The crisis facing the Oregon Bureau of Labor and Industries

“The Oregon Bureau of Labor and Industries (BOLI) is facing an unprecedented crisis that threatens worker protections and civil rights enforcement in the state,” according to the Bureau itself.  In this episode of Policy for the People, we speak with Oregon Labor Commissioner Christina Stephenson about the funding crisis that BOLI faces, and what that means for the economic well-being of working Oregonians.

We also speak with Jake Barnes of the Workplace Justice Lab at Rutgers University. He is the co-author of a recent report estimating the extent to which workers get paid less than the legally required minimum wage.

Transcript

“The Oregon Bureau of Labor and Industries is facing an unprecedented crisis that threatens worker protections and civil rights enforcement in the state.” Those aren’t my words. They are the words of the Bureau of Labor and Industries itself. In a recent report presented to the Oregon Legislature, the Bureau of Labor and Industries, also known by its acronym BOLI, warned that “systemic underfunding over the past four decades has left the agency unable to cope with the escalating demand for its services.”

In this episode of Policy for the People, we’re pleased to speak with Oregon Labor Commissioner Christina Stephenson about the funding crisis that BOLI faces and what that means for the economic well-being of working Oregonians.

Later in the show, we speak with Jake Barnes of the Workplace Justice Lab at Rutgers University. He is the coauthor of a recent report estimating the number of minimum wage violations in Oregon, the extent to which workers get paid less than the legally required minimum wage. Stay tuned. 

Juan Carlos Ordóñez (host): Commissioner Stephenson, welcome to Policy for the People. 

Labor Commissioner Christina Stephenson: Thanks for having me.

Juan Carlos: Commissioner, could you explain to our listeners about the mission of the Bureau of Labor and Industries? How does this agency that you lead serve the people of Oregon? 

Commissioner Stephenson: BOLI has been around for over 120 years. It was founded in 1903 by the Oregon Legislature to do some really important things, like enforce laws related to child labor, to women’s work hours, and factory safety.

But of course, over the years, the jurisdiction has expanded. Now, BOLI primarily operates across three main divisions. First, there’s the wage and hour division that investigates wage claims, investigates violations like failure to pay minimum wage or overtime. It also enforces Oregon’s prevailing wage laws on public projects. The second enforcement division is the Civil Rights Division. It enforces our anti-discrimination laws in employment, housing and public spaces and ensures that Oregonians have equal opportunities regardless of race, gender, disability or other protected status.

The third main division is the Apprenticeship and Training Division, and it develops and supports registered apprenticeship programs that help workers acquire skills and earn while they learn. All of them come together under the mission to protect workers rights, through the enforcement of our employment laws and ensuring that we’re developing a highly skilled workforce. The goal is every individual deserves to be treated with fairness, respect and dignity in their work environment. And we want to create a labor market where those are the foundation of every workplace. 

Juan Carlos: So in September, the Bureau of Labor and Industries issued a report saying that the bureau is “facing an unprecedented crisis that threatens worker protections and civil rights enforcement in the state.” How would you summarize the crisis that the agency faces? 

Commissioner Stephenson: I mean, crisis is the right word, and I summarize it by saying BOLI is under water.

You know, we are at a place where the agency is just unable to cope with the escalating demand for our services. So we just don’t have the staff capacity or the technology to process the claims and complaints and investigate them at the rate they’re coming in. 

And so, to give you some perspective, BOLI has less staff today than it did in the 1980s. And of course, since the 1980s, the number of Oregonians and Oregon workers has only increased in that time. But more than that, the number of claims and complaints being submitted with BOLI has just increased exponentially over the last several years. And because of that, we have backlogs in every single division. 

I don’t want to diminish the incredibly hard work our staff is doing. I mean, when it comes to wage claims, for example, we did a concerted backlog push and have pushed through a backlog of claims from 2022 and 2023. And that took a ton of work. So now the backlog is only 2024 claims, but it is still thousands of claims. So Oregonians who filed claims and complaints with us are waiting about six months for their cases to even be viewed by someone at the agency for the first time. And for a case to be processed, investigated and resolved, that can take years. That is unacceptable to me and everyone at BOLI. You know, Oregonians should be paid what they’re owed when they are owed it. And when they come to us, their paycheck could be the difference in their making rent, paying for medical bills, child care. Most Oregonians need that money now. Not in a year. 

Juan Carlos: So how big of an increase has the Bureau seen in terms of the number of wage complaints filed by workers, of complaints where workers say that they have not been paid wages that they are owed?

Commissioner Stephenson: It’s exponential. The wage and hour division has seen a 208% increase in wage claims since 2020. And we’ve also seen a pretty steep increase in civil rights complaints. That’s 110% since 2020, but a 278% increase in the last ten years. 

