A recent posting of mine dealing with the nonimmigrant investors' program carried this headline: "The Worst Alien Worker Programs Are Those Managed by the State Department".
On January 9, a federal court case in Colorado, dealing with another foreign-worker program, for the employment of au pairs, underlined that headline. There is a proposed $65.5 million settlement in a civil suit regarding the financial exploitation of the au pairs who came to the United States in a program — surprise — managed by our diplomats.
The workers who were the alien victims in the first case, were "key employees" in the E-2 investors program; (really cooks and kitchen helpers), while those in the second are child-minders recruited through the State Department's au pair scheme, arriving with J-1 exchange visas. As I noted in the earlier article, the department has absolutely no States-side presence to monitor these programs.
The $65.5 million settlement in this class-action case was not the product of State Department activity, it was something that happened because tort lawyers sued on behalf of the young foreign women. Several au pair middleman organizations signed the agreement, each noting that they were not admitting any wrongdoing.
Au pairs, often from Europe, who live in homes where there are small children, and who are supposed to work no more than 45 hours a week, receive room and board and cash payments. They are supposed to attend school when not taking care of the family's children.
The main issue in the case was the amount of the cash payments. According to a report on the case by Law360:
A group of them [the au pairs] sued more than a dozen different agencies in 2014, claiming the agencies were a cartel that colluded to fix au pair wages at a little more than $4 an hour for a 45-hour workweek, the bare minimum allowed under the Fair Labor Standards Act
The agreement included the payment of $65.5 million and the provision that each of the au pairs and each of the families must be informed, in their own languages, that there is nothing in the au pair program that prevents a negotiation of a higher pay rate than the federal minimum wage.
Caveats. This proposed agreement between the two sides is better than nothing at all for these young women, but it would have been far better had the government intervened early in the process. Here are some of the problems with the settlement:
- The lawyers are asking for 35 percent of the total, and the court may grant that amount;
- This leaves the workers with about $42,575,000 at most, to distribute among some 100,000 au pairs, or about $426 each;
- That low figure may be reduced further given the lawyer's efforts to collect some expenses in addition to the 35 percent;
- The whole process will take, once it is concluded, more than four years, approaching five (as the court still has to evaluate and approve or not approve the settlement); and
- The only concession that I can detect, beyond the payments, is that agencies will not try to prevent the individual au pairs from negotiating a higher rate of pay from the individual families, hardly a major move toward reform.
The problems with this relatively small program (some 17,500 au pairs at any given time) are similar to those of the State Department's much larger Summer Work Travel Program that my colleague Jerry Kammer wrote about a few years ago. Both programs hide the harm they do, to both the exploited aliens and the displaced U.S. workers, by speaking of cultural exchange rather than their negative labor market impacts.
Kammer and I both conclude that the State Department should get out of the cheap-labor business and stick to its foreign affairs tasks.