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With minimum wage on the rise, labor leaders focus on wage theft

After a year of fighting to raise the minimum wage, labor leaders in Southern California want to make sure that workers who earn it ultimately see it in their paychecks. It's a tall order in the Los Angeles area, often called the "wage theft capitol of the U.S."

"There's lots of victims in wage theft," says David Huerta, President of the SEIU United Service Workers West. "In a moment when we’re trying to fight for not just immigrant rights, we’re fighting for economic rights, we’re fighting for civil rights. This issue is front and center for the community as a whole." 

Los Angeles is a progressive city, where labor unions have considerable power. But it's also a city with many low-wage, small-margin industries and immigrants willing to take the jobs they can find. So the wage theft riddle is hard to solve.

In the shadows and under the table, a garment industry worker might be paid by the "piece" at a rate that could never add up to the hourly minimum wage, or a husband and wife might clean buildings together but only earn the pay of one worker.

"With a rising minimum wage, especially with exotic pay systems, the wage theft issue will only grow," says John De Leon, a deputy who works in the field enforcement unit in the California Labor Commissioner's Los Angeles office.

Researchers from the UCLA Labor Center estimate $26 million is lost to wage theft each week in Los Angeles. 

Tia Koonse, legal and policy manager at the UCLA Labor Center, says Los Angeles can't shake the "wage theft capitol" title because the city is home to the highest number of people who perform low-wage occupations, like car wash workers, domestics, day laborers, restaurant workers, and janitors. L.A. has more of these workers than any other U.S. city.

"Because it is so widespread, it is important that we have a solution for all industries," Koonse told KPCC. 

Georgina Hernandez says she worked 12 hours a night, seven nights a week and was paid just $300 every two weeks. Hernandez cleaned movie theaters and venues like L.A. Live.  She wasn't directly employed by the movie theater chain or by L.A. Live, but by a contractor called Coast to Coast.  

"No overtime, no break. No lunch. Nada," Hernandez says. "When I asked about overtime, the manager said I was crazy," she said in Spanish, explaining that she had to keep doing the job to provide for her children.  

Her advocate, Lilia Garcia Brower, says in the janitorial services sector, wage theft happens in well-known retailers, supermarket chains and movie theater chains, but the venue is contracting with a prime contractor who might even hire a subcontractor. 

"That subcontracting level can be as many as two or three tiers down to the individual who actually physically hires the janitor," says Garcia Brower, the executive director of the Maintenance Cooperation Trust Fund, a janitorial watchdog group.  

Georgina Hernandez and her co-workers eventually filed a complaint with the California Labor Commissioner. It took years to pursue, but in May of 2014, the Labor Commissioner cited Coast to Coast West and NLP Janitorial for $1.7 million.  Those companies are challenging the judgment. The news release issued by the Labor Commissioner explains that the two companies provided cleaning services to a list of well known places: Pacific Palms Conference Resort and Hylands Inn by Carmel; the Regal, Regency, Edwards, Galaxy, and Mann theater chains, the LA Live complex; as well as the Red Robin, Pei Wei and The Counter restaurants. 

In Los Angeles County, wage-theft complaints usually begin in the State Labor Commissioner’s office in downtown Los Angeles. There is usually a line of people waiting to file  a wage-theft complaint. Deputy John De Leon said there are three offices in the L.A. County area, but downtown's is the farthest east and is responsible for an area that stretches all the way to the San Bernardino County line.   He didn't want to say how many c0-workers he had in the field investigation unit out of fear of further emboldening rogue employers. The complaint process is tedious, requiring documenting hours worked and not compensated, meal and rest breaks - or lack thereof - on spreadsheets.

"The work is sitting in front of the computer trying to get the numbers right," said De Leon, adding that he had 40 open cases in his load. "It’s a pile of numbers and spreadsheets and a person there who is struggling to pay rent or who has kids, who needs to put food on the table, so there is a pressure to get it done."

Once it does get done, and an employer gets cited, the chances of the workers seeing any back wages are remote. Another staggering finding from the UCLA Labor Center: 83 percent of workers who hold a court-ordered claim to receive their back wages never collect a dime. Lilia Garcia Brower says in 16 years, her group has helped workers win $65 million in back wages, but has only collected half that amount. 

By the time the judgment comes, she says, the company has changed its name or transferred assets  to someone else, and now they’re operating under a different name,  "so that judgement that we’ve won doesn’t have any weight to the new operation." 

Tia Koonse of the UCLA Labor Center says the multiple name changes to evade a judgment are often comical:  "It’s like 'AAA Contracting...AAA Contracting Company Inc., AAA, LLC and Bros.'" she says. "It’s the same bad actors, the same bad invidual, and it just costs 300 dollars to register a new business." 

State Senator Kevin de León  - no relation to the investigator  - is moving a billthrough the legislature to give California's wage laws more strength, and give the Labor Commissioner more power to collect on judgments against violators.

"The vast majority of businesses do not violate labor laws.  You do have some bad apples that are giving others a bad name," Senator de León says. "They themselves have an unfair competitive advantage over others that are doing the right thing."

This language in his bill helps to address the name-change problem: 

 The bill, which could wind up on the Governor's desk this month, would also require an employer with a judgment to post bond in order to continuing doing business.  

The labor community is putting its muscle behind the bill and behind efforts to create wage enforcement offices  in Los Angeles City and County. John De Leon, the Deputy Labor Commissioner welcomes the help.

"Even if we had infinite resources, we couldn’t be everywhere in every business to combat this problem," he  told KPCC.  "There really needs to be a partnership with the public at large."