The People’s Lawyers Take On Scofflaw Employers: Social Justice Oriented State AGs Stand Up for Workers 

In the past year, economic justice-focused state attorneys general (AGs) have continued a trend of increasing their involvement in enforcing and protecting workers’ rights. State AGs have brought lawsuits combatting wage theft and worker misclassification in a range of industries, and sometimes criminally prosecuted egregious cases. They have pushed back against unfair employment practices that reduce worker power in the labor market, like non-compete and no-poach provisions, as well as a major merger with potential to adversely impact workers. State AGs have championed state-level pro-worker policies in the legislature and defended them in court, and they have weighed in on federal labor and employment policy.  

Most notably, there are currently twelve state AG offices with dedicated labor or worker protection units (compared with only three in 2016): Arizona, California, Colorado, D.C., Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, New Jersey, and Pennsylvania. Several smaller state AG offices, like Delaware and Rhode Island, have lawyers focused on enforcing workers’ rights, even without a dedicated unit. State AGs are increasingly key players in protecting workers’ rights. At the same time, there is still considerable room for greater involvement: ideally, protecting workers will become a core function of virtually all state AG offices, alongside other areas like antitrust law and consumer protection.  

Labor Day 2024 is an apt moment to examine the extensive activities of state AGs in relation to workers’ rights in the last year.  

Fighting misclassification of workers as independent businesses rather than as employees  

Nationwide, employer misclassification of workers as “independent contractors” rather than as employees has stark consequences: it deprives workers of essential protections, creates unfair competition for law-abiding employers, and harms the public coffers because tax and safety net programs do not receive needed funding. A number of state AG offices have played a role in fighting this, through litigation, task forces, policy input, and more.  

D.C. AG’s office: The D.C. AG’s office provides an example of an office focused on fighting misclassification. The office obtained a $3 million settlement resolving its lawsuit against Arise Virtual Solutions, a large national corporation that provides customer services representatives to major household-name companies. As a condition of the settlement, Arise agreed to stop doing business in D.C. ProPublica covered the D.C. AG’s lawsuit and settlement, and previously reported extensively about the corporation.  

The office also took action in several cases in the construction industry, securing a $600,000 settlement with a construction company that underpaid and misclassified workers, and an agreement by the company not to do business in DC for five years, and a separate $350,000 settlement with additional measures to ensure future compliance in another case. In June, the office sued five companies in a case involving hundreds of construction workers. The lawsuit was filed against multiple players in relation to a development project: the general contractor, a subcontractor, and three labor brokers who helped procure workers. News coverage of the case detailed the value of seeking such “up-the-chain liability” in construction misclassification and wage theft cases.  

The office also resolved smaller misclassification cases, including one involving a political consultant and another involving Fetch Package Inc., which partners with apartment buildings to outsource package receipt and delivery for residents. Finally, in August 2024, the D.C. AG announced the largest recovery in a workers’ rights enforcement action in District history: a $3.75 million settlement with Power Design, a major construction firm. The settlement includes $1.7 million in restitution to over 1,200 workers, as well as penalties and fees to the District, and robust injunctive measures to prevent future violations.  

The Illinois AG reached a $718,000 settlement with a construction company that misclassified over 480 of its workers as independent contractors instead of as employees, and also paid a fixed daily rate no matter how many hours they worked, thereby depriving workers of required overtime pay.

New Jersey AG’s Office collaborates with state labor department to fight misclassification: The New Jersey AG’s office collaborated with the state labor department on major initiatives related to misclassification of workers, including a lawsuit against the nationwide trucking company STG Logistics, Inc., and STG Drayage, LLC (according to its website, the largest drayage provider in the United States). The case is the first to use new authority in New Jersey that allows the AG to sue in court on behalf of the Labor Commissioner. The AG and the Labor Department also jointly entered into a $455K settlement agreement with a luxury car transporter based on alleged misclassification of workers as independent contractors, unlawful deductions from pay, and recordkeeping violations.  

