Some companies choose whether or not to follow federal and state workplace safety regulations based on a mathematical calculation. Too often, penalties are so minor that it is cheaper for the company to break the law and pay the fines, rather than adequately address the safety or worker rights issue.
Pennsylvania AFL-CIO President Rick Bloomingdale believes this is true, and he joined the America’s Work Force Union Podcast to discuss how companies base breaking rules and regulations on a simple financial calculation, he also made the case that more must be done to hold companies accountable.
Wage theft remains prevalent
Wage theft is a huge issue in Pennsylvania, Bloomingdale said. The problem is not limited to construction. In the restaurant industry, bosses sometimes steal tips. Companies tend to prey on immigrants and people who may not be familiar with the law.
Bloomingdale recalled one major Pennsylvania heavy equipment contractor who pleaded no contest to theft over allegations it illegally diverted pension money and other benefits from its workers. In one of the biggest instances of wage theft in the nation, the company was ordered to pay restitution of more than $20 million and several people went to jail, Bloomingdale added.
While it is good the company was held accountable and the ruling included jail time (a rarity in labor law), the workers were only partially made whole as they can never regain the performance their pensions may have made in the stock market, Bloomingdale pointed out.
For far too long, authorities have been lax in prosecuting similar instances of wage theft, he said. The penalties are a slap on the wrist and do not deter companies from breaking the law.
Companies calculate the expense of breaking the law
One would hope to see companies respecting the rule of law, but all too often they make a simple calculation, Bloomingdale said. Does the fine or penalty for breaking the law cost more than can be saved by skirting it?
Unfortunately, many companies see it as a cheaper risk to allow someone to get hurt and pay a fine or the workers’ compensation after something terrible happens. A simple $5,000 fine is peanuts for a multi-billion dollar corporation, he pointed out. Light fines that require no jail time do little to deter companies from breaking the law.
Bloomingdale pointed out the Pennsylvania AFL-CIO routinely argues that safety is more cost effective because it leads to less downtime and higher productivity. Many companies agree and are willing to hire union labor because they know they are getting specialized workers who will do the job safely, on time and under budget, he said.