Juan Carlos: What do you think is driving this surge in the number of wage complaints and civil rights complaints, as well?

Commissioner Stephenson: There’s a lot of factors, but one factor seems to be that there’s been an improvement in our technology, which made BOLI more accessible to Oregonians. So if you can believe it, before 2020, you had to file a paper claim or complaint with the agency. And since 2020, the agency implemented an online system for filing claims, and the agency saw an increase after that.

And while that system was certainly an improvement over paper, you actually still had to take a quiz to figure out which of several online complaints you should fill out. So it’s still not as accessible as it could be. So in January of this year, we rolled out an even more accessible complaint portal, which made the process simpler. Just one complaint form for both wage and civil rights all together.

And there’s another thing that I think is contributing to an increase in claims. And this is something that we’ve noticed in the data, which is that people are coming to BOLI for smaller and smaller amounts of money that’s owed to them. So before it would have taken a larger amount of lost wages for people to bother with the process.

So I’m speculating what we could gather from that fact, but I think what it tells us is that people are feeling stretched and they can’t afford to even lose a small amount of money. So it’s worth it to them now to come, even with the barriers, even with the bureaucratic process. It’s still worth it to them because they need that money.

Juan Carlos: So you talked about the underfunding crisis that the agency has been facing. I wonder if you can say more about what impact that has had on the bureau’s ability to investigate wage complaints. 

Commissioner Stephenson: BOLI only has ten labor standards investigators on staff to investigate the thousands of wage claims and complaints we received each year. So that comes out to over 200,000 workers per investigator in Oregon. The International Labor Organization standard says a ratio of one investigator per 10,000 workers is the standard.

So if BOLI were going to meet that standard, we’d need 20 times the investigators we have. And an investigator can be reasonably expected to complete around 85 to 100 cases per year. But with the current volume of claims –  this is just wage claims, people saying that they were not paid what they were owed – an investigator would have to investigate nearly 450 cases per year which, of course, it’s just impossible.

Juan Carlos: We’re seeing a surge of complaints and there’s too few investigators on staff. What? How has the bureau responded to this situation? How are you coping with this crisis? 

Commissioner Stephenson: We had to ask ourselves really hard questions like, you know, who has a better shot of recovering their wages through a different process? And what rights should BOLI prioritize enforcing? And these are impossible questions and ones that we don’t think that we should have to ask.

But the reality is that doing nothing and continuing the status quo means that no Oregonians get the help they need when they need it, and that is simply unacceptable. So BOLI has implemented an earnings threshold for our investigations. This means that if someone’s making over $52,710 per year, BOLI is not going to investigate that case. 

And I want to be clear, this only applies to formal investigations. So we still accept the claim and issue a notice of claim to the employer. And our data shows that about 50% of the time this results in the employee being paid the wages that are owed. So at least that part of the process will continue. And then we’re working with what we can to support folks who don’t meet that threshold.

So we created a resource guide for individuals that are experiencing economic hardship while their case is pending. We provide a list of attorneys who may take on their case, along with other referrals, just to ensure that those who don’t meet that threshold still have alternative options. And I just want to be completely clear, this is a decision we did not come to lightly.

We know that for low income workers, BOLI may be their only option for seeking justice. And we also know low income workers experience disproportionately devastating consequences when they’re not made whole in time. No one should be denied justice, but we’re trying to prioritize those who are at the highest risk of falling into crisis because for them, we know waiting over a year for a paycheck is just simply too late.

Claimants are telling us – 66% of them are telling us – they are experiencing economic hardship now because they’re waiting on these wages. We hope that this will be a temporary measure until we have the capacity to bring on the staff necessary to serve all Oregonians. 

Juan Carlos: So what will it take to put the Bureau in a good position to enforce Oregon’s labor laws? What are you asking the legislature to do? 

Commissioner Stephenson: We have been asking for a number of things. It’s several million dollars. It’s about a 30% increase in BOLI’s current budget. But to put that in perspective, a fully funded BOLI is just 0.15% of the general fund. So it’s a very small percentage in the scheme of things.

But this would allow us to modernize our systems, strengthen our workforce, and ensure that BOLI can handle its increasing caseload in a way that serves Oregonians effectively and promptly. And one of the biggest needs we have right now is for an updated case management system to transform how we intake, track, resolve cases and help us cut down on backlogs and reduce wait times.

Currently, our outdated system creates just these huge bottlenecks and without a new system, we won’t be able to have the data management and effective enforcement that we need. Another essential component is what we’re calling kind of our modernization request. And this is going to allow us to improve our responsiveness across the board and help us address the critical recruitment and retention challenges we have, because we need to keep our skilled staff in these essential roles.

