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by Bob Sloan From the late 19th century into the depression years, Americans struggled economically. For the man and woman on the street to the businesses, companies and manufacturers vainly trying to keep their enterprises afloat, those were difficult times. States strained to overcome the desperate financial situation which held citizens captive as a result of few jobs and even less income or money available for business capital. To partially overcome the public’s lack of – and need for – everyday household, agricultural and other necessary items, many states began allowing their prison systems to put prisoners to work producing products for consumers. Many of those goods were distributed outside the state of manufacture and began to compete with private sector companies, which were already having difficultly finding markets for their products in the slow economy. Legislating Limits on Prison Industry Programs In 1924, the U.S. Secretary of Commerce, Herbert Hoover, held a conference on the “ruinous and unfair competition between prison-made products and free industry and labor” (70 Cong. Rec. S656 (1928)). As a result of that conference, an advisory committee was formed to study the issue. The need for such a committee was in response to complaints from private sector businesses alleging unfair competition from more and more prison-made products finding their way to the marketplace. In 1928, the committee issued its report to Congress. The eventual legislative response to the committee’s report led to some very important federal laws regulating the manufacture, sale and distribution of prison-made products. Congress enacted the Hawes-Cooper Act in 1929, the Ashurst-Sumners Act in 1935 (now known as 18 U.S.C. § 1761(a)), and the Walsh-Healey Act in 1936. Walsh controlled the production of prison-made goods while Ashurst prohibited distribution of prison-made products in interstate transportation or commerce. Both statutes authorized federal criminal prosecutions for violations of state laws enacted pursuant to the Hawes-Cooper Act. The pertinent language of these laws, as amended, now provides: “Whoever knowingly transports in interstate commerce or from any foreign country into the United States any goods, wares, or merchandise manufactured, produced, or mined, wholly or in part by convicts or prisoners, except convicts or prisoners on parole, supervised release, or probation, or in any penal or reformatory institution, shall be fined under this title or imprisoned not more than two years, or both.” Thus, for several decades to come, the manufacture of prisoner-made products for public or private sale and distribution was prohibited. Certain prison industry products were exempted by statute from the Ashurst-Sumners Act, including “agricultural commodities or parts for the repair of farm machinery.” Codified at 18 U.S.C. § 1761, the Prison Industries Enhancement Certification Program (PIECP, or “PIE” as it is commonly called) was implemented in 1979. PIECP relaxed the
restrictions imposed under the Ashurst-Sumners and Walsh-Healey Acts, and allowed for the manufacture, sale and distribution of prisoner-made products across state lines. However, PIECP limited participation in the program to 38 jurisdictions (later increased to 50), and required each to apply to the U.S. Department of Justice for certification. PIECP includes mandatory requirements that must be met prior to receiving certification to participate in prison industry programs. Eligible jurisdictions that apply to take part in PIECP must meet all nine of the following criteria: 1. Legislative authority to involve the private sector in the production and sale of prisonmade goods, and administrative authority to ensure that mandatory program criteria will be met through internal policies and procedures. 2. Legislative authority to pay wages at a rate not less than that paid for similar work in the same locality’s private sector (termed “prevailing wages”). 3. Written assurances that the PIECP program will not result in the displacement of freeworld workers already employed before the program is implemented. 4. Authority to provide worker benefits, including workers’ compensation or its equivalent. 5. Legislative or administrative authority to take deductions not to exceed 80 percent of prisoners’ gross wages for room and board; federal, state and local taxes; allocations for family support pursuant to state statute, court order or agreement of the offender; and contributions of not more than 20 percent but not less than 5 percent of gross wages to any fund established by law to compensate victims of crime. 6. Written assurances that participation by prisoner workers will be voluntary. 7. Written proof of consultation with related organized labor groups before startup of the PIECP program. 8. Written proof of consultation with related local private industry before startup of the PIECP program. 