Summary: The Subsidized Unfair Wages Act is designed to discourage large employers from paying poverty-level wages by imposing upon them a surtax that reimburses the state and local governments for approximately the amount that those governments pay for social services for the employees of those businesses—the services that make those low wages possible.
SECTION 1. SHORT TITLE
This Act shall be called the “Subsidized Unfair Wages Act.”
SECTION 2. FINDINGS AND PURPOSE
(A) FINDINGS—The legislature finds that:
1. Some large employers are paying many of their employees so little in wages and benefits that they and their families qualify for public assistance programs such as Medicaid, [TANF, SNAP, free school lunches, housing assistance and low income tax credits].
2. These government subsidies directly enable the companies to pay poverty wages. State and local governments are, in effect, helping to keep wages artificially low.
3. While the state should not be enabling any business to pay unfairly low wages, it is most practical and cost-efficient to focus on large employers.
(B) PURPOSE—This legislation is enacted to safeguard the public welfare, health, safety and prosperity of residents by encouraging fundamental fairness for both employees and for state and local governments.
SECTION 3. SUBSIDIZED LOW WAGES
After section XXX, the following new section XXX shall be inserted:
1. “Family” means spouses, children and other dependents as defined by the Internal Revenue Code at 26 U.S.C. Section 152 who reside in the same household as an employee or for whom the employee is obligated to pay financial support.
2. “Full-time employee” means an employee scheduled to work 35 or more hours per week.
3. “Large employer” means a for-profit or nonprofit corporation that employs more than the 1,000 full-time employees within the state. For purposes of the definition of large employer:
(a) two part-time employees count as one full-time employee; and
(b) for individuals who work on the premises of the employer and are employees of companies that contract with the employer, those individuals also count as employees.
4. “Part-time employee” means an employee scheduled to work less than 35 hours per week, whether such worker is employed in a career position or is a temporary worker.
5. “Social services” means [list government social services programs, like Medicaid, here]. “Social services” shall additionally include similar programs that are adopted by rule by the [Controller].
1. Every large employer shall pay an annual surtax to the state which is equivalent to the amount that the state, state agencies, and the state’s local subdivisions are estimated to pay in social services for that employer’s employees and the employees’ families. For a part-time employee, the surtax shall be proportional to the amount of hours the part-time employee works compared to the average for the employer’s full-time employees.
2. By October 1 of each year, the [Controller] shall make its estimate based upon information available from that and prior years. Companies may voluntarily provide information to the [Controller] that is relevant to this computation. The [Controller] estimate shall not be challenged in court except by showing that it was grossly or willfully unfair to the company.
(C) NO RETRIBUTION
1. If the [Controller] finds that a company outsources jobs previously done by employees after the enactment of this act, the [Controller] shall count the outsourced contract workers as if there were employees for purposes of this surtax.
2. If the [Controller] finds that a company discourages employees from applying for social services of any type, the Comptroller shall increase the surtax for that year by 50 percent over the amount for which employees would have been expected to apply without employer discouragement.
The [Controller] shall promulgate appropriate guidelines or rules for implementation and enforcement of this section.
SECTION 4. EFFECTIVE DATE
This Act shall take on July 1, 20XX and the surtax shall take effect for taxable years beginning on or after January 1, 20XX.