So this is really a holistic look at restructuring BOLI so that we are funding, reclassifying certain staff roles. How we think about this is it would take BOLI from being underwater to just treading water, just allowing us to plug some structural holes that bog down the divisions. And then on top of that, we obviously need funding to work through the sheer volume of complaints and backlogs and both wage and hour and civil rights divisions.

So we want to add intake staff and investigators who respond faster and thoroughly to complaints. And we’re also looking to add a joint customer service center that would streamline intake and keep investigators focused on resolving cases. And finally, there’s just the core operations that have just been historically neglected, things like expanding HR and IT infrastructure and adding support to meet disability compliance and language accessibility needs.

I mean, the bottom line is we need to be able to recruit, retain and support the staff who keep BOLI moving forward 

Juan Carlos: And beyond having a well-funded Bureau of Labor and Industries, I’m wondering what other policies are needed to confront the problem of wage theft, of ensuring that employers are, in fact, paying workers the wages that they’ve earned.

Commissioner Stephenson: Of course, we always want every tool in our toolbox to protect Oregonians, but the reality is that right now, we’re not even enforcing all the laws that are on the books due to our limited capacity and the surge in claims. So we need to be funded to the level required to ensure that the laws passed are a reality for Oregonians when they need them.

You know, to the extent where laws are passed to combat wage theft, those efforts are welcome, so long as they are also accompanied by funding to make them truly enforceable. 

Juan Carlos: And, Commissioner, I’m wondering if you have any final thoughts on the crisis that the Bureau is facing and how to protect and enforce Oregon’s labor laws? 

Commissioner Stephenson: No worker should have to be told that their rights don’t fit our budget.

We know that we are in a terrible position where we’re essentially forced to triage justice, dismissing claims not because they lack merit, but because we lack resources. I think this is a time for us to have a conversation in Oregon about what it is that we value as a state. I think when we have that conversation, we will all come to see that we do care, that workers get paid what they’re owed and that they live and work in a discrimination free work environment. And that’s something that we can do.

Juan Carlos: That was Oregon Labor Commissioner Christina Stephenson discussing the funding crisis afflicting the Oregon Bureau of Labor and Industries. And now we go deeper into the issue of wage violations in Oregon, specifically, the extent to which employers failed to pay the legally required minimum wage.

We speak with Jake Barnes, who is research project manager at the Workplace Justice Lab at Rutgers University. The Workplace Justice Lab is a research organization that aims to address economic inequality through supporting, strengthening, and fostering innovations in government and grassroots organizations. Jake is the coauthor of a recent report on minimum wage violations in Oregon. Here’s my conversation with Jake Barnes.

Hi, Jake. Welcome to Policy for the People. 

Jake Barnes: Thanks so much for having me, Juan Carlos. 

Juan Carlos: So you and several of your colleagues recently published a report looking into minimum wage violations in Oregon. And what specifically was the question that your study was looking to answer? 

Jake: Generally, the idea is to get a sense of underlying minimum wage violations happening within the jurisdiction. 

So why do we do this? The main reason is that wage theft is a much broader issue than just being paid underneath the minimum wage. This is not getting the appropriate overtime rates, not getting the sick leave that you may be entitled to. This is retaliation when filing a complaint with the requisite agency.

So there’s a lot that kind of goes into what wage theft really means, but it’s really difficult to research because it’s hard to get good data on it. You can’t just go up to an employer generally and be like, hey, so are you abiding by the law? What laws are you violating? Now, on the flip side, we would love to talk to workers about their experiences, but, workers can often be really apprehensive to discuss these issues.  

But minimum wage we can get at because there’s this survey conducted by the U.S. Census Bureau and the Bureau of Labor Statistics, called the Current Population Survey, which is about 60,000 households nationally per year. And there’s a subset of this survey. A subset of respondents essentially get this additional set of questions around economic and wage and job variables, including the amount of money that you make and the number of hours that you work. So, essentially, we can use that to calculate a respondent’s hourly wage to understand if they were paid below or above the minimum wage that they’re entitled to.

Juan Carlos: So what were the main findings of your report? What answers did you come up with? 

Jake: Yeah. So ultimately we find that significant numbers of violations of Oregon’s minimum wage ordinance are, in fact, going unreported. So our study period was 2010 to 2020. And we find that, over that period, Oregonians, on average, lose $283 million to $405 million a year from being paid below the mandated minimum wage.

We estimate that an average of 88,000 to 128,000 workers a year are paid below the minimum wage in Oregon. But BOLI received an average of just 443 minimum wage and overtime claims per year during the study period. And we find this in a lot of jurisdictions, really in most jurisdictions that we study, that this underlying issue is much greater.

Juan Carlos: What do you think accounts for that huge discrepancy in the instances of minimum wage violations that your data is tracking to the number of complaints filed with the Oregon Bureau of Labor and Industries? And you’re saying that this is a common occurrence nationally. 

