensation when injured on the job
• are responsible for paying the full payroll tax contribution to federal Social Security and Medicare programs

This publication was created in collaboration with the Friedrich-Ebert Foundation.

In contrast, employers are responsible for covering payroll tax and social insurance costs, and providing these worker protections, for workers classified as employees. Thus, classifying workers as independent contractors both deprives these workers of workplace protections and imposes significant costs, resulting in considerable cost savings for employers, as they are able to shift these costs onto workers and avoid making payments to government tax and social insurance programs.

Misclassification of workers as independent contractors is a pervasive and extensive problem in the United States. According to a report commissioned by the U.S. Department of Labor, as many as 30% of employers, and perhaps more, have misclassified some workers, affecting millions of workers, disproportionately workers of color. Workers are misclassified by employers in many occupations and industries, including janitorial services, trucking and transportation, retail, hospitality, home care, and construction.

To address the misclassification problem and ensure workers are not deprived of important protections, many states have adopted the ABC test—a strong, protective legal test known for its three interlocking parts ((A), (B), and (C))—for determining whether an individual is an employee or independent contractor. The ABC test establishes a presumption of employee status unless an employer can meet three factors and show the individual is truly an independent entrepreneur. Adoption of the test has reduced misclassification in those states using it.

In 2019, the California legislature adopted, and the governor signed, Assembly Bill (AB) 5, which codified an earlier California Supreme Court decision holding that the ABC test applies for purposes of determining whether an individual is an employee covered by state Wage Orders. The law took effect on Jan. 1, 2020. Even before it took effect, Uber and Lyft announced a multimillion-dollar campaign to win passage of Proposition 22, a ballot initiative to exempt from AB5 platform-based drivers. Proposition 22 passed in November 2020. The measure’s proponents immediately announced they would be pushing to have platform-based drivers excluded from employment laws in other states, and federally.

Debate continues in Congress and in executive branch agencies over the proper test for employee status under various federal labor laws. The Protecting the Right to Organize (PRO) Act, which adopts the ABC test for purposes of federal labor law establishing organizing and collective bargaining rights, has passed the House of Representatives and is pending in the U.S. Senate. Appointees of President Trump rolled back protections for workers at the U.S. Department of Labor and the National Labor Relations Board, and weakened the long-standing federal test for establishing employee status, and new Biden administration appointees are confronted with restoring workers’ rights. States continue to face issues of misclassification and employee status.

EPI and Friedrich-Ebert-Stiftung (FES) have prepared this report to provide background on the experience in California under AB5 and Proposition 22. By understanding more fully the impacts of AB5 and Proposition 22 on California workers, policymakers can see the importance and benefit of establishing a strong, protective test, and the downside of depriving workers of employee status. We hope this report can inform the ongoing active debate in the states and in Washington, D.C., over employee status and the appropriate legal test for determining it.

In addition, the issue of legal protections for so-called “nonstandard workers,” including independent contractors, as well as platform-based workers, continues to be a focus of discussion in the European Union. In the face of aggressive employer misclassification of entire workforces as noncovered “independent contractors,” international labor organizations have called for strengthened protections for workers engaged in nonstandard forms of work, including independent contractors (ILO 2019). As for platform-based workers, different EU countries have taken different approaches to the issue of employment protections for these workers, with some countries treating these workers as employees, while employee status is less clear in other countries. Thus, in the EU and Britain, as in the United States, the issue continues to be a focus of policymakers, worker advocates, and employers.

Lack of employee status means lack of worker protections in the United States

The determination of whether an individual providing services to an employer is an employee or an independent contractor carries significant consequences for both the individual and the employer in terms of job protections, tax obligations, and eligibility for employment-based benefits and protections. As Table 1 shows, individuals who are classified as independent contractors are not covered by federal or state wage and hour, anti-discrimination, health and safety, collective bargaining, or other worker protection laws. They do not receive employment-based health insurance or retirement benefits, and they do not qualify for paid sick or family leave in places where those benefits are statutorily prescribed. Nor are independent contractors eligible for unemployment insurance when temporarily unemployed, or workers’ compensation when injured on the job. This leaves independent contractors in a far more vulnerable status, as compared with employees, when it comes to securing basic rights and protections on the job.

