The Pentagon Wakes Up to Arms Industry Concentration

Lockheed Martin’s decision to bow to pressure from the Federal Trade Commission and abandon its takeover of Aerojet Rocketdyne is a rarity. Such mergers among weapons producers were long encouraged by the Pentagon and approved by antitrust regulators. Bigger and more prosperous contractors were seen as being in the national interest.

This gave rise to a group of military leviathans. Along with Lockheed Martin, the result of the 1995 combination of Lockheed and Martin Marietta and the later addition of Sikorsky Aircraft, those giants include: Raytheon Technologies, which arose out of the 2020 merger of Raytheon and portions of United Technologies; Northrop Grumman, born out of the 1994 combination of Northrop Aircraft and Grumman Corporation; General Dynamics, formed from the 1950s merger of Electric Boat Company and Canadair; and Boeing, which gobbled up McDonnell Douglas in 1997.

Concentration, however, is no longer seen as a virtue in the arms industry. The Defense Department has just issued a report warning that the sharp reduction in competition among contractors is creating problems for the Pentagon. It points out that the number of aerospace and defense prime contractors is down from 51 in the 1990s to five today, making the military highly dependent on a very small number of producers in all categories of weapons systems.

This reduction in competition, the report argues, creates supply risks, increases costs and diminishes innovation: “Consolidations that reduce required capability and capacity and the depth of competition,” it states, “have serious consequences for national security.”

In place of the old approach of “bigger is better,” the report recommends heightening merger oversight, encouraging new entrants, increasing opportunities for small business, and hardening of supply chain resiliency.

For all its candor, one issue the report does not address is the checkered history of the big contractors in terms of honest dealing. They were all involved in numerous procurement scandals in the 1980s, the 1990s and into the 2000s. These ranged from massive cost overruns to cases of outright bribery.

The misconduct has continued. According to Violation Tracker, which covers cases back to 2000, the big five have paid more than $2 billion in fines and settlements in cases relating to government contracting—mainly violations of the False Claims Act. For example:

In 2006 Boeing paid $615 million to resolve criminal and civil allegations that it improperly used competitors’ information to procure contracts for launch services worth billions of dollars from the Air Force and NASA.

In 2008 General Dynamics agreed to pay $4 million to settle allegations that a subsidiary fraudulently billed the Navy for defective parts.

In 2014 a subsidiary of Lockheed Martin paid $27.5 million to resolve allegations that it overbilled the government for work performed by employees who lacked required job qualifications.

In 2009 Northrop Grumman agreed to pay $325 million to settle allegations that it billed the National Reconnaissance Office for defective microelectronic parts.

In 2008 Raytheon subsidiary Pratt & Whitney, then part of United Technologies, agreed to pay $50 million to resolve allegations it knowingly sold defective turbine blade replacements for jet engines used in military aircraft.

Now that the Pentagon is trying to reduce its dependence on giant contractors, it should also show less tolerance for corruption on the part of suppliers both large and small.

Building Back Unions

While its Build Back Better bill remains in limbo, the Biden Administration has been doing the smart thing by undertaking significant policy initiatives via executive order. Such steps cannot redistribute income or create big new social programs, but they can do some significant good.

That includes changes in the workplace. Biden recently signed an executive order requiring project labor agreements for all federal construction projects with a cost of $35 million or more. This will ensure that these projects are carried out by well-paid and well-trained tradespeople working with the protection of union contracts.

The order is not flawless. It contains exceptions that would allow agencies to forgo a PLA if they determine it would not advance “economy and efficiency” and under several other circumstances. Hopefully, these loopholes will not be abused. It’s a good sign that the anti-union Associated Builders and Contractors put out a statement blasting the order, claiming it will “needlessly increase construction costs.”

Encouraging the creation of high-quality union jobs by federal contractors is also part of a report just issued by the Administration’s Task Force on Worker Organizing and Empowerment. The document is an unabashed endorsement of unions as a force for raising living standards and workplace standards.

It argues for positioning the federal government as a model for cooperative labor-management relationships within its own workforce and for using the government’s spending power to promote stronger labor standards in private companies from which it purchases goods and services as well as in organizations receiving federal grants and loans.

