How low-wage workers are robbed of their wages and employers are getting away with it
* Denotes name change
I met *Roberto last month standing on the pavement near a crowded parking lot. He was muscular, clean-shaven and possibly middle-aged – it was hard to tell because he wore a blue baseball cap that matched the sky. His face was calm, almost stoic, and bore parenthesis-like creases on the sides of his mouth, either a sign of age or hard work (or both). I asked him to share his story with me, and he replied almost jokingly. “It’s a really sad story…” he trailed off. “So, so sad.”
He was being silly, but his words had some irony. His life was no stroll through the park. Roberto began his story as most stories begin, with his place of origin: Mexico City, where he worked as a bartender. “I miss drinking,” he said. “Don’t miss the work.” Roberto’s job wasn’t paying the bills, nor was it helping him provide for his two kids. In 2004, he left for Tijuana to try and go into California. Roberto said that if you cross into New Mexico or other states, authorities consider you a delinquent and give you jail time, but getting caught crossing into California would just mean getting sent back. Several times he was caught by ICE, which would send him to Tamaulipas, a city near Florida. On the other side of the border from ICE was a greater threat: Los Zetas, the most violent mafia in Mexico. Roberto said Los Zetas make the El Chapos look polite: unlike El Chapos, Los Zetas will kill anyone and demand payment equivalent to $300 to cross.
After failed attempts to cross, Roberto ran into a friend who helped him cross. Together, they walked for three weeks. “No food, just water,” Roberto said. “We drink everyday water, water, water.” They eventually came to a church, and Roberto said “some white people” gave them a ride to San Diego. There, Roberto called up a family friend to pick him up and take him to his home in El Cajon, San Diego. Roberto stayed there for 15 days eating, sleeping and recuperating. Once fully recovered, Roberto left to East Los Angeles for four months, washing dogs for a living and getting paid $9 an hour — in cash— for an eight-hour workday.
When work ran out, he went to Chino Hills and found work at a restaurant as a dishwasher. Roberto said his employer would “mistreat [him] mentally” and “psychologically abuse” him. There, he worked 12 to 14 hours every day with no breaks, no lunch. Sometimes he’d get Mondays off.
“They give us place to sleep and they would pay us by month,” said Roberto in Spanish through a translator. He was paid $1,400 a month. “Cash every time,” Roberto manages to say in English.
Anywhere from $60 billion to $140 billion annually is generated in the California “underground economy”, where employers’ practices bypass regulatory requirements, deal in cash, withhold wages, hide deductions or commit other abuses against unsuspecting employees.
Many like Roberto are not aware they are not supposed to work more than eight hours a day without getting overtime. These employers know that and prey on immigrants and economically disadvantaged workers, like Roberto, who are the most vulnerable members of society.
Without rights for undocumented workers, employers would be more inclined to hire undocumented workers to exploit them and use them against other workers. “If undocumented workers had no labor rights you’d see a further deterioration of what we have now,” said Victor Narro, project director of the UCLA Labor Center. “It impacts the native born worker and workers who do have work authorization in the same workplace because once you bring down the standard for a group of workers it brings down the standard for all the workers.”
“It’s been hard to get immigration reform,” said Narro. “Every time it comes up [in congress] we see what happens right? The debate becomes very ugly. It transforms to a very hateful debate.”
To Narro, 11 million undocumented people living in the U.S. means 11 million are vulnerable to exploitation.
“If you legalize these workers you’re not going to automatically improve their working conditions but at least you give them a legal entry to the labor market. To give them a better situation from which they can enforce their labor rights.”
For many years, Narro said the country has been trying to get immigration reform through Congress. President Obama issued two executive orders to that would have granted work authorization for an estimated 5 million undocumented immigrants, so almost half of the undocumented immigrants in the country would have benefitted from work permits.
That ruling, the DAPA/DACA challenge, now stands before the Supreme Court.
“Wage theft capital”
Studies by the UCLA Labor Center show violations in LA County amount to $26 million per week or $1.4 billion annually. This is more than twice that of New York City or Chicago, deeming LA as the “wage theft capital of the country.” Approximately 750,000 workers, or 17 percent of all workers, work for low-wages. Two-thirds of those workers frequently experience wage theft and workplace violations, including tip stealing and employer retaliation. A report by the UCLA Labor Center found there are over 650,000 violations per week in the country alone.