9. Compliance with the National Environmental Policy Act and related federal environmental review requirements. The reasoning behind these stipulations, as mandated by Congress in 18 U.S.C. § 1761, was to allow competition between prison industries and private sector manufacturers. The nine restrictions listed above were intended to “level the playing field.” By making the requirements mandatory, Congress believed they would make prison industries competitive with free-world businesses without giving either an unfair advantage. But PIECP goes even further, by allowing private sector businesses to “partner” with prison industry programs through joint ventures to manufacture products or provide services to the general public. Such partnerships are also required to abide by the nine mandatory requirements. In 1999, the U.S. Department of Justice’s Bureau of Justice Assistance (BJA) issued final guidelines for PIECP programs after allowing all participants to discuss and argue for or against the provisions contained within the guidelines. The mandatory requirements were included in the guidelines and are now the “law of the land” with regard to prison industries and their privatesector business partners. The Fox Guarding the Prison Industry Henhouse
PIECP programs include safeguards to ensure that Congress’ intent regarding the mandatory requirements are followed by all participants, with private sector and prison industries competing on an equal footing. However, as with any situation where free enterprise and capitalism flourish, the pursuit of profits often outstrips rules and regulations designed to prevent abuses. There have been many examples of profiteering at the expense of regulatory compliance – such as with the current meltdown on Wall Street, the Enron and WorldCom scandals, and ponzi schemes like that of Bernie Madoff (which brought down the JEHT Foundation, a major funder of criminal justice programs) [See: PLN, June 2009, p.34]. Both individuals and businesses in pursuit of profit either ignore controlling laws or find loop holes. PIECP is no different. In addition to the usual practice of exploiting free-world workers, corporations now exploit prisoner labor through PIECP programs. In the beginning, small businesses that had trouble hiring or retaining employees due to low wages or fluctuating work schedules solicited partnerships with prison industries. This changed dramatically by the 1990s, when companies such as Wal-Mart, Victoria’s Secret, Boeing, Microsoft, Starbucks and dozens of others joined the ranks of U.S. businesses that benefited from PIECP programs, usually through subcontractors. [See: PLN, April 2009, p.32; March 1997, p.1]. Prisoners are now making more than just license plates and road signs. Oregon’s prison factories are perhaps best known for the “Prison Blues” line of blue jeans and other clothing sold on the open market. Tennessee prisoners have manufactured clothes for Kmart and JC Penney, as well as wooden rocking ponies for Eddie Bauer and, more recently, hardwood flooring. Prisoners in Ohio produced car parts for Honda until the United Auto Workers intervened. Prisoners have been employed in data entry and computer circuit board assembly programs, and have even worked in a TWA call center. Incarcerated workers in Utah make cold-weather clothing for Northern Outfitters, while Arkansas prisoners produce cable assemblies and wire harnesses used in medical equipment. Once private sector companies were allowed to partner with PIECP prison industries to manufacture products and make them available to the general public, they began seeking ways around the program’s mandatory requirements, which were interfering with the corporate goal of generating more profit. In 1995, the BJA outsourced oversight and management of PIECP programs to a nonprofit group, the National Correctional Industries Association (NCIA). The PIECP guidelines are available on NCIA’s website: www.nationalcia.org. The government’s decision to use NCIA to fulfill its oversight responsibilities appeared to be a natural choice. The association was experienced and knowledgeable about prison industry operations, and was already established. The DOJ and BJA issued a handsome government grant to the NCIA to oversee PIECP programs. In the end, however, this proved to be a poor choice that has led to significant abuses. Most of the NCIA’s members are administrators and employees of state prison industry programs and their PIECP private sector partners, vendors and suppliers. The association’s board of directors is almost exclusively composed of prison industry officials. Thus, the NCIA includes the very PIECP participants that it is charged with monitoring; in effect, it is overseeing itself. The BJA requires PIECP partners to be reviewed for compliance with the mandatory requirements prior to starting any new prison industry. Following issuance of a certificate allowing a prison industry to begin operations, the program must be reviewed for continuing compliance. These reviews – initial and annual – are to check the wages being paid to prisoner