The Task Force also makes the case for increasing union density in the private sector overall. Yet without legislation such as the Protecting the Right to Organize Act, which is stalled in the Senate, the Administration is limited to providing indirect support. The report includes a list of recommendations such as getting the National Labor Relations Board to use the web and social media to promote better understanding of worker organizing rights under existing federal law. It also suggests that high-level administration officials disseminate the same message through public service announcements.

This is all laudable but unlikely to make much of a difference. The main obstacle to worker organizing is not a lack of understanding of labor law but rather the ability of employers to flout that law with no real consequences.

More promising are the report’s recommendations concerning the enforcement of labor standards. Strong regulation works hand in hand with union organizing to exploitative working conditions.

Among the suggestions is a call for closer cooperation between the Labor Department and the Internal Revenue Service to investigate worker misclassification, a practice which not only undermines overtime pay rules but also interferes with proper payroll tax collection.

Reading the report, one gets the impression that the Task Force was trying to find every last way to use the federal government to help unions. The laundry list includes numerous arcane ideas such as instructing the Department of Education to include labor-management collaboration as a criterion in awarding competitive grants.

After decades in which the spirit of the National Labor Relations Act has been largely ignored by both Republican and Democratic presidents, it is heartening to see an administration so driven to promote labor rights. Yet it is going to take much more substantial measures to reverse the decline of private sector unionization.  

Toxic Corporate Culture

Most large companies like to brag about their corporate culture, seeing it as a key factor in their success. Yet when an independent assessment is done, the results may tell a very different story.

The latest example of this is taking place at the Anglo-Australian mining giant Rio Tinto Group, which has operations in more than 30 countries. A report commissioned by the company from an outside expert paints a dismal picture of workplace culture in its mines and other facilities around the world.

Elizabeth Broderick, Australia’s former sex discrimination commissioner, conducted an investigation that included a survey completed by more than 10,000 employees as well as more than 100 group listening sessions, 85 confidential individual interviews, and 138 written submissions.

Based on all this, Broderick found that Rio Tinto’s workplace culture is marked by widespread bullying, sexual harassment and racism. She found that the harmful behavior was not limited to the male-dominated manual workforce. Managers, including those at senior levels, often tolerated the behavior or even demonstrated it themselves.

Among the most disturbing findings was that 21 female employees reported experiencing actual or attempted rape or sexual assault during the past five years.

High percentages of the employees had not reported the various forms of mistreatment, believing either that their concerns would not be taken seriously or that they might face repercussions for filing a complaint. Broderick writes: “Employees believe that there is little accountability, particularly for senior leaders and so called ‘high performers’, who are perceived to avoid significant consequences for harmful behaviour.”

In a company press release about the report, CEO Jakob Stausholm stated: “I feel shame and enormous regret to have learned the extent to which bullying, sexual harassment and racism are happening at Rio Tinto.” The implication was that the revelations came as a surprise, thus making management somewhat less culpable.

Yet Stausholm and other senior executives must have been well aware of the problems for some time. The Broderick report was commissioned in response to previous revelations, such as those that emerged from a West Australia parliamentary inquiry last year.

Moreover, Rio Tinto does not exactly have an unblemished track record when it comes to the treatment of employees or the communities in which it operates. Mining industry critic Danny Kennedy once called the company—a frequent target of criticism over its policies relating to the environment, labor relations, and human rights—“a poster child for corporate malfeasance.”

In the area of human rights, Rio Tinto’s sins include having operated a uranium mine in Namibia, in violation of United Nations decrees, during a period in which apartheid-era South Africa still occupied the country. It has also been accused of abuses at mines in Indonesia and Papua New Guinea. A lawsuit was filed against Rio Tinto in the United States under the Alien Tort Claims Act, alleging that the company colluded with local authorities in Papua New Guinea to violently suppress protests. It was ultimately dismissed.

In 2020 Rio Tinto’s then-CEO Jean-Sebastian Jacques was pushed out after shareholders demanded he face more serious consequences in the wake of a decision to destroy ancient rock shelters in Australia’s Juukan Gorge that were sacred to two Aboriginal groups.

The question now surrounding Rio Tinto is whether it will see the Broderick report as more than a public relations problem to overcome and make meaningful changes throughout its operations, including the policies adopted by those at the top.