Table 1

At the same time, individuals classified as independent contractors are responsible for the payment of employment-based taxes that go toward Social Security and Medicare, currently 15.3% of earnings (IRS 2021a). Employers are required to make the employer portion (50% of total FICA tax, i.e., 7.65% of wages) of these payments on behalf of employees. They also are required to pay premiums for unemployment insurance and workers’ compensation coverage, as well as short-term disability benefits in some states. These costs, when combined with the cost of employee benefits, can add as much as 30% or more to a worker’s total costs.

To avoid paying these additional costs, employers misclassify workers as independent contractors. This widespread and pervasive problem affects millions of workers in numerous industries and occupations, including home care, delivery, driving, janitorial services, hospitality, construction, and other industries. The U.S. Government Accountability Office (GAO) reported that in 1984, 15% of employers misclassified workers, and 3.4 million workers were misclassified as independent contractors (GAO 2009).

Misclassification is rampant in low-wage, labor-intensive industries where women and people of color, including Black, Latinx, and Asian American/ Pacific Islander (AAPI) workers, are overrepresented (Alexander 2017). According to one study, seven of eight high-misclassification occupations are held disproportionately by women and/or workers of color. Four of these occupations—hairdressers, maids and housekeepers, teacher’s assistants, and door-to-door sales workers and street vendors— are disproportionately women and workers of color (Alexander 2017).

The pervasive problem of misclassification

Employers routinely misclassify workers. A 2000 study commissioned by the U.S. Department of Labor found that between 10% and 30% of audited employers misclassified some workers, and that up to 95% of workers who said they were misclassified as independent contractors were reclassified as employees following review (Planmatics 2000). A recent report by the National Employment Law Project (NELP) contains even starker findings: In California, nine out of 10 employers inspected in 2017–2018 were found to be out of compliance with the state’s laws against misclassification (NELP 2020). According to a study by University of California, Berkeley researchers, 23% of truck drivers in California are classified (or misclassified) as independent contractors (Sinroja, Thomason, and Jacobs 2019). Nineteen percent of contracted-out janitors were classified (or misclassified) as independent contractors. All of these industries have workforces made up disproportionately by people of color (Sinroja, Thomason, and Jacobs 2019).

Other states similarly confront significant problems with misclassification, as summarized by the National Employment Law Project’s recent review of state investigations in 30 states (NELP 2020). Washington state and Massachusetts are just two states where workers and state coffers are bearing heavy costs from misclassification. In Washington state, misclassification increased from 5% of employers misclassifying some workers in 2008 to 14% of employers misclassifying workers in 2017, with construction workers, clerical workers, and hotel and restaurant workers the most likely to be misclassified (Xu and Erlich 2019). (See “The Massachusetts story” below for more on that state’s struggles.)

Misclassification takes a real toll on workers and states

Employers misclassify employees as independent contractors to save on paying for employee benefits, employment taxes, and workers’ compensation and unemployment insurance premiums which, as previously noted, can add up to 30% on top of wages. A related and significant problem, but one beyond the scope of this report, is paying workers off the books in cash to avoid any record of employment whatsoever. Together, these payroll fraud practices undermine worker protections and deprive government programs of important revenue.

For an example of the heavy toll exacted by misclassification, consider the construction industry, where misclassification is rampant.1 A recent report by the Midwest Economic Policy Institute describes the impact of payroll fraud in the construction industry on worker pay, benefits, and state revenue (Goodell and Manzo 2021). The study looked at misclassification and “off the books” construction work in Illinois, Minnesota, and Wisconsin. Specifically regarding the problem of misclassification, the study found that 10% of construction workers across these three states were misclassified as independent contractors—13% in Illinois, 5% in Minnesota, and 9% in Wisconsin—for a total of 55,784 misclassified workers. Independent contractors in construction in these three states earned 18% less than workers classified as employees—an average of $45,292 for independent contractors, compared with $55,463 for employees. Construction workers classified as employees received an additional $24,100/year in benefits, including paid leave, health care, retirement, Social Security premiums, Medicare, unemployment insurance, and workers’ compensation. By classifying (or misclassifying) construction workers as independent contractors, employers reduce their labor costs by 29% in Illinois, 36% in Minnesota, and 31% in Wisconsin.

The lost revenue to the state is significant. As seen in Table 2, the Midwest Economic Policy Institute study estimated that the three states together lose $152.1 million annually in income tax payments, unemployment insurance premiums, and workers’ compensation premiums from employers misclassifying construction workers as independent contractors.

