Improving Workplace Conditions Through Strategic Enforcement

Abstract

This report draws on research that examines how industry structures affect the way employers behave and, in particular, their likelihood to comply with the important provisions of the Fair Labor Standards Act (FLSA), the primary federal workplace law regulating minimum wage and overtime standards. The research examines how structural features of the industries employing large numbers of vulnerable workers create incentives or disincentives for compliance. Insight into these relationships provides opportunities to increase compliance through different approaches to enforcement.

Employment relationships in many sectors with high concentrations of vulnerable workers has become "fissured" as major companies have shifted the direct employment of workers to other business entities that often operate under extremely competitive conditions. Fissuring of employment increases the incentives for employers at lower levels of industry structures to violate workplace policies, including the FLSA. These changes require that enforcement policies must act on higher levels of industry structures in order to change behavior at lower levels where violations are most likely to occur.

This paper provides detailed analysis of the impact of fissuring in three major industries. It then provides a detailed set of recommendations regarding the implications of these findings on enforcement policy.

Keywords: Enforcement, compliance, regulation, low wage work, employment

JEL Classification: J31, J38, J81, J88, K31