Many say the state’s lax enforcement fuels the growth of this sector.
“There are too many cases for [the state] to handle so that’s why [enforcement] has been really ineffective here in LA,” said Veronica Federovsky, the west coast coordinator of the National Day Laborers Organizing Network. “That’s why workers don’t go to the Labor Commissioner anymore, or they’re really frustrated because when they do it takes years. They don’t see the money sometimes.”
A study by the National Employment Law Project and the UCLA Labor Center reported that 83 percent of workers in California who win their wage theft case don’t recover their unpaid wages.
There are two main pitfalls in the system that allow for unscrupulous employers to escape paying a judgment: they can transfer their assets or create dummy corporations.
Liens, inherently passive, serve as placeholders to discourage or practically prevent the transfer of assets to the detriment of creditors, according to Yee.
Where Wisconsin uses broad wage lien laws (essentially prejudgment liens) that place a temporary hold on the employer’s property so during the legal proceeding employers are deterred from transferring their assets to a “paper corporation” or to relatives, California law under Senate Bill 588 gives the Labor Commissioner the power to issue a lien and a stop order but only hinders the transfer of assets post-judgment.
SB 588, effective January, applies to employers who have already lost a legal proceeding. If the employers fail to post a bond, the Labor Commissioner is supposed to issue a stop order. If and when the employers do not obey the order, the Labor Commissioner is supposed to issue liens. With such steps that must be taken with a government agency with limited resources, there’s not much guarantee that the stop orders will be put in place, said Jay Shin, a senior staff attorney at the Wage Justice Center. According to Yee, liens can also be filed after the decision for liability is made – before a stop order and after a hearing officer’s decision stands (after 15 days to appeal to superior court). If worker is found to be owed money and the appeal expires, the decision stands and liens are filed.
Yet an employee with the tool of a prejudgment lien is almost guaranteed to collect: the effects of having a broader, more general wage lien can be seen in Wisconsin, where about 80 percent of the workers who prevail with unpaid wages collect something, which is almost the inverse of California where 83 percent go empty-handed.
California legislators have proposed laws similar to Wisconsin’s pre-judgment liens, but these bills have not been made into law. Why did California settle with SB 588 and not a lien such as Wisconsin’s? Shin said it is a simple values question.
“On one hand the value is to put rightfully earned wages into the workers’ hands and the other is to protect property interests and I think the California legislators valued the latter,” said Shin.
The second complication with collecting wages is that employers can create dummy corporations by the time the judgment is issued and a sheriff is called to collect payment. When employers create dummy corporations, the Labor Commissioner has to go through a legal proceeding to prove that the old corporation is the same as the new, or A equals B. Shin said it sounds very easy on paper, but having to prove A equals B can take another two years of litigation.
These two loopholes are why employers don’t feel pressured to pay their employers.
“You straight up have employers who say, ‘I’m not going to pay them. Take me to court,’” said Andy Baldenegro, a day labor coordinator and organizer for Central American Resource Center, also called CARECEN, in Los Angeles. “They don’t really care and that’s usually because it’ll be an employer that has had wage theft cases before and they understand how the system works.”
The enforcement is just not there. And employers know it.
Even though it’s bad, it’s better here
If you steal from a shop, you go to jail. But if you cheat your workers from their wages, you’re likely to get away with it. Are both crimes equally as offensive? Baldenegro said she doesn’t think many employers see it that way. Baldenegro works everyday at CARECEN’s day laborer center on Wilshire Boulevard in LA. She’s responsible for the day-to-day opening and running the center and provides referrals if the day laborers at the center need more resources, such as going to the dentist or getting their eyes checked. It’s her job to help them find resources for low-cost services. CARECEN provides some of these resources, such as consultations in immigration law in a nearby office on Seventh and Hoover.
She’s also there to see these workers are getting their wages, and is the go-between for both parties. Baldenegro said employers who frequently ask for workers are homeowners and unfortunately, shady contractors, and that wage theft is prevalent. “We see that a lot of times [contractors will] lie,” said Baldenegro. “They don’t pay them. They’ll give false information and end up disconnecting their phone numbers. Stuff like that.”
Jose Abraham Martinez is a day laborer in Los Angeles who finds work through CARECEN and gets paid gardening, cutting grass and cleaning houses.