Minnesota AG Task Force on misclassification leads to legislation: The Minnesota AG’s office created a statewide task force to study and make recommendations regarding combatting employer misclassification fraud. The AG’s task force developed a policy proposal that turned into a bill that was signed into law this year as Article 10 of a multi-issue bill (pp. 175-209). Among other measures, the law facilitates coordinated multi-agency enforcement, increases penalties for repeat violators, creates a stronger test for workers in the construction and improvement services industries, and creates a private right of action for victims of employer misclassification.  

Fighting misclassification in the gig economy: After a multi-week bench trial against Uber and Lyft for misclassifying drivers, the Massachusetts AG office reached a settlement on the eve of closing arguments. News coverage explains that the AG’s decision to settle before a likely favorable verdict aimed to avoid a ballot initiative that would have undermined the state’s victory and cemented workers’ status as independent contractors in the future. The AG’s settlement requires Uber and Lyft to drop the ballot initiative, pay $175 million in settlement funds, and adopt pay rates of $32.50/hour. The resolution also includes significant additional relief for drivers: paid sick leave, occupational insurance, transparency about trips and pay, deactivation procedures, and more. Shortly after the settlement, the AG expressed support for a union-supported ballot initiative that would allow drivers to collectively bargain. The AG also authored an op-ed about the decision to settle the case.  

The Pennsylvania AG’s office filed an amicus brief in Razak, et.al. v. Uber Technologies urging a federal court to use the correct interpretation of Pennsylvania’s laws when deciding the question in issue in the case–whether Uber Black drivers are employees or independent contractors.  

Fighting wage theft  

While some states have statutes defining the term “wage theft,” elsewhere, it is a colloquial term referring to situations in which workers are not paid all of the wages they are legally owed: too often, employees work uncompensated hours, do not receive overtime, their hours are shaved, unlawful deductions are taken, or tips are stolen. Many AG offices have taken measures to fight wage theft. Some examples, in alphabetical order:   

• The California AG’s office filed a lawsuit against a construction company for wage theft and other labor violations. The office also reached a $826,000 settlement with a stoneware company that used an unlicensed, out-of-state labor broker. A joint investigation by the AG’s office, the Employment Development Department (which administers unemployment insurance), and the Labor Commissioner’s Office found that the company failed to report and pay payroll taxes, pay overtime, and provide itemized wage statements to workers as a result of their association with the labor broker. The settlement includes back taxes, back wages for overtime, a civil monetary penalty, and funds for a restitution administrator.  

• The D.C. AG’s office obtained multiple settlements involving wage theft, including cases involving restaurant workers, employees of a commercial cleaner and a drywall contractor, personal fitness trainers, workers for a janitorial company that was a government contractor, and a Burger King franchisee, among others. The office also reached a settlement with a national hotel chain over inappropriate disclosure and handling of tips at a restaurant at a D.C. location.  

• The Illinois AG’s office, along with the U.S. Department of Labor, obtained a $3 million settlement in a case involving a meat processing company that allegedly failed to pay overtime, paying by check for the first 40 hours of work and cash at straight time rates off the books for hours past forty. The AG also settled a case for $335,000 involving truck drivers who haul road construction materials to and from construction sites; the workers were not paid for all time spent driving and also had prevailing wage violations.  

• The Massachusetts Attorney General is the primary enforcer of wage and hour laws in the commonwealth, and has a record of considerable activity fighting wage theft. A number of these cases also included paid sick leave or other violations. The office reached a $6.8 million settlement, including restitution and penalties, in a wage-theft case involving more than two thousand workers at the MGM Springfield Casino Hotel. The office also used the False Claims Act to recover nearly $1 million from a construction company, based on a subcontractor’s failure to pay the prevailing wage. The office also issued citations against a garment manufacturer ($665,000), a temp agency ($1.3 million), a concierge staffing agency that provides concierges for luxury buildings ($2.4 million), Boston Market ($104,000), and an Amazon warehouse subcontractor. Those cases are ongoing. 