Table 2

Other states also experience high levels of misclassification in construction. A report by the Economic Roundtable found that in 2011, 19% of construction workers in California were misclassified as independent contractors (Sinroja, Thomason, and Jacobs 2019). Researchers found that between 12% and 21% of construction workers in the U.S. in 2017 were misclassified or working off the books (Ormiston, Belman, and Erlich 2020). About one-third of construction workers in the U.S. South were estimated to be misclassified (Weil 2017).

As previously explained, workers who are misclassified as independent contractors lose out on many important employment-based protections, including minimum wage and overtime protections, anti-discrimination protections, health and safety protections, and the right to organize and collectively bargain. The impact on workers’ wages is significant, as shown by the millions of dollars of lost wages recovered when federal and state authorities sue employers for misclassification.2

Workers in California have lost millions of dollars in wages because of misclassification. For example, according to the California Legislature’s labor committee report on AB5 (detailed below), the state cited a framing and drywall subcontractor for misclassifying more than 1,000 workers and depriving them of the minimum wage, overtime and rest breaks on construction projects throughout the Los Angeles region.3 The state ordered the company, RDV Construction, to pay more than $11.94 million in back wages and penalties for violations between 2014–2017. In another case, Calcrete Construction was cited for $6.3 million for cheating 249 construction workers out of their wages. The California labor commissioner regularly brings misclassification actions against California employers, recovering millions of dollars in back wages on behalf of affected workers (Calif. Lab. Com. 2018).

As previously noted, states lose millions of dollars annually in tax revenue, and unemployment insurance and workers’ compensation premiums from employers who are misclassifying workers. These losses are described in a comprehensive report by the National Employment Law Project (NELP 2020). Likewise, the California Department of Labor Standards Enforcement estimates that misclassification costs the state more than $7 billion annually.5 The federal government, too, loses revenue. A 2009 report by the U.S. Government Accountability Office (GAO) found that the federal government lost $1.6 billion (in 1984 dollars) in tax revenue from employers misclassifying workers as independent contractors. This translates into $2.72 billion in 2006 inflation-adjusted dollars (GAO 2009).

The ABC test can deter misclassification

To address the problem of misclassification, more than 20 states have adopted what is known as the ABC test for determining whether an individual is an employee or an independent contractor for purposes of coverage of certain workplace laws. The ABC test got its name from the three, interlocking elements of the test—parts (A), (B), and (C). It establishes a presumption that an individual performing services for an employer is an employee, not an independent contractor, unless the employer can establish three factors (Mass. FLD 2021):

• (A) The work is done without the direction and control of the employer.
• (B) The work is performed outside the usual course of the employer’s business.
• (C) The work is done by someone who has their own, independent business or trade doing that kind of work.

By establishing a presumption of employee status and shifting the burden onto the employer to demonstrate the individual is truly an independent contractor in business on their own, the ABC test establishes a strong, protective, pro-employee test, which streamlines the process for workers to prove they are employees who have been misclassified as independent contractors.

Table 3

As Table 3 shows, many states have used the ABC test for purposes of their unemployment insurance programs for decades. Using a strong, protective test for this program both assures workers of important income when they are temporarily jobless, and ensures that employers are paying their fair share into the program by remitting unemployment insurance premium payments on behalf of all covered workers. As previously noted, the loss of revenue for social welfare programs like UI due to misclassification is a key reason why states have adopted the ABC test.

The ABC test in play in California—and the sequel, Proposition 22

In April 2018, the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (Calif. 2018). Dynamex is a same-day courier and delivery service. Prior to 2004, the company treated its drivers as employees, but in 2004, the company converted all drivers into independent contractors. Two drivers brought a class-action lawsuit challenging their misclassification. In its decision in Dynamex, the California Supreme Court held that the ABC test was the appropriate test for evaluating employee status under California’s Wage Orders, which contain portions of the state’s wage and hour laws. The Dynamex ruling was hailed by worker advocates as a major step forward for workers.

State legislators, led by Assemblywoman Lorena Gonzalez, then introduced AB5, to codify the Dynamex decision into law. AB5 establishes that the ABC test is the operative test for determining coverage not only under California’s Wage Order, but also under the California labor code, unemployment insurance, workers’ compensation, and other labor laws, with certain limited exceptions.8 According to subsequent reports and analyses, the legislation applies the ABC test to approximately 1 million janitors, maids and other cleaners, truck drivers, taxi drivers, retail workers, grounds maintenance workers, and child care workers, among others (LAO 2020; Thomason, Jacobs, and Jan 2019).