workers, to ensure deductions from those wages are used for the purposes allowed under 18 U.S.C. § 1761(c), and to verify that benefits are being provided and local unions and competing private sector businesses are being consulted. Additionally, the NCIA handles complaints related to participating prison industries and their private sector partners. The association is supposed to investigate complaints, determine whether or not the particular industry is in compliance, and, if not, take steps to bring them into compliance. Those are the responsibilities delegated to the NCIA. However, since the association’s board of directors is largely comprised of individuals deeply involved in prison industries, if an allegation of non-compliance is made against a PIECP program, the chances are high that the industry has an employee or administrator sitting on the NCIA’s board who can influence any investigation. Over the past several years the NCIA has stopped performing annual reviews. Instead it reviews participating prison industries on a 24-month cycle, and only about 30% of the industries are reviewed during each cycle. Further, the NCIA has adopted the practice of conducting “desk assessments,” which are reviews of previously-filed documents from PIECP programs by NCIA staff. Unless there are problems noted or unresolved issues from previous reviews, a cursory desk assessment is all that is done to check such programs for compliance. PIECP Prison Industry Violations & Abuses Virtually all of the mandatory requirements for PIECP programs are being ignored or openly violated nationwide. One example involves circumventing the requirement that prisoners be paid prevailing wages, through the use of training periods. Of the 32 jurisdictions currently operating PIE programs, most have reduced “prevailing wages” for incarcerated workers to the state or federal minimum wage. In Florida, for example, Prison Rehabilitative Industries and Diversified Enterprises (PRIDE) uses a “training program” to limit the wages paid to PIECP workers. PRIDE requires prisoners to complete a 480-hour training course (Level I), which pays the Florida minimum wage. Following this training period, the prisoner advances – with small wage increases – through three more levels until reaching Level IV after two years, where he or she “has the potential of making the prevailing wage.” At any time during the four-tiered training program the prisoner can be moved to another position to begin training on different equipment, further extending the training period and keeping wages depressed. This practice allows PRIDE, and other prison industries that follow a similar practice, to use prisoners to manufacture goods at reduced pay for years before they qualify to receive the prevailing wages to which they are entitled for their labor. Consultation with Labor Groups PIECP participants are required to consult with local unions or labor groups prior to starting a prison industry program, to determine if the program will interfere with free-world employment. PRIDE and other prison industries routinely fail to comply with this requirement; instead, they sometimes advertise their intent to start or operate prison industry programs in classified ads in local newspapers.
The requirement to consult with competing private sector businesses is handled in a similar manner. PRIDE notifies the local Chamber of Commerce instead of contacting local competing businesses to get them to sign off on prison industry programs. This puts the responsibility for such contacts and obtaining authorization on the Chamber of Commerce instead of on the prison industry, where it belongs. PIECP requires any business that partners with a prison industry to maintain its freeworld operations in addition to the prison-based program. This is to ensure that employees of the private sector PIECP partner are not replaced by prison labor. The employers/partners are also required to maintain benefits and wages for non-prisoner workers at the same level as before their participation in the prison industry program. In several cases, however, companies have violated this provision without being sanctioned. The requirements for private sector PIECP partners to contact or notify labor unions and competitors and to maintain their non-prison operations are important issues, as demonstrated by the 2008 closure of Lufkin Industries’ trailer division in Lufkin, Texas and the loss of 150 freeworld jobs in Austin, Texas due to prison industry programs, among several other examples. Free-world Job Losses In the mid-1990s, Lockhart Technologies, Inc. partnered with Wackenhut Corrections (now known as GEO Group) to operate an industry program at a Wackenhut prison in Lockhart, Texas, assembling computer and electronic components. Wackenhut built an industrial workspace at the facility and agreed to lease the 25,000 sq. ft. space to Lockhart for $1.00 a year. Once the program was up and running, Lockhart closed its business operation located in nearby Austin, Texas, resulting in the termination of 150 employees. [See: PLN, April 1996, p.1; June 1997, p.1]. Lockhart owner Leonard Hill was candid about his use of prison labor. “Normally when you work in the free