• The New York AG’s office reached settlements with Uber and Lyft, in a case involving tax and fee deductions from driver pay that should have been paid by passengers, not drivers. The settlement includes $328 million in total, most of which will be distributed to drivers; it also requires the companies to provide paid sick leave to drivers, and to pay drivers outside of New York City at a minimum rate of $26.00 per hour. (New York City already regulates pay rates inside the City). Other cases involved $10,000 in wage theft by a dance company, as well as a $230,000 joint settlement, along with the New York City Comptroller’s office, involving a New York City building that failed to pay service workers prevailing wages, despite receiving a tax benefit that required them to do so. 

• The Wage Theft Unit of the Minnesota AG’s office has been very active since it was established in 2019. The office brought its biggest-yet wage theft case, filing a lawsuit against a dairy farms that allegedly owed workers $3 million and also deducted money from wages for uninhabitable living quarters. Two months after filing suit, the AG’s office obtained a stipulated temporary injunction requiring proper payment of workers and improvement of housing conditions while the lawsuit is pending. The office also settled cases involving unauthorized paycheck deductions by 3M (nearly $1 million), and unlawful time-rounding practices by a medical device manufacturing company that consistently resulted in hours worked being rounded down to workers’ detriment ($250,000).  

Child labor  

Amid a sharp increase in child labor violations nationally, several state AG offices have taken action to protect young workers. The Massachusetts AG recovered $1 million from Dunkin franchisees, and cited other restaurants for child labor infractions. The Minnesota AG’s office settled a child labor lawsuit case they handled on behalf of the Minnesota Department of Labor and Industry. The case involved teenagers performing hazardous work at a meat processing facility.  

Protecting immigrant workers  

Some state AG offices have taken action specifically to reach or protect immigrant workers, given their heightened vulnerability to workplace exploitation. The Washington AG’s office prevailed in the state Supreme Court in a case involving immigrant detainees who worked for the private prison operator Geo Group and were paid $1 per day, in violation of the state’s minimum wage law. The Court ruled that these workers were entitled to minimum wage. The D.C. AG permanently shut down a recruitment firm that exploited foreign exchange teachers, securing penalties and restitution. Recognizing that workers without employment authorization are more vulnerable still, the Massachusetts AG’s office announced a $750,000 grant program to fund nonprofit legal services and community partners to help provide legal services and help people apply for work authorization. The Illinois AG proposed legislation to strengthen protections prohibiting employer retaliation against immigrant workers; it was passed by the state legislature and currently awaits the governor’s signature. 

In addition, several multistate coalitions of state AGs took action to support immigrant workers, including submitting a comment on a U.S. Labor Department proposal for H-2A temporary agricultural workers, and a letter calling on the Department of Homeland Security (DHS) to expedite and expand access to work permits for newly arrived immigrants. Most recently, a multistate coalition of state AGs, localities, and local prosecutors successfully advocated to DHS for an extension (from two years to four years) of deferred action for workers in labor disputes. 

Working together to weigh in on federal matters  

State AGs collaborated in a number of multistate actions to support workers’ rights. They filed amicus briefs supporting the federal government’s requirement of higher minimum wages for government contractor employees and defending the Equal Employment Opportunity Commission’s rule implementing the Pregnant Workers Fairness Act. They submitted a comment letter to the Department of Treasury about the proposed rules on enforcement of prevailing wage and apprenticeship training provisions in the Inflation Reduction Act; a letter to Congress “to defend fund managers’ use of Environmental, Social, and Governance (“ESG”) factors as consistent with prudent investment decision-making to maximize returns”; and a letter to the U.S. Labor Department urging it to require more detailed certified payroll records information under the federal prevailing wage law. 

