PROVINCETOWN — As the cost of living has become increasingly untenable for workers on Cape Cod, many local businesses have had to sign leases on rental properties, or buy properties outright, in order to secure housing for their employees.
But a relatively obscure state regulation mandates how much employers can charge in rent to employees who are paid at or near the state’s minimum wage — and the state’s allowable rent levels have not been revised since 2003.
For employees making minimum wage, employers cannot deduct more than $35 per week for a room occupied by one person, $30 per week for a room occupied by two people, and $25 per week for a room occupied by three or more people.
For employees making more than minimum wage, the rent cannot exceed an amount that, once deducted, would bring their actual wage below $15 per hour.
An employee making $19 per hour and working 40 hours per week, for instance, could not be charged more than $160 per week for housing without bringing her wages below $15 per hour, breaking the minimum wage law. The rule pertains whether or not the rent is deducted directly from the employee’s paycheck or charged separately by her employer.
The regulation, which is administered by the state Dept. of Labor Standards under the Minimum Fair Wages Law, also mandates that the employer provides a written notice to the employee that outlines deduction amounts and provides notice that accepting the lodging is voluntary.
The law is not well known, and several business owners and state Sen. Julian Cyr told the Independent they had not been aware of it.
A slide citing the law, 454 CMR 27.05, was one of 94 presented at a forum in May organized by the U.S. State Dept. and several of the American sponsor agencies that help implement the J-1 visa Summer Work Travel program, which brings hundreds of college students to the Outer Cape to work every summer, most of them from Eastern Europe.
The slide, which had been contributed by the Cape Cod Chamber of Commerce, appeared to be new information to most of the employers in the room and to some of the presenters as well.
State officials and employment lawyers reached by the Independent said that complaints and litigation involving the regulation rarely come up — partly because so few workers know it exists.
One employee who lives in employer-owned housing told the Independent she earned $18 per hour on a 25-hour work week and paid $160 per week for housing: a formula which, according to the law, means she was paid less than minimum wage.
At 25 hours per week, she would have had to have been paid $21.40 per hour to avoid falling below the minimum wage after the housing deduction.
Several employees told the Independent they had no written agreement with the employers they paid for their housing.
Raven Moeslinger, a private-practice labor attorney at the Law Office of Nicholas F. Ortiz in Boston, said that “we don’t see a lot” of cases involving housing deduction violations, “in part because people just don’t know about it.”
The Fair Labor Division of the attorney general’s office, which enforces the regulation, “has limited resources and leans heavily on private plaintiffs to bring cases on their own,” Moeslinger said.
Adam Shafran, an employment lawyer at Rudolph Friedmann in Boston, said that J-1 visa workers are especially unlikely to challenge their employers.
“A lot of J-1 visa employees are very much afraid to speak up,” Shafran said. “They are very worried about taking any kind of action, knowing they are on a visa.”
A spokesperson for the Fair Labor Division said the division does not specifically track or tally deduction-related complaints. Housing deduction violations are lumped together in official counts with other forms of nonpayment, including late payment of wages and wage theft.
According to Fair Labor Division data, there have been 40 wage violation complaints of various kinds filed against Outer Cape businesses since 2018. Nineteen complaints were in Provincetown, three were in Truro, eight were in Wellfleet, and ten were in Eastham.
Renting at a Loss
Several business owners told the Independent that they make little or no money in the housing market and even rent units at a loss. Patrick Patrick, who rents units for employees of his retail store Marine Specialties, said that he charges them less than what he pays.
Sen. Cyr said he had not heard of the regulation before the Independent approached him about it and added that the rent levels permitted in the law — about $100 to $140 per month — did not set employers up for success.
Nicolas Ruggiero, a spokesman for the Mass. Executive Office of Labor and Workforce Development, confirmed that the last increase to the allowable deductions in the law was in 2003.
“There are some real questions about whether this regulation is outdated and whether it needs to be made more current,” Cyr said. “Employers don’t want to be in the business of providing housing for their workers — they’ve been forced into the business because our communities have failed to adequately set aside year-round and seasonal housing.”
Cyr said the regulation could perhaps be revisited through the seasonal communities provisions in the Affordable Homes Act, the state’s recently passed $5-billion housing bond bill.
In addition to offering several immediate policy changes through a seasonal communities designation, including the right to build housing specifically for public employees and artists, the bill provides for a Seasonal Communities Coordinating Council to recommend future policy changes.
“The council could look at myriad issues that are unique to seasonal communities,” Cyr said, adding that the rising need for employer-sponsored housing was one such issue.
“That is far down the road,” however, Cyr said.