The legislation passed in September 2019, despite fierce lobbying against the bill by Uber, Lyft, and other platform companies. These same companies lobbied California Gov. Gavin Newsom to reject the legislation. Newsom ultimately signed AB5 into law (CA Gov. Ofc. 2019), but he authored an op-ed suggesting that a more flexible approach was needed (Newsom 2019). At the governor’s urging, many meetings were held between the companies, the governor’s representatives, unions, and others, but efforts at reaching a deal ultimately failed (Conger and Scheiber 2019; Eidelson 2021).

AB5 took effect on Jan. 1, 2020. Various industries continued to agitate and lobby for an exclusion from the law. Legislation providing additional exemptions from the ABC test for certain music industry professionals, performing artists, freelance writers and photographers, and individuals who provide underwriting inspections, premium audits, risk management or loss-control work for insurance or financial services industries passed and was signed in September 2020.9 In the meantime, Uber and Lyft were sued by the California attorney general, the California labor commissioner and several city attorneys for misclassifying drivers as independent contractors. The lawsuits were successful in securing court rulings that drivers were employees under AB5, but that was undercut by the passage of Proposition 22, described below, such that only claims for unpaid wages predating the passage of Proposition 22 remain in litigation.

Even before AB5 was passed and signed, app-based platform companies, led by Uber and Lyft, announced that if they were not legislatively exempted from the law, the companies would spearhead and fund a ballot initiative campaign to overturn AB5 as it applied to platform drivers (Calif. AG 2019). The ballot initiative that the rideshare companies sponsored, known as Proposition 22, the Protect App-Based Drivers and Services Act, was approved by voters in November 2020 after the platform companies spent more than $200 million on their campaign in support of the law (White 2020).

As a result of the passage of Proposition 22, more than 750,000 app-based drivers are now exempted from AB5 and deprived of employee status under California law (Jacobs and Reich 2020). Proposition 22 promises drivers an hourly income of at least 120% of the state minimum wage, plus a health care stipend, totaling a minimum of $15.60/hour. But according to researchers from the University of California, Berkeley, with deductions for taxes, expenses, and unpaid waiting time, the true guaranteed hourly wage for drivers could be as low as $5.64/hour.10 In contrast, the hourly labor cost (including wages, taxes, health care, etc.) for a driver with employee status who is paid 120% of the California minimum wage would be approximately $30.93 (Jacobs and Reich, 2019; Reich 2020).

By winning an exemption from AB5, Uber and Lyft have avoided paying hundreds of millions of dollars into the California unemployment insurance system—a staggering $413 million from 2014–2019, and an estimated $115 million in 2018 alone (Jacobs and Reich 2020). Drivers are unable to draw regular unemployment benefits from the system. Because of the economic pain caused by the COVID-19 pandemic, Congress authorized unemployment benefits for independent contractors and loans to small businesses, including independent contractors. These programs are paid for by taxpayers, not employers. Tens of thousands of Uber and Lyft drivers have accessed these programs, meaning that the federal government—and taxpayers—financially supported the drivers through the pandemic, not Uber and Lyft. According to The Washington Post, tens of thousands of Uber and Lyft drivers received at least $80 million in government assistance during the coronavirus pandemic. More than 5,000 Uber and Lyft drivers received an average of $15,000 each in loans from the program (Siddiqui and Van Dam 2021).

Experience under Dynamex and AB5

The passage of AB5 strengthened protections for hundreds of thousands of California workers. An estimated 1 million workers whom employers have classified—or misclassified—as independent contractors are now covered by the ABC test, meaning their employers now will have the burden of meeting the strict criteria of the test to legally continue to exempt them from worker protection laws.11 According to researchers at the University of California, Berkeley Center for Labor Research and Education, the most common occupations where the ABC test will apply include janitors, maids and other cleaners, truck drivers, taxi drivers, retail workers, grounds maintenance workers, and child care workers (Thomason, Jacobs, and Jan 2019).

