HR-5048-119
Referred to the House Committee on Education and Workforce.
Sponsored by Seth Magaziner (D-RI)
What it does
The bill would add a new section to the Fair Labor Standards Act requiring covered employers to pay at least the greater of the rate in a contract, collective bargaining agreement, or other employment agreement, or the rate required by federal or state law. It would make willful violations of the wage provisions (sections 3(m)(2)(B), 6, 7, and 8) a crime: up to 5 years in prison if unpaid wages exceed $1,000, and up to 1 year if $1,000 or less, plus fines under title 18. It would also extend the Act's existing civil remedies to the new section and direct fines collected to the Labor Department's Wage and Hour Division for enforcement. It would repeal section 10 of the Act. The changes would apply to violations occurring 90 days or more after enactment.
Who benefits
Hourly and salaried workers in covered businesses who are underpaid, including low-wage, tipped, and overtime-eligible workers, who could gain a federal remedy for breach of a promised contract or collective bargaining rate. Employers who pay correctly and compete with those who underpay may also gain. The Labor Department's Wage and Hour Division could receive fine revenue to fund enforcement. Union members whose negotiated rates would be backed by federal law.
Who is hurt
Employers found to have willfully underpaid, who could face federal prison terms and fines, including small business owners. Employers who face disputes over contract or agreement wage terms and might face more litigation and compliance costs. Businesses with complex pay systems may need to spend more on payroll audits and legal advice. Federal prosecutors and courts could face added caseload, and defendants in these cases would bear the burdens of criminal process.
Supporters argue
Supporters argue that wage theft takes money from workers who often cannot afford private lawsuits, and that current criminal penalties, limited to repeat willful violations with up to six months in prison, rarely deter it. They contend that tying federal law to contract and collective bargaining rates, adding tiered prison terms, and directing fines to the Wage and Hour Division would strengthen deterrence and enforcement while rewarding employers who follow the law.
Opponents argue
Opponents argue that civil remedies, including back pay and liquidated damages, already exist, and that adding prison terms of up to five years risks criminalizing payroll errors and good-faith contract disputes, especially for small businesses. They contend that turning private contract terms into federal wage mandates expands federal enforcement into matters state contract and wage-claim law already handles, and the new penalties could increase litigation and compliance costs.
Constitutional context
Congress would rely on its Commerce Clause power (Art. I, §8, cl. 3) to regulate employment in or affecting interstate commerce, which United States v. Darby (1941) upheld for the Fair Labor Standards Act's wage provisions. Making contract-rate breaches a federal matter and imposing criminal penalties may draw due process and federalism questions, particularly where the willfulness standard is applied.
Checks and balances
Congress would expand enforcement authority of the executive branch (Labor Department and Justice Department prosecutors), while courts would check it through the required willfulness showing, criminal procedure protections, and judicial review of prosecutions and civil claims.
Historical precedent
The Fair Labor Standards Act of 1938 already makes repeat willful violations of its wage provisions a crime with limited penalties, and Congress has periodically amended its penalties, so this bill expands that existing structure.