“Sometimes when I go to work for employers, they don’t have the intention of paying,” said Martinez in Spanish through an interpreter. “I would wish to tell them that they need to be honest [when] they tell me they’re gonna pay because I live off these wages.”
According to California law, workers must be paid a minimum of $9 an hour and overtime at a wage rate of 150 percent of the regular hourly rate for hours that exceed eight hours a day or more than 40 hours a week. Yet, Martinez has worked up to 10 hours in a day without getting paid overtime. Aside from paying rent, cell phone, gas and car maintenance bills, he sends money to his family in El Salvador every month. Martinez has two daughters and a son with his ex wife in El Salvador, and is paying for his eldest daughter’s university tuition.
“It’s not enough money,” he said. “Part of it is because I don’t have work every single day.”
Sometimes, Martinez receives a bad check, and other times, he’s not paid at all. One of Martinez’s recent employers is a contractor who hasn’t paid him all his wages for work he’s done since January.
“The excuse is almost the same with many contractors, said Baldenegro. ‘“I don’t have the money yet, you need to wait for a couple of days.’” Martinez has lost many job opportunities just waiting for the employer to call so he can make sure he’s available to meet him and collect his wages. Initially, the contractor owed Martinez $800.
“I had to call [the contractor] several times and try to be nice so he can pay [Martinez] his money,” said Baldenegro. The contractor still owes Martinez $250.
CARECEN partners with the Los Angeles Coalition Against Wage Theft, which has fought for 10 years to end the illegal practice of wage theft. Violations are most rampant in the agriculture, garment, car wash, janitorial, restaurant, fast food, retail and household and construction industries. Each industry has its own set of problems. For instance, restaurant workers suffer more from meal and rest break violations.
“Our problem in particular with wage theft is that employers are not paying our workers at all,” said Baldenegro.
Life in El Salvador was good at first. Martinez had his own mechanic shop. He said he came to the U.S. to give his kids a better life, though his dream is to go back to El Salvador where he can open up shop again. But reality stands in the way. “I might not be able to realize that dream because of the violence in El Salvador,” said Martinez, who wants to bring his oldest daughter for her own safety. Violence there dates back at least four decades between a Marxist guerrilla movement and the country’s conservative government, and according to police statistics in 2016, 23 people die there everyday. Tens of thousands of Salvadorans have fled to the United States and other countries seeking refuge.
Eleven years ago, Martinez was approached by gangs that scared away his customers and wanted payments for having his shop there. Although he has escaped much violence, he is not worry-free here in America. His new dream is freedom from fear.
“I want to be able to have documentation to work in peace and not work in fear,” he said. “That’s the most important thing to me.”
Getting access to justice
Although wage theft affects people of all industries, white and blue-collar, there is a particular disadvantage to being a worker in a low-wage industry. Not having access to more resources means less avenues and less access to justice.
“We have a lot of great laws on the books, but the fact is that our staffing level is not nearly enough to represent all the people in California who can’t afford a private lawyer who need one,” said Matthew DeCarolis, a Bet Tzedek staff attorney.
At Bet Tzedek, DeCarolis and the staff rely on the help of volunteer law students, volunteer attorneys and paralegals to provide free, expert legal advice and representation to low-income LA residents. From 2006 to 2009, Bet Tzedek Legal Services worked on 570 employment cases. On any given day, there were five to 12 people who come to their office. Many of his clients come from smaller workplaces with referrals from CARECEN. Many that come are also no longer working for the employer who didn’t pay, often because they were afraid of speaking up.
Many cases DeCarolis handles involve filing a claim with the Labor Commissioner’s Office. Though workers could file such claims on their own, Baldenegro said workers at CARECEN prefer to have an attorney look at their case, feeling they’d have someone fighting for them and having a better chance of getting their rights asserted. Many workers are often ill-informed about what the state can do.
“I think what people don’t understand is due process,” said Melvin Yee, a deputy labor commissioner at the Wage Claim Adjudication Unit. A lot of times people will expect that he can just go out there and enforce payment. Yee said when they’re presented with a long technical explanation, all they can hear is government is not helping them.
“That’s not the case,” Yee said. “I have to take the delegation of powers very seriously.” If he is not able to assist the person, he makes sure to give them a referral or provide them with the information they need to move forward.