PG&E’s Ongoing Crime Spree

For all the talk about corporate crime, very few corporations are actually charged with criminal offenses. Of the more than half a million cases in Violation Tracker, all but a couple of thousand involve civil matters, and many of those categorized as criminal are misdemeanor environmental cases. A much smaller set of companies have faced felony charges, and an even smaller group have pled guilty to such offenses more than once.

And then there is PG&E. The giant California utility has faced scores of felony charges and has pled guilty or been convicted in several cases involving accusations of criminal negligence and involuntary manslaughter–the corporate equivalent of murder. All these cases have involved allegations that the company’s widespread failure to properly maintain its equipment played a major role in causing a series of deadly wildfires.

Recently, PG&E completed a five-year period of felony probation, with the presiding judge issuing a scathing report on the company’s failure to change its ways. “Rehabilitation of a criminal offender remains the paramount goal of probation,” wrote U.S. District Judge William Alsup of the Northern District of California. “During these five years of criminal probation, we have tried hard to rehabilitate PG&E. As the supervising district judge, however, I must acknowledge failure.”

That’s Judge Alsup’s way of softening the impact of the following passage, which makes it clear the failure was most definitely that of the company:

While on probation, PG&E has set at least 31 wildfires, burned nearly one and one-half million acres, burned 23,956 structures, and killed 113 Californians. PG&E has pled guilty to 84 manslaughter charges for its ignition of the 2018 Camp Fire in Butte County, is facing five felony and 28 misdemeanor counts arising out of the 2019 Kincade Fire in Sonoma Case County (that county’s largest wildfire ever), is facing pending involuntary manslaughter charges arising out of the 2020 Zogg Fire in Shasta County, and is facing a civil suit by five counties arising out of the 2021 Dixie Fire (and may face criminal charges as well). The Dixie Fire, the second largest in California history, alone required 1,973 personnel to extinguish. So, in these five years, PG&E has gone on a crime spree and will emerge from probation as a continuing menace to California.

This amounts to one of the strongest condemnations of corporate behavior ever to come from a judge in a U.S. court. Judge Alsup puts much of the specific blame on PG&E’s insistence on using independent contractors, many of whom turned out to be unreliable, to carry out its obligation to clear vegetation near power lines—rather than incurring the expense of hiring and properly training employees to do the job. He also cited the company’s “obsession” with keeping power lines operating (and customer meters turning) rather than temporarily de-energizing lines known to be a serious fire hazard because of downed trees and limbs.

Judge Alsup notes that various parties have urged him to extend the company’s probation, but he states that he does not have clear authority to do so. It’s also unclear what would be the point. As the judge wrote, probation is supposed to bring about rehabilitation. Probation violators are sent back to prison.

PG&E clearly has not been rehabilitated, and the prison option is not applicable to a corporation. What would make more sense is a radical restructuring of the company, turning it into something other than a profit-maximizing machine that shows little regard for human life. There has been talk of a state takeover or a conversion into a cooperative, but these proposals appear not to have gone very far.

Our legal system has a hard time dealing with brazen miscreants such as PG&E. It would help if corporate executives could be held more personally accountable for such behavior. Enacting these changes would be easier if the politicians now screaming about the uptick in street crime showed a similar concern about crime in the suites.

Scrutinizing Microsoft

Press accounts of Microsoft’s $70 billion offer for Activision Blizzard make frequent references to the legal problems it would inherit from the gaming company, which is embroiled in lawsuits and regulatory actions relating to sexual harassment and discrimination.

Those problems are real, but it is misleading to suggest that Microsoft is a boy scout of a company with no legal difficulties of its own. While none of the cases involve the same allegations surrounding Activision, Microsoft has, as shown in Violation Tracker, racked up more than $300 million in regulatory fines and class action lawsuit settlements over the past two decades.

The largest cases involve anti-competitive practices—the same issue that made Microsoft notorious in the 1990s. In 2009 the company paid $100 million to resolve a case brought by the Mississippi Attorney General, and in 2012 it paid $70 million to settle a similar suit brought by a group of cities and counties in California.