Workers in California have not yet experienced the full benefits of AB5, for several reasons. First, the continued uncertainty around the passage, applicability, and permanence of AB5 led some companies to resist complying with the law. Some industries resisted reclassification and subsequently won legislative exemption for their industry. The trucking industry brought—and recently lost—a lawsuit against the applicability of AB5 in that industry on grounds of federal preemption, and although the companies were unsuccessful, the litigation created uncertainty and delay in extending AB5 coverage to drivers.12 The rideshare and delivery platform companies sought an exemption from the law, and when unsuccessful in winning it from the legislature, won it from the voters in November 2020. Some companies continue to disagree that their workers are employees, and are fighting efforts in the courts to require them to classify workers as employees under AB5.13 And, less than two months after AB5 took effect, the COVID-19 pandemic struck, shutting down major parts of the California economy and shifting focus to other existential issues like unemployment benefits for unemployed workers, paid leave for workers who themselves or whose family members contracted the coronavirus, and health and safety protections for essential workers on the job. These factors, alone and in combination, have presented challenges to the implementation and enforcement of the law, and have muted AB5’s impact. (They also have made it impossible to collect comprehensive data on the impact of the law.)

Importantly and disturbingly, the continuing efforts by platform companies and others to avoid the reach of AB5 have put enormous pressure on companies that continue to treat workers as employees. A vivid example involves delivery drivers for Safeway.

Instacart illustrates the downside to drivers being classified as independent contractors. The number of people working on Instacart’s platform jumped from 180,000 to 500,000 in eight weeks at the start of the COVID-19 pandemic, as more and more shoppers turned to home delivery to avoid in-person shopping.15 Instacart drivers earn significantly less than drivers who are employees. Large companies like Albertsons and Kroger directly employ delivery drivers as employees with pay between $15 and $17/hour, depending on location, and pay is even greater where drivers are represented by a union. In contrast, one national survey of Instacart workers estimated median hourly gross earnings at $9.50 before deducting expenses (Benner et al. 2020). And, Instacart has shown itself to be hostile to workers joining together to improve their pay. In contrast to its delivery drivers, Instacart treats in-store shoppers as employees. Instacart in-store shoppers in Skokie, Illinois, voted to form a union in February 2020. Instacart responded by laying off the employees (Schiffer 2021).

As previously noted, some California employers have resisted complying with AB5, taking the position that their workers are independent contractors, notwithstanding the applicability of the ABC test. For example, Handy, a major app-based company that provides cleaning and handyman services, continues to maintain its workers are independent contractors, not employees. The district attorneys of San Francisco and Los Angeles have brought suit against Handy for misclassifying workers, seeking back wages and injunctive relief for thousands of workers. An estimated 17,000 Handy workers in California stand to benefit if the cities prevail in this litigation (LADA 2021; Iovino 2021).

Taking the show on the road: Platform companies look to expand Proposition 22’s reach

After their success in passing Proposition 22, the rideshare and delivery companies pledged to pursue similar initiatives in other states and at the federal level (Feiner and Kolodny 2020). Uber officials said they hoped to “work with governments across the U.S. and the world to make this [the Proposition 22 approach] a reality” (Korosec 2020). As Uber CEO Dara Khosrowshahi said, “You’ll see us more loudly advocate for new laws like Prop 22” (Eidelson 2020). The platform companies have lobbied the Biden administration and members of Congress for an alternative approach to employment protections for platform company workers, and are opposing the PRO Act, which would bring them under the fold of the National Labor Relations Act (Jaffe 2021). At the same time, states continue to sue Uber and Lyft for misclassification under state wage and hour and unemployment insurance laws, and at least three state courts have ruled that Uber has misclassified its drivers (Scheiber 2021).

The uncertainties created by the platform companies’ aggressive campaign to be exempted from labor and employment laws has led some policymakers and advocates to explore ways of establishing some rights for drivers, such as collective bargaining rights, coverage under unemployment insurance, workers’ compensation, and anti-discrimination laws, etc., without full employee status. A proposal for this “third category” of employment (in between “employee” and “independent contractor”) was floated in 2015 (Harris and Krueger 2015), and was roundly criticized by worker advocates, including EPI (Eisenbrey and Mishel 2016). Some unions have held discussions with state legislators, Uber, and Lyft about establishing a set of rights, including bargaining rights, premised on drivers remaining independent contractors for purposes of state law. Legislative proposals have been floated in Connecticut and New York, but they faced strong criticism from some drivers and worker advocates and, as of this report, have not proceeded (Eidelson and Penn 2021; Greenhouse 2021; Chen 2021).16 However, Uber did reach a deal with a union in Great Britain to provide bargaining rights for drivers there (Eidelson, Milligan, and Levingston 2021).