world, you have people call in sick, they have car problems, they have family problems. We don’t have that [in prison],” he stated. “The incentive for companies to go into the prisons is pretty clear in some cases,” said Edward Sills, a spokesman for the Texas chapter of the AFL-CIO. “They don’t have to pay all the benefits, in some cases they pay very few of the benefits, that an outside company has to pay in the regular marketplace.” In 2006, Texas Correctional Industries partnered with a private company in a prison industry program that manufactured flatbed trailers at the Michael Unit in Tennessee Colony. The private sector PIECP partner was Direct Trailer and Equipment Company (DTEC), owned by a former Texas prison employee. The Texas Private Sector Prison Industries Oversight Authority had failed to contact local union and labor groups prior to authorizing the operation. They also failed to contact Lufkin Industries or Bright Coop – Texas-based companies that manufactured the same type of trailers as DTEC. Due to those failures, Lufkin and Bright were unaware that they faced a new competitor that was using cut-rate prison labor. With sales falling, Lufkin attributed the loss in business to the bad economy. The company decided to close its trailer division in January 2008; 90 employees were transferred and 60 were let go. An investigation by Lufkin officials exposed the competition from DTEC’s prison industry program. It was further revealed that the trailers manufactured using prison labor were
similar to Lufkin’s trailers but were being sold for as much as $2,000 less, due to DTEC’s reduced operating costs through the PIE program. [See: PLN, Nov. 2008, p.12; April 2009, p.25]. Texas lawmakers, concerned over the loss of jobs in Lufkin’s trailer division, quickly got involved. They discovered that failures by the state’s Private Sector Prison Industries Oversight Authority had led to unfair competition – including prisoners being paid minimum wage with no employee benefits, and DTEC being allowed to lease the industry facility at the Michael Unit for $1.00 a year. Following the Lufkin debacle, Texas legislators passed a bill to correct problems in the state’s PIECP programs (HB1914 / SB1169). Under the new law, the Private Sector Prison Industries Oversight Authority was disbanded and oversight was transferred to the Texas Department of Criminal Justice. The law, which was enacted in 2009, prohibits any PIECP program that would result in the loss of free-world jobs to prisoners. The PIE program with DTEC was discontinued after the company’s contract expired on March 1, 2009 and was not renewed. Texas still operates four PIECP programs, including the manufacture of aluminum windows and AC parts and heating valves. Another PIECP program that resulted in the loss of free-world jobs involved Omega Pacific, a company located in Washington state that produced carabiners and other climbing equipment. In December 1995, Omega Pacific fired 30 employees and moved its operations to the Airway Heights Corrections Center near Spokane. Company owner Bert Atwater lauded the rent-free workspace at the facility and the use of low-cost prison labor, where “the workers are delighted with the pay; [there are] no workers who don’t come in because of rush hour traffic or sick children at home; [and] workers ... don’t take vacations. Where would these guys go on vacation anyway?” [See: PLN, Feb. 2000, p.12; March 1997, p.1]. Also in Washington state, Talon Industries, a company that used water jet technology, was forced out of business in 1999 and had to lay off 23 workers due to competition from MicroJet, a company that participated in a PIECP program at the Monroe Corrections Center. MicroJet was a contractor for Boeing that produced airplane parts. Talon and an industry association sued Washington officials over the illegal use of prison labor under the state constitution, which led to a Washington Supreme Court ruling prohibiting the use of prisoners in private sector industries. However, no damages were awarded and the state constitution was amended by referendum in 2007 to allow prisoners to participate in PIE programs. [See: PLN, Feb. 2009, p.20, 30; Dec. 2004, p.22; Feb. 2000, p.13]. Wanting a Bigger Piece of the PIE From 2002 to 2005, PRIDE operated a food processing industry program (Union Foods) at the Union Correctional Institution in Raiford, Florida. PRIDE partnered with ATL Industries, an Atlanta company. ATL eventually accused PRIDE of improper accounting during a financial dispute; PRIDE countered that ATL owed the agency money, seized all proprietary technology, equipment and products owned by the company, and forced ATL off prison property. The sonin-law of PRIDE’s president then formed two separate companies (Century Meats and Circle A Brands) which took the place of ATL in the prison industry program, using ATL’s equipment and customer contacts. PRIDE and ATL counter-sued each other, and the cases are still pending. See: ATL Industries v. PRIDE, Pinellas County Circuit Court (FL), Case Nos. 05-000696-CI-07 and 05-000797-CI-15.