Microsoft has also faced accusations of foreign bribery. In 2019 one of its subsidiaries paid $8.7 million to resolve criminal charges linked to alleged violations of the Foreign Corrupt Practices Act in Hungary. The parent company paid $16 million in a related civil matter brought by the Securities and Exchange Commission.

LinkedIn, a Microsoft subsidiary, paid $13 million in 2016 to settle a class action lawsuit alleging that it sent unsolicited messages to users.

Microsoft has had its own problems with employment discrimination. In 2020 it agreed to provide $3 million in back pay and interest to employees to resolve federal allegations that hiring patterns at several of its locations showed a statistical bias against Asian applicants.

Finally, Microsoft shares with Activision a track record of wage and hour violations. In 2014 LinkedIn was compelled to pay over $5 million in back pay and liquidated damages to a group of 359 current and former employees who had not received proper overtime pay.

In 2000 Microsoft paid $97 million to settle a lawsuit alleging that it misclassified several thousand people as independent contractors to avoid paying them overtime pay and employee benefits. This was the same issue in a lawsuit brought against Activision in California on behalf of senior artists. In 2017 the gaming company paid $1.5 million to settle the suit.

Despite its transgressions over the past two decades, Microsoft has developed a more benign image than not only Activision but also the other giants of the tech industry, including Amazon, Google and Facebook.

An assessment in the Washington Post attributes this not to changes in Microsoft’s practices but to its public relations and lobbying, especially in relation to Washington lawmakers, many of whom, the Post states, treat the company “like a trusted ally in their efforts to rein in other large tech companies.”

The Activision deal, which raises some significant antitrust issues given Microsoft’s sizeable Xbox business, will be a test of the strength of its good will among policymakers. This will be a good opportunity for those calling for stronger enforcement to show they are serious.

The Corporate Crime Lobby

One big difference between street crime and corporate crime is that drug dealers, burglars and arsonists generally are not able to influence the way their misdeeds are investigated and prosecuted.

Corporate violators, on the other hand, can use lobbying and campaign spending to push for policies that may make it less likely their wrongdoing will be detected or will be treated more leniently if it is discovered.

Much of this business effort is exercised through trade associations, and probably the biggest influencer of them all is the U.S. Chamber of Commerce. As is highlighted in a new report from Public Citizen, the Chamber has been an outspoken opponent of the Biden Administration’s plan to adopt a more aggressive posture toward corporate misconduct.

It has been especially critical of a new approach being taken by the Federal Trade Commission, which voted in November to expand its criminal referral program. While the FTC itself can bring only civil actions, the agency can pass on evidence of corporate criminality to the Justice Department—and now it will be doing more of that. The Chamber accused the FTC of “waging a war against American businesses” and vowed to “use every tool at our disposal, including litigation, to stop its abuse of power.”

The Public Citizen report demonstrates why the Chamber is so agitated: many of its leading members have been involved in significant cases of malfeasance in the past and are likely to be similarly embroiled in the future.

Using extensive data from Violation Tracker, the report shows that the known members of the Chamber have been involved in thousands of civil and criminal matters and have paid more than $150 billion in fines and settlements.

Three major banks—JPMorgan Chase, Citigroup and Wells Fargo—alone account for $81 billion in penalties, and the pharmaceutical industry another $26 billion.

While these numbers represent all forms of misconduct, Public Citizen gives special attention to the 19 Chamber members that have been involved in criminal cases. Among them are Amgen (illegal drug promotion), Bayer (price-fixing) and Zimmer Biomet (Foreign Corrupt Practices Act).

The report notes that at several other Chamber members such as American Express are reported to be targets of current criminal investigations.

Public Citizen looks at overall corporate rap sheets, but given the Chamber’s hyperbolic statements about the FTC, it is worth zeroing in on cases brought by that agency.

As Violation Tracker shows, the FTC has fined companies over $14 billion since 2000. More than one-third of that total comes from a single case brought against a Chamber member. Facebook, whose parent company is now called Meta Platforms, was penalized $5 billion in 2019 for deceiving users about their ability to control the privacy of their personal information.

Other Chamber members involved in significant FTC cases include: Citigroup, which paid $215 million to resolve allegations that two of its subsidiaries engaged in deceptive subprime lending practices; Alphabet, whose Google subsidiary paid $136 million for violating rules regarding the online collection of personal data on children; and AT&T, whose AT&T Mobility subsidiary paid $80 million to the FTC to provide refunds to consumers the company unlawfully billed for unauthorized third-party charges.