The ABC test provides better protection for workers than other legal tests

The ABC test is stronger than other legal tests for determining whether an individual is an employee or independent contractor because it shifts the presumption to one of employee status, places the burden on the employer to prove independent contractor status, and strictly defines a narrow test for independent contractor status. In contrast, the Internal Revenue Service uses a 20-factor test that focuses on which entity controls how and when work is performed (IRS 2021b). The test is subject to manipulation and interpretation, and is further complicated by a “safe harbor” that excuses employers from misclassification if they are following industry practice (Erlich 2020).

The National Labor Relations Act (NLRA), establishing organizing and collective bargaining rights, and Title 7 of the Civil Rights Act, establishing anti-discrimination protections, utilize versions of the “common law” test, derived from court decisions over the years. The common law test, as articulated by the Restatement (Second) of Agency, uses 10 factors for evaluating whether an individual is an employee or independent contractor. It has been criticized for being overly subjective and open to manipulation (Garden 2019).

The broadest test, used under the federal Fair Labor Standards Act (FLSA) for purposes of determining minimum wage and overtime protections, is the six-factor “economic realities” test, which, as its name suggests, looks at the economic realities of the arrangement to determine whether an individual is in reality subject to the direction and control of the employer or in business for herself. The economic realities test derives from the FLSA’s broad definition of employee, which states that an employee is any person whom an employer “suffers or permits” to work. The FLSA’s test has been described as the broadest possible test (“A broader or more comprehensive coverage of employees within the stated categories would be difficult to frame,” U.S. v. Rosenwasser, 323 U.S. 360 (1945)).

Elections have consequences: Employee status under the Federal Fair Labor Standards Act and National Labor Relations Act

Workers who are deemed employees have minimum wage and overtime protections under the federal Fair Labor Standards Act, meaning they must be paid at least the minimum wage, and except for exempt workers, be paid 150% of their regular wage for hours worked in excess of 40 in a week. Workers who are classified as independent contractors have no such minimum wage or overtime protections, meaning they can be paid less than the federal minimum wage of $7.25/hour.

During the Obama administration, Wage and Hour Administrator David Weil issued an administrator’s interpretation, explaining that under FLSA’s language, most workers are employees and not independent contractors (DOL WHD 2015). Drawing from long-standing U.S. Supreme Court and federal circuit court decisions and settled agency interpretations, the guidance document explained how FLSA’s economic realities test applies to independent contractor situations. Weil’s interpretative guidance was lauded by workers’ rights advocates as an important and helpful primer on employee status under the FLSA.

The U.S. Department of Labor in the Trump administration took a different tack. The Trump Department of Labor quickly withdrew Weil’s interpretation (DOL 2017), and later issued an opinion letter stating that workers in a “virtual marketplace” were categorically independent contractors, not employees (DOL 2019). The Trump Labor Department then proposed and issued an interpretive regulation that took a very narrow view of employee coverage under the FLSA. According to an EPI analysis of the rule, an estimated 530,000 workers would be reclassified as independent contractors and lose employee status and protections as a result of the rule (Shierholz 2020). As seen in Table 4, EPI estimated that the Trump administration rule would cost workers $3.7 billion annually—at least $400 million in new annual paperwork costs, and $3.3 billion in lost compensation. EPI further estimated that social insurance funds would lose at least $750 million annually in the form of reduced employer contributions.

Table 4

The new Biden administration moved quickly to restore workers’ rights. It promptly withdrew the Trump administration’s not-yet-effective interpretive regulation and opinion letter (Wiessner 2021). The Biden administration has proposed a $30.5 million increase in the Wage and Hour Division’s 2022 budget, and has identified cracking down on misclassification as a priority, including supporting federal legislation to establish the ABC test for labor and employment laws (DOL WHD 2021).

Employer status under the National Labor Relations Act

Questions over employee status and misclassification have also played out at the National Labor Relations Board (NLRB), the federal agency that enforces workers’ collective bargaining rights. Workers who are classified as independent contractors are not covered by the NLRA, so have no federal right to organize and collectively bargain. As previously indicated, the legal test for employee status under the NLRA is the multifactor common law test.17 The NLRB and reviewing courts look to the Restatement (Second) of Agency and its 10-factor common law test for determining whether an individual is an employee or an independent contractor (FedEx Home Delivery v. NLRB (D.C. Cir. 2017)). The NLRB majority appointed by President Obama issued several decisions finding truck drivers, canvassers, and other workers to be employees, not independent contractors.18 The Obama-appointed NLRB General Counsel brought a number of complaints alleging that employers commit an unlawful unfair labor practice when they misclassify workers as independent contractors.