Jake: Clearly, when we’re looking at minimum wage violations, the actual minimum wage rate is really important here. The higher the minimum wage is, the more likely workers are to be paid underneath the minimum wage. And likely oftentimes that’s because employers see a greater potential for greater cost savings in that sense. Oftentimes, these violations are done by very small employers who just don’t understand the full set of standards that they need to uphold. So there’s a lot that goes into it. 

That is not in any way to say that more harm is being done to workers than good when raising the minimum wage, of course. These minimum wage laws, increasing minimum wage rates, raises wages for thousands, if not millions of workers. But it just goes to show that as minimum wages are being increased, it’s just that much more important that additional resources are being put into enforcement.

Juan Carlos: Your report also looked into the industries where minimum wage violations are more common. What did your report find in that respect? 

Jake: Private households was where the highest number of violations were, around 33.9% of workers. So this is domestic workers, childcare workers, groundskeepers. One and three of these workers are being paid below the minimum wage. Food services and drinking place workers, about 18.1% of workers. That’s about one in every six workers, which is not only still very high, but of course, food services and drinking places is a much larger industry than private households as well. So  that’s a lot of workers being paid below the minimum wage. Personal and laundry services, about 13.8% of workers. This is a large industry that kind of encompasses a lot of low wage service workers like beauticians, laundry workers, massage therapists, parking attendants, things like that. Accommodations, so things like hotel workers, maids and housekeepers, 13.2% of workers. And then about 13% of workers in agriculture as well. So all of these industries are industries that often come up in our reports, as being amongst those that have the highest violations.

But again, to kind of return to this comparison with the complaints, there are three industries that we find have particularly high violation rates compared to the amount of complaints being submitted to BOLI. And that’s the private household workers; social assistance, which is particularly childcare workers and personal care aides, but those that are employed by agencies rather than directly by households; and then retail trade. So it’s particularly in these three industries where the violation rates are significantly higher than the actual complaint being submitted to BOLI. So these are the three industries that we particularly say, in terms of creating a proactive, strategic approach to a subset of enforcement activities, these are three industries that would be good to potentially focus on. 

BOLI has already been working on implementing these proactive efforts, with their proactive investigation unit. So we really applaud what BOLI has already done in the past few years, in terms of using these strategic efforts. 

Juan Carlos: So let’s talk about the policy solutions. You’ve mentioned strategic enforcement. I’m wondering if you can explain what that means, and how it would help address some of these problems that we’re seeing with respect to minimum wage violations. 

Jake: There’s a lot that strategic enforcement encompasses, a lot more than we can get to here. So first off I would just like to direct anybody who’s interested to the Workplace Justice Lab website and specifically our Labor Standards Enforcement Toolbox.

Generally, the idea of strategic enforcement is to use limited resources in the most effective way to create as much of a ripple effect throughout the jurisdiction, throughout a sector as possible. The majority of enforcement efforts today are still based around complaint based enforcement. A complaint based enforcement approach means taking each complaint one by one as they’re received and addressing them as they come into the agency.

And of course, some percentage of enforcement efforts are going to need to come from complaints. Complaints are incredibly important. But what we advocate for with strategic enforcement is taking at least some percentage, some portion of enforcement resources and using a data driven approach to target those resources towards employers, towards sectors where, research may show, there is likely to be an issue.

So again, there’s a lot that can kind of go into that. The main thing that I want to touch on here is what we call co-enforcement. And the idea here being that workers who are facing these violations are much more likely to confide in and trust worker advocacy organizations that are staffed by people that they identify with, that look like them, that talk like them and that they find much more relatable often to a government worker coming and knocking on the business’s door.

So we think it’s really crucial that agencies today, they really need to build these relationships with these worker advocates on the ground doing this work on the ground, building relationships with workers. And again, I just want to say that BOLI is really ahead of the curve on this. BOLI is in active conversation with a number of worker advocate groups.

Juan Carlos: Jake, any final thoughts you want to share with us regarding minimum wage violations and the broader problem of wage theft, as well as, how to address the problem? 

Jake: As big of an issue as this may seem based off of our findings, the minimum wage violations really are just the tip of the iceberg in terms of the underlying issue of wage and hour violations.

A study by the Economic Policy Institute in, I believe, 2014, found that more money was lost by workers through wage and hour violations than larceny, burglary, all forms of of personal theft combined. It’s an issue that doesn’t get a whole lot of attention, but it is an underlying issue throughout the country. Of course, strategies are an incredibly important part of this in terms of making sure that enforcement agencies have the powers, and the practices in place, that they need in order to effectively address the weight of this issue. But ultimately, agencies also need the resources in order to hire the inspectorate in order to put into place these strategies.