It was later discovered that PRIDE had performed the same kind of takeover of three other private sector businesses through PIECP partnerships prior to taking over ATL. In each case the agency assumed control over joint venture prison industry programs and put the former partners out of business. The other companies that were taken over by PRIDE included Custom Converter Sales, Value Line Converters and Fresh Nectars, Inc. PRIDE attempted a similar takeover of a fourth partner, Man-Trans, LLC, but the agency reportedly settled with the company and returned its equipment as part of a settlement agreement. The Florida Attorney General’s office held that several spin-off companies created by PRIDE, and owned or operated by PRIDE executives or board members, were in violation of state law. One of those companies, Industries Training Corp. (ITC), which ran PRIDES’ office and administrative operations, received millions of dollars in loans from the agency. In 2004, PRIDE CEO Pamela Jo Davis and president John Bruels were asked to resign, and PRIDE was told to sever its ties with the spin-off companies. Davis also served as president of ITC, which among other businesses owned Northern Outfitters, a company that manufactures extremeweather clothing using prison labor in Utah. Job Training for Lifers? Prison industry programs often hire prisoners serving life or other long-term sentences. This disregards the fact that PIECP is intended to be a “vocational training program” for the purpose of training offenders and making them more employable upon their release. Providing job training to prisoners who have no or little opportunity for parole or release denies such training to other prisoners who will be released and can use the job skills they learn. Another important and serious aspect of using lifers in PIECP or other prison industry programs is the access they have to dangerous tools and materials. Putting offenders with the least to lose in close proximity to saws, knives and other items that could be used as weapons places other prisoners and staff at risk. This was dramatically demonstrated in Florida on June 25, 2008, when a PRIDE prison industry worker attacked and killed Donna Fitzgerald, 50, a guard at the Tomoka Correctional Institution. The weapon used was a “shank” made from sheet metal by prisoner Enoch Hall, who stabbed Fitzgerald 25 times. He has since been charged with first-degree murder. [See: PLN, Nov. 2008, p.50]. An investigation revealed that Hall, who worked as a welder in a PRIDE program, was already serving two life sentences. He had received at least four disciplinary reports for problem behavior prior to Fitzgerald’s murder, but PRIDE pressured the institution to keep him on the job because the agency needed welders. A report by the Critical Incident Response Team found that the prison classification panel that placed prisoners in job positions had been “inappropriately influenced by PRIDE and their production priorities” in retaining Hall as a PRIDE worker. Prison industry programs have a motivation to employ prisoners with life sentences or other lengthy prison terms, because keeping such prisoners in the same job for years results in quicker production by experienced workers, and thus more profit. However, as demonstrated by Fitzgerald’s death, this practice is also dangerous. According to Florida law, 40 percent of prisoners who work in PRIDE programs must be serving sentences of at least ten years. Deductions from Prisoners’ Pay
In terms of prisoner pay, PIECP guidelines allow prison industry programs to take four authorized deductions from the wages of incarcerated workers, up to a maximum of 80% of their total earnings, as follows: “(A) Deductions from gross wages, if made, may be withheld only for the following authorized purposes: “(1) taxes (federal, state, local); (2) in the case of a state prisoner, reasonable charges for room and board as determined by regulations issued by the Chief State Correctional Officer; (3) allocations for support of family pursuant to state statute, court order, or agreement by the offender; and (4) contributions of not more than 20 percent, but not less than 5 percent of gross wages to any fund established by law to compensate the victims of crime.” The BJA says that it maintains jurisdiction and authority over wage deductions to ensure that participating prison industries use the deductions for the purposes stated in the guidelines. In the case of room and board deductions, the funds withheld from prisoners’ wages are intended to offset taxpayer expenditures for the cost of incarceration. PRIDE decided to take allowable deductions from the wages of incarcerated workers in PIE industry programs. However, the agency diverted more than $3 