However, Trump appointees on the NLRB took a more restrictive view of the law. The Trump NLRB issued decisions finding workers to be independent contractors, saying they would evaluate the 10 common law factors through the prism of entrepreneurial opportunity, and taking a broad view of that term to deny workers coverage.19 The Trump appointees also rejected the complaint brought by the Obama-appointed NLRB General Counsel, refusing to find misclassification to be a violation of the NLRA.20 The Trump-appointed NLRB General Counsel issued a memorandum concluding that Uber drivers are independent contractors, not employees, and therefore outside of the NLRA’s protections (NLRB GC 2019).21

Because the NLRA does not include an independent right of workers to bring their own claims of employer unfair labor practices directly to the NLRB or a court, this conclusion by the Trump NLRB General Counsel deprived hundreds of thousands of Uber drivers and other similarly situated workers of their federally protected organizing and bargaining rights. A new NLRB General Counsel and new majority on the NLRB could reverse course and determine that app-based rideshare drivers are indeed employees covered under the NLRA.

Establishing the ABC test for collective bargaining rights—the PRO Act

In order to better define “employee” in a way that assures broader coverage and protection for workers, Rep. Bobby Scott (D-Va.) and Sen. Patty Murray (D-Wash.), the chairs of their respective labor committees, have introduced the Protecting the Right to Organize (PRO) Act (H.R. 842, S. 420), which, among many other provisions, adopts the ABC test for purposes of coverage under the NLRA.

The PRO Act passed the U.S. House of Representatives with bipartisan support in March 2021 and is pending in the U.S. Senate, where 47 senators have signed on as co-sponsors. Passage of the PRO Act is a top priority for the labor movement and its allies. Because of the significance and implications of establishing the ABC test for purposes of federal labor law on their operations, gig companies have lobbied heavily against the PRO Act (Cassel and Adams 2021).

Employee status is gaining attention internationally

Issues of employee status, the need to protect workers against misclassification as independent contractors, and the question of legal protections for platform-based workers continue to generate significant interest and attention in the European Union (EU) and at international labor bodies. EU countries have taken different approaches to the issue, with some adopting varying laws on the protections to be provided to workers. The International Labour Organization recently issued a comprehensive report on the topic, describing the variety of approaches and noting the importance of the employment relationship to worker protections, as addressed by ILO Recommendation 198 (De Stefano et al. 2021).

Recently, the Supreme Court in the United Kingdom ruled that Uber must treat its 70,000 drivers as workers—an intermediate category of employment—and pay them the minimum wage. After initially resisting, Uber announced it would comply with the court’s decision, and it later reached a deal to provide drivers with collective bargaining rights (Satariano 2021). Spain recently enacted a law requiring platform companies to classify drivers as employees (Parra and Brito 2021). International labor organizations have called for strengthened protections for workers engaged in nonstandard forms of work, including independent contractors and platform workers (ITUC 2019). The European Commission is examining whether to issue a directive that would redefine the scope of EU competition law to enable collective bargaining under some circumstances for the solo self-employed (European Commission 2020). Thus, in the EU and Britain, as in the United States, the issue continues to be a focus of attention by policymakers, advocates, and business.

Conclusion: A strong test and strong enforcement are vital

Employee status under U.S. labor and employment laws is essential to fundamental workplace rights, benefits, and protections. A strong, protective legal test for establishing employee status is critically important to combat employer misclassification of employees as independent contractors, and help ensure workers get the rights, benefits, and protections they are due, governments are not wrongly deprived of important revenue for social protections, and law-abiding employers are not undercut by employers engaging in fraud. Efforts to establish the ABC test as the prevailing test continue in the states and in Congress, as do efforts by platform companies to avoid the reach and obligations under these laws. In the meantime, in the absence of a uniform ABC test and strong enforcement, workers continue to be misclassified by their employers and deprived of important rights and protections. These are issues with real-life impact on working people and their standard of living that policymakers need to address.

Acknowledgments

This research was made possible by support from Friedrich-Ebert-Stiftung (FES). EPI and FES thank the following advocates and experts for their assistance in providing background information for this report: Annette Bernhardt and Ken Jacobs, UC Berkeley Labor Center; Mark Erlich, Harvard Law School Labor and Worklife Program; Cynthia Mark, Office of the Massachusetts Attorney General; Chloe Osmer, Office of the California Labor Commissioner; Jim Araby, UFCW Local 5; Julie Gutman Dickinson, Bush Gottlieb; Margo A. Feinberg, Schwartz, Steinsapir, Dohrmann & Sommers; Shannon Liss-Riordan, Lichten & Liss-Riordan; Cathy Ruckelshaus, National Employment Law Project; and Caitlin Vega, Union Made.