A coalition of state AGs also filed an amicus brief in Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. ___ (2024), urging the Supreme Court to hold that transportation workers in non-transportation industries are covered by the transportation-worker exemption to the Federal Arbitration Act and therefore are able to file lawsuits in court rather than being forced into arbitration. This argument ultimately prevailed.  

Supporting state labor departments in their investigations and representing the state  

A central aspect of state AGs’ work involves representing the state and state agencies in court, which sometimes involves labor issues.  

Some state AGs file lawsuits on behalf of the state in general or state labor departments. Connecticut’s AG, for example, filed a $6 million lawsuit against the operator of state rest stops for allegedly not paying workers a higher wage rate that was required as a condition of a state contract. Wisconsin’s AG sued a garment business for unpaid wages, upon the request of the state Department of Workforce Development. The Minnesota AG and Minnesota’s Department of Labor and Industries jointly sued a major construction contractor alleging widespread wage theft ($2.4M) on 19 projects. North Carolina’s AG filed a lawsuit against a paper mill for breach of a grant agreement with the state: the agreement provided the mill with $12 million in economic development incentives in exchange for a commitment to maintain operations, and at least 800 jobs through a set date, but the mill closed and terminated all employees before then.  

State AGs’ representation role can also safeguard state labor agency enforcement. Minnesota’s AG won a consent judgment in a case where a construction contractor obstructed a state labor department investigation; among other measures, settlement terms required the employer to personally tell all workers, with an AG representative present, that they are free to speak with the labor department.  

State AGs have defended pro-worker state laws that are challenged by business opponents. For example, several AGs are defending state workplace conscience laws. Often described as laws banning employer captive audience meetings, the laws have much broader scope and prohibit employers from retaliating against workers for not attending employer-sponsored meetings in which the primary purpose is to communicate the employer's opinion concerning religious or political matters. New York’s AG has defended the state’s Farm Laborers Fair Labor Practices Act, which gives farmworkers the right to organize. 

California’s AG repeatedly and successfully fought off challenges to AB5, a state law adopting the protective “ABC test” for determining employee status. The 9th Circuit issued an en banc decision upholding AB5 as not violating equal protection law. 

Addressing labor market inequities  

Various aspects of labor market inequities are detrimental to workers. Corporate concentration and certain mergers can depress wages and harm workers. Sometimes employers expressly collude regarding worker pay, and too many enter into no-poach agreements, agreeing not to hire each other’s employees. Worker mobility and working conditions are harmed by coercive contract terms: non-competes and stay-or-pay contracts (like training repayment agreement provisions, or TRAPs) prevent workers from being able to seek a new job. State AGs have begun to use their labor, consumer, and antitrust authority to address these types of workplace abuses.  

 New York’s AG recovered $4.5 million from a title insurance company that used no-poach agreements that limited their employees’ mobility. A multi-state group of AGs submitted an amicus brief in a no-poach case involving tax preparer Jackson Hewitt, and 21 state AGs and the U.S. Department of Justice sought reinstatement of a lawsuit over no-poach agreements between Saks Fifth Avenue and high-end luxury designers. A multi-state group of AGs and the Federal Trade Commission, as well as the Colorado AG separately, sued to block a massive supermarket chain merger between Kroger and Albertsons for a host of reasons, including the impact on workers. The FTC-multistate lawsuit notes that the merger “may substantially increase Kroger’s and Albertsons’s leverage in negotiating with workers, reducing wages, benefits, opportunities, and the quality of workplace conditions and protections.”  

The Illinois AG office prevailed in an Illinois Supreme Court case about the applicability of the state’s antitrust laws to labor markets. The case emerged from an AG investigation of three temporary staffing agencies that allegedly used no-poach agreements. 

A multistate coalition of seven AGs reached a settlement to end the use of non-competes for hourly employees at the oil change and auto services company Valvoline. And enforcing a new state law, Minnesota’s AG reached a settlement with a commercial printer to release their workers from non-competes, and to notify workers of this.  

