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Broken Record/System: Wage Theft Laws Not Providing Relief to the Millions Affected

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Across the country, legislative and task force initiatives to combat wage theft are not providing enough power to those charged with enforcing standards, putting unscrupulous employers in the position of cat while workers are the mice. The legal system is the block of cheese.

While cracking down on wage theft has gained momentum in the past half decade, flawed bills leave exploitable loopholes for misclassification and wage theft.  Three recent stories from Los Angeles, Iowa, and Virginia highlight the challenge of wage theft rules enforcement, and the even greater hurdles for workers trying to collect when they are granted the right to do so.

California is a problem area, according to the Los Angeles Times.  They featured Jose Luis Cazares and Marina Torres, two workers who were incorrectly paid for more than six years as they worked 11-hour shifts cleaning Regal Theaters.  Five years after they went to the California Labor Commissioner, the duo is still owed more than $83,000 in back wages.  Their former employers simply changed their company name and went right on working as if nothing had happened.   

According to a 2013 UCLA study, this has become par for the course in Los Angeles.  The study examined three years of wage theft claims and found that only 17 percent of workers who prevailed against their employer were able to recover the back wages they were owed.  In just over 60 percent of the cases the employer changed names or transferred assets in order to avoid liability.  Cazares and Torres’ employer did just that, changing their name from Coast to Coast West to NLP Janitorial.  No one lost their job and all of their contracts remained in place.  The only difference is that, according to the California Secretary of State, Coast to Coast West is a suspended business while NLP Janitorial is still active.  The change of names has allowed NLP to avoid paying $1.7 million to 52 workers across the state.

Steps are being taken in California to find new methods for the government to assist workers in getting their due.  Among them is a recently passed bill from Sen. Kevin de Leon, a Los Angeles Democrat who has been on the forefront of the issue.  As we wrote in June, de Leon pushed SB 588 to give the state expanded back wage power:

The bill would grant the state more power to collect back wages.  It would also include a provision forcing employers who fail to pay court-ordered back wages to put up a bond to provide the funds. Those who do not comply would receive liens or be ordered to cease operations.  Business owners’ names would also be included in judgements under the legislation, which would prevent employers from skipping out on back wages by shutting down their company and reincorporating under a different name.

This month the bill passed the State Senate and is currently awaiting action from Governor Jerry Brown.  Upon news of its passage, Wage Justice Center Director, Matthew Sirolly, said the bill is not a panacea for collecting back pay but is nonetheless a major improvement. 

In Iowa, a recent report shows that despite laws on the books preventing wage theft, it remains rampant in low-wage industries.  The Iowa Policy Project shows that nearly one in four low-wage workers has been the victim of wage theft.  According to their survey, which used numbers from 2014, the number one form of wage theft was unpaid overtime.  The survey also found that 20 percent of respondents reported late or unpaid wages and 8 percent reported that they were not paid at all for their work.  

The group’s executive director, Misty Rebik, said in a news release: “This report shows we still need better laws, better enforcement and greater awareness on the part of employees, employers and all policy makers.”

Colin Gordon, a history professor at the University of Iowa and an Iowa Policy Project senior research consultant, added:

“Among state (wage theft) laws, Iowa’s isn’t bad, if we had the enforcement mechanism, if we had more than one-half a (full-time equivalent position) at the wage and hour division.  Not only could we enforce, but we could go out and audit industries and make a lot of progress that way.”

Perhaps workers rights advocates need to manage their expectations. Awareness of the gravity of wage theft in the United States is only now beginning to build. Will demand for more resource to pass and enforce laws grow quickly once the public understands how frequent — and how terrifyingly accepted — wage theft is? If researchers’ estimates of the number of people affected by this plague is accurate, then almost everyone should hope so.


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