This report was primarily authored by Lynn Rhinehart, with assistance from Celine McNicholas, Margaret Poydock, and Ihna Mangundayao at EPI.

Lynn Rhinehart is a senior fellow at EPI. She previously served as General Counsel of the AFL-CIO, a federation of 56 national and international labor organizations.

Endnotes

1. One expert points to two factors in particular that have led to the misclassification problem in construction: the adoption of the Section 530 safe harbor under the Internal Revenue Code, and the push from a general contractor model on construction projects to a construction manager model, with multiple, separate contractors. See Erlich 2020.

2. For examples of lost wages from misclassification, see Weil 2017, 2019.

3. A.B. 5, 2019–20 Assemb., Reg. Sess. (Cal. 2019).

4. Drivers have also participated in class-action lawsuits and have pursued charges at the National Labor Relations Board, among other actions. See LAANE 2021.

5. A.B. 5, 2019–20 Assemb., Reg. Sess. (Cal. 2019).

6. For a comprehensive database of enforcement actions taken by the attorney general against employers since 2015, see Mass. AG 2021.

7. Author interview with Cynthia Mark, chief, Public Protection & Advocacy Bureau, Office of the Attorney General, May 17, 2021.

8. A.B. 5, 2019–20 Assemb., Reg. Sess. (Cal. 2019).

9. A.B. 2257, 2019–20 Assemb., Reg. Sess. (Cal. 2019).

10. Uber and Lyft have lowered driver pay since the passage of Proposition 22. See Sainato 2021. A lawsuit brought by drivers and worker advocates seeking to overturn Proposition 22 is pending. See Mulvaney 2021.

11. According to the California Legislative Analyst’s Office (LAO), AB5 applies to approximately 1 million Californians working as independent contractors. The LAO report explained that it could not estimate the number of contractors who would be converted to employees because that is dependent on various unknown factors, including whether businesses would change their model to continue hiring independent contractors. See LAO 2021.

12. California Trucking Association v. Bonta (9th Cir. 2021).

13. For example, Jan-Pro, a national janitorial and cleaning services company, has been sued for misclassifying workers as independent contractors, and continues to resist reclassifying its workers even after AB5’s passage. See CleanLink 2019.

14. In a more hopeful example, delivery drivers for Imperfect Food—a food delivery app—recently voted to form a union with the United Food and Commercial Workers (UFCW). But the passage of Proposition 22 makes it difficult for other drivers to follow suit because of the incentives the measure creates for companies to treat drivers as independent contractors. See Harnett 2021. In another hopeful sign, there are indications that major grocery chains are looking to bring delivery services back in house so as not to lose the customer connection—and customer data—to a third party. See Benner et al. 2020.

15. Prior to the pandemic, 2% of grocery sales were online; estimates are that as much as 10% will be done post-pandemic. See Benner et al. 2020.

16. Collective action by independent contractors also raises antitrust issues, as demonstrated by the court decision striking down Seattle’s ordinance to provide collective bargaining rights for platform drivers (Chamber of Commerce v. City of Seattle, 890 F.3d 769 (9th Cir. 2018)). The draft New York legislation contained provisions seeking to address these issues by requiring the state to approve collectively bargained terms.

17. National Labor Relations Board v. United Insurance Co. of America et al., 390 U.S. 254 (1968).

18. See, e.g., Fed Ex Home Delivery, 361 NLRB 610 (Sept. 30, 2014) (Fed Ex home delivery drivers are employees, not independent contractors); Sisters’ Camelot, 363 NLRB No. 13 (Sept. 25, 2015) (canvassers are employees, not independent contractors); Minnesota Timberwolves Basketball, 365 NLRB No. 124 (Aug. 18, 2017).

19. SuperShuttle, 367 NLRB No. 75 (Jan. 25, 2019) (holding that SuperShuttle drivers are franchisees, not employees.

20. National Labor Relations Board, Velox Express, Inc. and Jeannie Edge, 368 NLRB No. 61 (Aug. 29, 2019).

21. For a critique of the Advice Memorandum, see Mishel and McNicholas 2019.

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