But after workers are done with the process, how do they enforce the judgment to recover wages? Prior to 2012, before the Wage Justice Center made a public bid with the Labor Commissioner’s Office, the two avenues workers could go through were either the Franchise Tax Board or private attorneys.
Kyle Todd, a private immigration and employment law attorney, has taken on many of these cases in civil court. His clients are documented and undocumented and mostly white, black or Latino. With almost every case, Todd starts with a demand letter and if the employer is not responsive, he will file a case in court. He discovered that to get a fair or decent settlement, he has to push towards trial.
“I really show them that we’re serious about taking it to trial so usually with that in mind we settle late in the game, closer to trial because they see that we’re serious,” said Todd. “I think the whole system is anti-worker inherently.”
A number of corporations have surfaced in the news with lawsuits and complaints alleging large-scale wage theft. In 2014, McDonald’s and several of its franchise operators erased timecards, denied overtime and had their workers work off the clock. Last year, workers at Papa John’s franchises in New York were awarded $500,000 in wage theft settlements. Last month, Kroger was sued by three former workers charging the supermarket giant with illegally classifying them as exempt employees ineligible for overtime.
“With bigger companies, I think most of them in California at this point have the employers practice liability insurance, which ensures against lawsuits,” said Todd. As a result these companies have a half million or million dollar policy that applies to the claim, something he has to keep in mind when making a demand. In these cases, Todd said it is the employer’s lawyer that is driving the defense, which could delay a settlement, even if it’s obvious to the jury that the worker has a solid case.
“Their lawyer’s basically convincing them the opposite so that they can bill these hours and make a couple hundred grand off of the client in the next year or two while you litigate it,” Todd said.
In 2007, former USC Law students Matthew Sirolly and Melvin Yee co-founded the Wage Justice Center to enforce wage judgments using a framework of commercial debt collection, making the center unique. It also was one of the few legal aids at the time that represented undocumented workers.
“The Wage Justice Center just tried to fill a very niche, specific area that had not existed in the public interest community,” said Yee.
The center’s use of a commercial debt collection framework is used because it extends where employment law ends. One of the few ways employment law can succeed is if just before or just after the judgment is entered, the other side “liberally” communicates with the worker and his or her attorney and wants to pay. This framework allows for the plaintiff to maximize assets.
In 2012, the Labor Commissioner posted a public bid and the Wage Justice Center, the only law office in the state that enforces judgments, won for its lowest bid of under $300,000, a bid below that owed to DLSE’s prior partner, the Franchise Tax Board. Today, requests sent through the Labor Commissioner to assign judgment enforcement get processed in an office in Sacramento and then goes to the Wage Justice Center.
“Because we only have four staff attorneys we have to pick and choose which fraudulent transfer lawsuits to file,” said Shin.
With limited resources, what avenues do low-wage workers really have and what chance do they stand against wage theft?
“A day without immigrants”
May 1, 2006 was a day millions of protesters gathered, calling for change to U.S. immigration policy. Some in Chicago, Illinois; others in Dallas, Texas. The biggest march was in Los Angeles, California.
The protests were largely in response to H.R. 4437, a proposed legislation that would raise penalties for illegal immigration and classify undocumented immigrants and anyone who helped them enter or remain in the U.S. as felons. The march that followed not only sought a rejection of this bill and a comprehensive reform of the country’s immigration laws that included a path to citizenship for all undocumented immigrants, but celebrated laborers and working classes. It gave a face to the identities of immigrant protesters as significant contributors to U.S. society. Immigrants that come to this country accept low wage jobs to seek economic prosperity for themselves and their families.
“It was very difficult for my parents to make ends meet,” said Eddie Gonzalez, whose parents migrated to the U.S. from Mexico in the 1970s. In 2006, Gonzalez, like 500,000 others, joined the May Day march to stand with his fellow brothers and sisters.
There’s a big possibility that I can lose my job by participating, thought Gonzalez, who worked for the Commission for Children, Youth and Their Families. Grounded with U.S. citizenship and passion for the cause, he went anyway and dragged two of his closest friends along with him. That day, Gonzalez and his friends stood with other marchers, all in white shirts, and walked down the streets of downtown LA.
What’s the worst thing that can happen?