California’s AG filed a stipulated judgment with a home care company that engaged in unfair competition by including in clients’ contracts no-hire and non-soliticitation provisions that placed unlawful constraints on home care workers’ mobility. The contracts also included a $12,500 liquidated damages charge if a client used, hired, or solicited a former caregiver from the company up to a year after termination of services. The stipulated judgment requires the company to pay $500,000 in civil penalties and imposes injunctive terms to “protect workers, safeguard consumers, and preserve competition in the market.”

Pennsylvania’s AG used its consumer protection authority to reach an agreement with PetSmart, requiring greater transparency and disclosures in relation to TRAPs.  

Criminal prosecutions  

State AG criminal authority varies: in some states, like Delaware and Rhode Island, AGs are the sole criminal enforcers. In other states, like Connecticut, the AG has no criminal authority. Most states fall somewhere in between: State AGs have authority to bring charges involving certain crimes for example, or in cases where a district attorney is unable to handle the case or requests the AG’s assistance.  

Several AGs have brought criminal cases against employers for crimes affecting workers. Most notably, the Massachusetts AG office obtained the state’s first labor trafficking conviction after a jury trial in a case involving a defendant who forced immigrant women to clean businesses. The defendant was sentenced to 5 years in prison. The Michigan and Hawai’i AGs also brought labor trafficking charges involving a domestic worker and a worker on a farm, respectively. 

California’s AG secured convictions in cases alleging wage theft, tax evasion and more, including in relation to a group of restaurants in the Bay Area and another group of restaurants in Los Angeles. The Michigan AG’s office charged an insurance agency owner with embezzling from employees.  

Education and outreach  

State AGs have high visibility, and their offices often use this position to educate the public on important workers’ rights issues. The Pennsylvania AG’s office, for example, hosted a labor trafficking symposium in conjunction with Labor Day 2023, and is planning its second Labor Day symposium, focused on home health care workers, for 2024. DC’s Attorney General did social media outreach about a minimum wage increase and about a new pay transparency law. After Arizona’s AG created a new dedicated worker protection unit, the new unit’s leader authored an article in Arizona Attorney Magazine (a monthly publication of the Arizona State Bar) about plans for the newly created unit.  

Not all the state AG news is good for workers 

In contrast to the positive developments described above, there are state AGs who have taken anti-worker actions in the past year. For example, Texas’ AG filed a lawsuit challenging a federal labor department rule that would greatly expand the number of workers entitled to overtime pay; fourteen state AGs filed an amicus brief in support of the Texas lawsuit. And many state AGs simply do not pursue workplace justice among their ongoing activities.  

Looking ahead 

Social justice-oriented state AGs will likely continue to expand their involvement in worker issues in the coming year. The presidential election looms large, of course, and the federal landscape will be vastly different depending on the results in November. In the event of a second Trump administration, state AGs that care about workers will likely devote considerable effort to fighting rollbacks of worker protections, while also filling the enforcement gap, as federal labor agencies will likely pull back from aggressive action in relation to workers’ rights. In a potential Harris administration, state AGs focused on workers’ rights will likely continue to aggressively enforce state worker protection laws, many of which are stronger than federal statutes.  

At the same time, ten states are electing their top legal officer this year, and the outcomes of those elections could determine whether certain states continue down this path of increased worker protection and whether more state AGs take up this work. State AGs will continue to use a range of tools—labor law, antitrust, consumer law, criminal law, false claims acts—to fight employer abuses. And as the trend of state AG offices establishing dedicated labor units continues and solidifies, state AGs may perhaps collaborate more extensively in relation to violations by national or regional employers.  

In any future scenario, one thing seems clear: a set of justice-focused state AGs will play a meaningful role in standing up for workers in the year ahead.  

Labor and Employment Law, State Attorneys General, Workers’ Rights