million in “room and board” deductions to offset PIECP operations and program costs – not to reimburse the state or the Florida Department of Corrections for costs of incarceration. A similar situation was recently reported in Iowa, involving wages for prisoners in a private sector industry program at the North Central Correctional Facility in Rockwell City. According to a November 7, 2009 news report, “Inmates were paid less than people in similar jobs who are from outside the correctional institution.” The industry program involved work at local grain elevators. Non-prison workers received $10.00 per hour for their labor. However, prisoners who performed similar job duties were paid $6.15 an hour. The $3.85 wage difference was due to an “up-front deduction” for transportation, supervision costs and work-related materials such as work clothes. This was permissible according to North Central Correctional Facility Warden Jim McKinney, who said the problem was one of “misinterpretation, or difference of interpretation.” A report by the state auditor found that the wage deductions were not being placed in the state’s general fund as required by law. What is a Prevailing Wage? Although PIECP workers are supposed to receive prevailing wages for work comparable to that of free-world employees, this is rarely the case. In fact, the BJA determined in 2006 that wages for prisoners in PIECP programs “must be set at or above the 10th percentile as defined by the State Department of Economic Security agency.” The 10th percentile is the point at which 10% of workers earned below that amount and 90% earned more. In other words, starting wages for prisoners in PIE programs begin at an amount earned by the lowest-paid 10% of comparable free-world employees, but not less than minimum wage. Further, prisoners who participate in PIE programs are only entitled to receive minimum or prevailing wages if they are engaged in production work. In some cases, PIECP programs have classified prison industry jobs as “service” rather than production positions, which means
minimum wage is not required. For example, a PIE program at the South Central Correctional Facility in Tennessee made T-shirts for Taco Bell among other customers. Prisoners who printed the T-shirts received minimum wage while those who packaged the shirts for shipping – labor classified as service rather than production work – were paid $.50 per hour. According to an October 2008 NCIA report on PIECP compliance assessments, “wages were the single most difficult requirement for PIECP Certificate Holders to implement.” The report noted that six of the 28 jurisdictions assessed had “wage issues of some kind,” though that was “considerably less than in the previous assessment cycle.” Most of those problems were considered significant; three were “serious enough to involve the potential payment of back wages.” The report stated that “PIECP managers tend to try to hold wages at or near the minimum wage, sometimes for very long periods of time. They argue that their ability to attract PIECP partners depends upon keeping wages low. ... The result is that many PIECP inmate workers never achieve wage levels significantly above the minimum wage, despite the 10th percentile requirement.” Additionally, “two jurisdictions were found to be deducting from the inmates’ gross pay for items other than the four deductions allowed under the PIECP statute.” The report concluded that assessors had discovered “instances of major non-compliance in eight jurisdictions, which is roughly 25% of the jurisdictions assessed.” Those findings are likely optimistic, as the NCIA report frankly acknowledged that “no independent observers were used” in the assessments, “no assessor training was provided,” a majority of the findings relied on “desk assessments” rather than “on-site assessments where an assessor ... observed the operation first-hand,” and much of the information relied upon by the assessors was provided by the PIECP program members themselves. Private Sector Corporate Abuses of PIECP In the 1990s, a Delaware corporation, U.S. Technologies, Inc., decided to capitalize on PIE programs by using prison labor nationwide to create products for various businesses and manufacturers. According to its SEC filings, “Historically, the Company has been engaged, directly and through its wholly owned subsidiary UST Industries, Inc. (‘UST’), in the operation of industrial facilities located within both private and state prisons, which are staffed principally with prison labor. UST’s prison-based operations are conducted under the guidelines of the 1979 Prison Industry Enhancement (‘PIE’) program.” As described above, U.S. Technologies, through its subsidiary UST – previously known as Lockhart Technologies – partnered with Wackenhut Corrections to operate a prison industry program at a facility in Lockhart, Texas, resulting in the loss of 150 free-world jobs. In 2004, the SEC charged U.S. Technologies’ chairman, C. Gregory Earls, with securities and wire fraud and misappropriation of investors’ funds totaling $13.8 million. He was sentenced in 2005 to 125 months in federal prison, and U.S. Technologies was de-registered as a publicly traded firm as part of a settlement with the SEC. The company’s subsidiary, UST, went out of business in 2003 as a result of tax forfeiture. Once the UST / Lockhart Technologies industry program shut down at the Wackenhut prison in Lockhart, Texas, another operation moved in: OnShore Resources, Inc. OnShore apparently took over where UST left off, even using the same address. The company partnered with Wackenhut to use prison labor to manufacture wiring harnesses and related products – the
same type of goods produced by UST. OnShore advertises itself as a minority-owned company that operates as a “PIECP participant.” See: www.onshore-resources.com. OnShore uses its PIECP program as a tool to attract other businesses. The company’s “product” is basically prisoner labor, and it provides that labor source to other manufacturers regardless of the goods being produced. This is nothing less than a thinly-veiled prison labor “brokerage service” that offers the benefits of PIE programs to other companies that want to save money by using incarcerated workers. As previously reported in PLN, in 2002 the California Dept. of Corrections and Rehabilitation (CDCR) and CMT Blues, a CDCR joint venture industry partner, were sued for underpaying prisoners. Seventy prisoners at the R.J. Donovan Correctional Facility who made Tshirts for private sector companies filed a class-action suit, claiming they were not paid during a 30-day training period, did not receive overtime pay and were not paid prevailing wages, in violation of state labor laws. They were paid the state minimum wage of $6.75 per hour, while prevailing free-world wages were $8.37 to $13.55 an hour. CMT Blues was also accused of “directing inmates to remove and replace ‘Made in Honduras’ labels [on T-shirts] with others reading ‘Made in the USA.’” [See: PLN, July 1998, p.17]. The prisoners’ lawsuit was later joined by a private citizen, Cristina Vasquez, vicepresident of UNITE, an organized labor group. CMT counter-sued the CDCR, complaining that it was misled by the department’s promises of cheap prison labor. Two other CDCR joint venture industry partners, Western Manufacturing and Pub Brewing, also were accused of shorting the wages of prisoner workers. The Superior Court found that CMT Blues had engaged in unlawful and unfair business practices, and awarded $841,188.44 in back pay and damages to 167 prisoners plus $435,000 in attorney fees and $65,000 in costs. [See: PLN, Dec. 2004, p.16; Oct. 2003, p.26; Dec. 2002, p.16]. Vasquez’s claim resulted in a stipulated injunction with the CDCR, and the court awarded her $1.25 million in attorney fees. The injunction required the state to obtain wage plans and duty statements from each joint venture partner, to comply with all record-keeping requirements, to provide payroll data to Vasquez’s attorneys, to identify comparable private sector wages, to require joint venture employers to notify prisoners of their rights under state labor laws, to establish wage-related grievance procedures for prisoners, to require joint venture partners to post bonds to secure payment of wages, to notify the court and Vasquez’s counsel of defaults in wage payments, and to take reasonable steps to collect overdue wages. However, the CDCR repeatedly failed to comply with the injunction, and appealed the fee award. [See: PLN, March 2008, p.18]. On November 20, 2008, the California Supreme Court upheld the award of attorney fees under the state’s private attorney general statute (Code Civ. Proc. § 1021.5), rejecting the state’s argument that plaintiffs must first attempt to settle “before resorting to litigation” under § 1021.5. See: Vasquez v. State of California, 195 P.3d 1049, 45 Cal. 4th 243 (Cal. 2008), modified with no change in judgment, 2008 Cal. LEXIS 13923. While the California Prison Industry Authority still operates private sector joint venture programs, CMT Blues, Western Manufacturing and Pub Brewing are no longer partners. Why Everyone Should be Concerned