Almost ten years later
A yellow trailer held a sign that read, “Workers available.”
There, several women gathered at 8:30 a.m. on Tuesday for a meeting. They sat around a conference desk adjacent to a blackboard. The blackboard read, “Cambia de derechos,” or bill of rights.
“There’s not a worker here,” said Benjamin Wood, “that has not suffered wage theft.” Wood, an organizer at the Pomona Economic Opportunity Center, led the women’s meeting. He passed out fliers printed with “Lanzamiento de campaña para SB 1015.”
Gonzalez went around the room with two whiteboard markers in hand held like a microphone. He approached one of the women at the table at a time and asked in Spanish, “What is your name and why are you here?”
Some ladies giggled. Others were apprehensive and hoped they wouldn’t have to answer. They were preparing for an event to extend an expiring sunset clause that would eliminate the right to overtime pay for domestic day laborers.
“Obviously they should be eligible for overtime after eight hours, just like any other worker,” said Wood. Domestic workers, farm workers and agricultural laborers were excluded from the New Deal’s National Labor Relations Act, which Wood said was a quite deliberate act of racial discrimination.
“You know, really, they try to say we’re not American and all this kind of stuff,” Wood said. “But I think the immigrants, the migrant people that are here, they’re working harder to make this a better country than a lot of people that were even born here.”
The negotiations process decimated the original version of the domestic workers bill, removing allowances for workers to be able to use home facilities to warm up their meals or use the restroom. For the employer it is their home, but for domestic workers, it is their workplace. Ultimately, the bill ended up just being about overtime.
“As domestic workers, we have rights like everyone else,” said Sandra Dimas, a domestic worker. “We want our breaks, lunch, the right to go to the restroom and reasonable pay, wages, the right to go on vacation, sick time — like any other worker.”
Dimas is part of Compañeras, Lideres, Emprendedoras, Aliadas y Revolucionarias with the Pomona Economic Opportunity Center, a non-profit organization for day laborers under the umbrella of the National Day Laborer Organizing Network. The organization’s mission is to help day laborers find work, learn new skills and protect and expand their civil, labor and human rights.
“This kind of thing, it takes movement,” said Wood. “You have to have people protesting when abuses and injustices happen. That’s the kind of thing that really inspires people to take action.”
Gonzalez, now a day labor organizer, is fueled by the passion he kindled on May Day. He was not fired for attending the 2006 march — in fact, the CCYTF director told him he respected him for it.
Ten years later, the struggle for employment rights for low-wage workers has not changed. The UCLA Labor Center reported since the start of the 21st century, America’s workplace laws fail to protect the nation’s workers.
Here’s to a better future
California has recently enumerated its people. With Assembly Bill 304, workers are provided with sick leave. Several other laws were enacted in January. One was AB 1513, which requires piece-rate employees to receive a separate hourly wage when they are not generating piece-rate earnings. Also effective in January was SB 358, which establishes gender pay equity by prohibiting employers from paying less to employees of the opposite sex for jobs that require equal skill, effort and responsibility under similar working conditions. In January, SB 588 also entered the books, which among other things prevents employers from closing down business to avoid their debts to workers, requires private employers in California to provide written notice and authorizes civil penalties for wage theft violations. The effects of these recent laws may not be seen for another couple weeks, maybe a few months. In the meantime, workers fend for themselves with what resources they can salvage.
After three months, Roberto left the restaurant. When I met him, he was his own boss at “the office”, what he and his fellow day laborers call the parking lot outside of the Home Depot on Gale Avenue.
Roberto works hard everyday, mostly dealing with construction projects. His “coworker” *José Luis waits with him, eyeing the cars that slow down while passing by, hoping to get called for more work. Fortunately, work is not scarce: Roberto gets about two to three jobs everyday.
Though work is demanding, the pay is better than it was in Mexico. José Luis said back home, he would only have enough money for milk, eggs and meat for the first week of the month, but for the remaining three weeks he could not afford what he calls “those privileges”. In California, he would get $100 in one day, which is enough to last him the whole week. José Luis said that money could buy him burgers and even some beers.
Though they’ve faced their fair share of workplace abuses, José Luis and Roberto said there is no place else they would rather be. When I asked Roberto how he feels living here, he cracked a smile and said, “Estoy muy feliz esta en California.”