These were all civil matters. The Chamber is apparently worried that such cases could now result in referrals to the Justice Department for criminal prosecution, especially since the DOJ is vowing to bring more such actions.

The next few years will be a test of whether more aggressive regulators and prosecutors can overcome the power of the corporate crime lobby.

Holding Corporations Accountable for Defective Products

A federal judge in Michigan just shot down a motion by Fiat Chrysler to derail litigation alleging it sold 800,00 vehicles with faulty gearshifts. The company could end up paying many millions in damages. At about the same time, a federal judge in New York gave final approval to a $5.2 million settlement of class action litigation claiming that DevaCurl products caused hair loss and scalp damage.

These are two recent examples of actions in an arena in which corporations are held accountable for causing harm to their customers: product liability lawsuits. These kinds of court cases are the latest category of class-action and multi-district litigation to be added to Violation Tracker.

The database now contains entries covering 120 of the most significant product lawsuits of the past two decades in which corporations paid substantial damages or a monetary settlement to large groups of plaintiffs.  The total paid out by the companies in these cases is more than $54 billion.

Fourteen of the cases involved payouts of $1 billion or more, the largest of which was the $9.6 billion Bayer agreed to pay to resolve tens of thousands of suits alleging that the weedkiller Roundup, produced by its subsidiary Monsanto, causes cancer. Bayer, which produces pharmaceuticals as well as chemicals, was involved in five other cases on the list, bringing its aggregate payout to more than $12 billion, the most for any corporation.

Next in line are Pfizer and Johnson & Johnson, each with payout totals of about $5.5 billion for cases involving harm caused by products ranging from hip implants and diabetes drugs to heartburn medication and talcum powder. These two companies and other pharmaceutical and medical equipment producers account for one-third of the cases on the list and half of the payout total. The giant settlements involving opioid producers and distributors are not included here, since they are treated as matters of illegal marketing rather than defective products—and because those cases are most often brought by state attorneys general rather than as private litigation.

The motor vehicle industry also features prominently, with 32 cases and total payouts of $9 billion. The largest portion of that is linked to Toyota, with $5.3 billion in payouts in cases involving issues such as unintended acceleration, defective airbags and premature corrosion. Volkswagen has actually paid out much more in class action settlements due to its emissions cheating scandal, but Violation Tracker categorizes those as environmental rather than product liability cases.

Among the remaining cases are a $1 billion settlement by the German company Knauf involving drywall that emitted noxious odors and a $500 million settlement by Sears Roebuck of allegations that it sold stoves that had a tendency to tip over.

Yet perhaps the most surprising of the cases were two involving the Brazilian company Taurus, which paid a total of $277 million to resolve allegations that it produced firearms with a defect that caused them to go off when dropped. The irony is that gunmakers are shielded from liability when their weapons are used in criminal activities.

Product liability class action and multi-district cases—like similar litigation involving issues such as toxic chemicals, wage theft and privacy violations—are reminders that the courts are an important complement to the regulatory system in addressing corporate misconduct.

The 2021 Corporate Rap Sheet

After four years of Trump’s regulation bashing, the expectation was that the Biden Administration would adopt a much more aggressive posture toward corporate misconduct.

There have been some encouraging signals, such as those given by Deputy Attorney General Lisa Monaco in an October speech, but few blockbuster federal case resolutions have been announced during the past eleven months.

According to data my colleagues and I have collected for Violation Tracker, no individual company has paid a settlement or fine of $250 million or more to the Biden DOJ. In fact, there have been only two case resolutions of that size announced by any federal agency during this period.

In September, the Securities and Exchange Commission announced a $539 million settlement with entities linked to Chinese businessman Guo Wengui relating to illegal sale of stock and digital assets. That same month, the Office of the Comptroller of the Currency fined Wells Fargo $250 million for ongoing risk management deficiencies.

By contrast, numerous mega-cases have been resolved by state attorneys general. Since last January, they have announced nine settlements of more than $250 million, including five worth $1 billion or more. Those are the giant cases against pharmaceutical manufacturers and distributors for their role in the opioid crisis.