There is no question that products manufactured using prison labor cost less to make than comparable products produced by private sector businesses. But at what cost to consumers and to free-world competitors and their employees? This involves considerations beyond what is fair for incarcerated workers, and weighs the benefits of employing prisoners in PIECP programs, ostensibly as a means of job training, against the impact on free-world businesses and the loss of private sector jobs. Since 1999, PIE programs have expanded considerably; there are now 42 participating state or county agencies. In Florida alone, PRIDE currently operates eleven PIECP industries. Companies that seek profits at any cost have adopted prison industry programs as a way to fight economic downturns, staffing problems and competitor pricing. By partnering with PIE programs that use inexpensive prison labor they can significantly boost their bottom lines. Many prison industries offer the use of prison-based workspace at nominal cost, and incarcerated workers receive no employee benefits such as vacations or health insurance. This clearly gives prison industries and their PIECP partners a considerable advantage over private sector competitors. Most free-world businesses have to provide prevailing wages, vacations, paid holidays and other benefits to their employees. They must pay to lease or buy manufacturing space, and have to deal with employee turnover or transient workforces. The evolution of PIECP from 1979 to the present has changed the program entirely, allowing it to be corrupted to a point where it is hardly recognizable as the beneficial program that was intended in the original legislation. PIECP participants now look not to prisoner job training as a goal, but rather profit. The merger of private sector enterprise with prison labor has resulted in huge profit margins for a select few companies and businesses. Prison-made goods are routinely being sold to the general public on the open market, where such products were previously prohibited. There have been repeated examples of free-world job losses due to prison industry programs. Although PIECP requires that no private sector jobs be sacrificed as a result of prison labor, that restriction is limited to the immediate locality and in any event is not enforced by the BJA or NCIA. There are no statistics that clearly show the number of free-world jobs lost to PIECP programs. The BJA does not keep or provide such statistics. The NCIA has no idea, and prison industry operators will only claim that no jobs have been lost in their “locality” due to prison labor. Although only a small number of prisoners are involved in PIECP industry programs – approximately 4,700 nationwide – the impact on free-world businesses in terms of competition, lost or foregone private sector jobs, and depressed wages can be significant. “Prison labor is one thing,” said Phil Neuenfeldt, secretary-treasurer for the Wisconsin State AFL-CIO. “But prison labor that provides unfair labor to the outside world and keeps pressure on wages downward is not a good thing.” The solution to safeguarding private sector jobs while keeping PIECP programs from unfairly competing with free-world businesses is simple. Start by firmly enforcing the existing mandatory requirements of 18 U.S.C. § 1761 and the PIECP guidelines. The laws are in place and need only be applied. Abiding by these requirements would reduce the possibility of prison industry unfairly competing with private manufacturers or businesses. This includes ensuring that prisoners in PIECP programs are paid true prevailing wages. The most important part of any solution would be the removal of oversight and review responsibilities from the NCIA. The NCIA has repeatedly shown that its agenda is at odds with the legal requirements and statutory intent of the PIECP. Continuing to allow prison industry
administrators and employees, and their private sector partners, vendors and suppliers to be the only regulatory authority over PIE programs is ineffective and insufficient, and reeks of conflict of interest. The Department of Justice’s BJA needs to resume its responsibility to oversee PIECP programs. Enforcement and regulation at the federal level is not only needed but should be required. Until such solutions are adopted, PIECP industries will continue to operate with impunity and to the detriment of everyone affected – except, of course, the companies that are raking in money hand over fist as they exploit cheap prisoner labor. Bob Sloan is an independent Prison Industries Consultant dedicated to reducing the number of private sector jobs lost to prison industries. He has worked with state and federal authorities for seven years to enforce PIECP requirements regarding prevailing wages and to identify improper sales of prison-made goods. A former prisoner who worked in a PIE program in Florida, he has been instrumental in bringing about investigations into PIECP abuses nationwide. For more information: www.piecp-violations.com.
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