The largest case was the settlement worth an estimated $10 billion with the biggest opiate villain of all, Purdue Pharma, which is now in bankruptcy and will effectively go out of business. Many argue that the Sackler family got off too easy in the case, but the company is paying a substantial price for its misdeeds. The other ten-figure settlements of the year involved McKesson ($8 billion), AmeriSourceBergen ($6.5 billion), Cardinal Health (also $6.5 billion) and Johnson & Johnson ($5 billion). Also substantial was the $573 million settlement McKinsey reached with states over its role in advising opioid producers in improper marketing practices.

There were also significant state settlements on issues other than opioids. Duke Energy signed an $855 settlement with the North Carolina AG relating to coal ash pollution. Boston Scientific Corporation reached a $188 million settlement with a group of states to resolve allegations it engaged in deceptive marketing of a transvaginal surgical mesh device.

While the Biden DOJ has yet to roll out blockbuster cases, it did announce some substanial resolutions during the year. For example, the U.S. Attorney’s Office in Cincinnati announced a $230 million settlement of criminal charges against utility company FirstEnergy for making improper payments to public officials to get them to pursue nuclear power legislation benefiting the company. Taro Pharmaceuticals agreed to pay $213 million to settle price-fixing charges. In a case that also involved UK and Swiss regulators, Credit Suisse paid $175 million to the DOJ to resolve criminal charges relating to a fraudulent project in Mozambique.

The year also saw the resolution of some major class action and multi-district lawsuits against large corporations. After the U.S. Supreme Court declined to hear its appeal of a court verdict, Johnson & Johnson paid more than $2 billion in damages to a group of women who claimed they developed ovarian cancer from using the company’s talcum powder.

Hyundai Motor agreed to pay up to $1.3 billion to settle a consolidated class of claims that it and its subsidiary Kia sold vehicles with defective engines that could catch fire. Facebook paid $650 million to settle a class action over its harvesting of facial data.

Facebook was also at the center of a controversy that not yet been fully resolved by regulatory or court action. A former manager leaked a large collection of internal documents indicating that the company, which now calls itself Meta Platforms, was aware of the harmful effect its services were having on some users, especially younger ones, but did little about it. The revelations prompted widespread criticism among members of Congress but no significant legislation or litigation so far.

Another widely criticized corporation that has yet to face full consequences for its conduct is Amazon.com. The e-commerce behemoth has been reproached for the way it treats employees, the small merchants who make use of its platform, and the communities in which it operates. Yet it continues to expand at a rapid pace and has seen an enormous growth of profits during the pandemic.  

During the Facebook disclosures, there was growing speculation as to whether the big tech firms were now facing a situation similar to that of the tobacco companies, which were the subject of their own scandalous revelations and eventually had to pay out many billions of dollars in settlements and sharply curtail their marketing activities.

The key word there is “eventually.” The dangers of smoking were known for decades, yet the big cigarette companies adamantly denied the reality—the same way the fossil fuel companies have denied their role in climate change. We should not expect Meta, Amazon and the other tech giants to give in without a long and bitter fight.

Called to Account for Wage Theft

New data from the Bureau of Labor Statistics on job-hopping and on wage increases continue to illustrate a remarkable rise in worker assertiveness. The pandemic has finally allowed those who have been suffering for years from wage stagnation to turn the tables on employers. What business groups describe as a labor market crisis is in fact the beginning of liberation for the low-wage workforce.

These workers are reacting not only to inadequate compensation and oppressive schedules. They are also fed up with the additional indignity of being cheated out of the pay they are supposed to receive. The Great Resignation can also be seen in part as a response to the epidemic of wage theft that has afflicted the U.S. labor market.

This was brought home to me again in the course of updating the data in Violation Tracker. There continues to be a steady stream of announcements of cases involving the failure to provide proper overtime pay, the failure to provide required paid breaks and the numerous other ways employers take money out of the pockets of workers.

The cases we document come from either private litigation or regulatory actions. The larger settlements involve collective action lawsuits brought by plaintiff law firms on behalf of groups of workers. Here are some examples that were finalized in just the past few months:

  • Chipotle agreed to pay $15 million to resolve allegations that it denied overtime pay to management trainees.
  • Humana paid more than $11 million to settle allegations that it denied overtime to nurses by improperly classifying them as exempt employees.
  • T-Mobile agreed to pay $2 million to resolve a lawsuit alleging that it forced customer service representatives to do off-the-clock work.
  • The discount grocery chain Aldi paid $2 million to thousands of California employees who said they were cheated out of overtime pay.

Wage theft is, of course, also investigated by the Wage and Hour Division of the U.S. Labor Department. Many of the cases handled by WHD involve small firms, but it also takes on bigger employers and sometimes collects substantial amounts of back pay and penalties. Among the recent examples of these larger actions are the following:

In October, a federal court in Pittsburgh entered a consent judgment in which an oilfield services company admitted liability for more than $40 million in back wages and damages after a WHD investigation found Fair Labor Standards Act violations affecting 700 workers. The company, Holland Services, has filed for bankruptcy.

In November, a federal court in San Francisco ordered telemarketing firm Wellfleet Communications to pay more than $1.4 million in back wages and liquidated damages to more than 1,300 call center workers found by a WHD investigation to have been improperly classified as independent contractors.

There has also been an increasing focus on wage theft by state and local prosecutors. For example, the New York Attorney General, in partnership with the New York City Department of Consumer and Worker Protection, recently announced an agreement with two major home care health agencies to deliver up to $18.8 million in unpaid wages to approximately 12,000 workers who had been denied fair pay for years.

The San Francisco City Attorney announced a $5 million settlement with DoorDash to resolve allegations that it misclassified its delivery drivers as independent contractors to avoid providing required sick leave and that it improperly used tip income to cover their base pay.

Some businesses are paying a price in fines and settlements while others are now having to offer higher wages. One way or another, they are being called to account for years of labor exploitation.

Note: all these cases will be included in the Violation Tracker updated that will be posted later this month.

Populism Real and Ridiculous

Some analyses of Trumpism and Republican populism have claimed to detect a strain of anti-corporate sentiment. It is true that today’s right-wingers are willing to criticize big tech companies for supposedly treating them unfairly, but most of the times the GOP continues to serve the interests of big business.

That was clear during an important hearing just held by the House Judiciary Committee’s subcommittee on antitrust, commercial and administrative law. Subcommittee chair David Cicilline, vice chair Pramila Jayapal, other Democratic members and the witnesses all raised serious questions about the current regulatory system, focusing on issues such as disclosure and social equity.

The Republicans, on the other hand, did their best to change the subject or spoke in favor of less rather than more oversight. Ranking member Ken Buck used his opening remarks to attack “executive overreach” and praise the Trump Administration’s wholesale attack on regulation.

Jim Jordan spent his time attacking what he claimed was a plan by the Justice Department to treat parents critical of school boards as domestic terrorists. One of the witnesses, NAACP climate justice director Jacqueline Patterson, was asked by Dan Bishop whether she was a revolutionary. She was also chastised for a facetious tweet about vaccines. The comments of GOP members on regulation were mainly limited to attacks on “woke bureaucrats.”

Despite these antics, there was a serious exchange between the Democrats and the witnesses on the failures of the current regulatory system. These issues are also addressed in the Stop Corporate Capture Act introduced by Rep. Jayapal. The legislation would create more transparency in rulemaking, reduce corporate influence over the process and create a framework for considering social equity. It would fine companies that lie about the impact of public interest rules. It would also create a Public Advocate to provide for more robust public participation.

It turns the usual discussion on its head. Rejecting the idea of executive overreach, the bill correctly diagnoses the problem as a situation of what one might called regulatory anemia. Agencies are not aggressive enough in tackling serious problems relating to the environment, the workplace and the marketplace. The parties meant to be targeted instead are playing an outsized role in creating the rules. Hence the reference in the bill’s title to regulatory capture.

Jayapal’s proposal is what one might call a populist approach to reforming the regulatory system—one that is not likely to receive support from corporate lobbyists. When they are not simply kicking up dust, Republicans, by contrast, are doing the bidding of big business by continuing the Trump Administration’s drumbeat against regulation.

This is one of those areas in which the conventional labels of U.S. politics continue to baffle me. Why are those working to benefit giant corporations called populist, while those who are seeking to rein in that power called elitist?