Many low-wage workers who won judgments were never paid
SACRAMENTO — Anita Herrera spent years cleaning offices in San Diego, but her boss never gave her a legally required lunch and rest break during a seven-hour shift.
When she eventually asked for a breather, her employer cut her hours. So, in 2009, Herrera filed a complaint with the California Labor Commissioner’s Office. Investigators corroborated the allegation and got a court order requiring her former employer to pay her $20,000 in penalties for the wage-and-hour law violations. Even so, she never got a cent.
Herrera’s cleaning company switched offices, changed its name and took out new business licenses, she said in Spanish. “I feel very defrauded. The company continues with its contracts and continues doing business.”
Her experience is not unusual.
Over a recent three-year period, thousands of mainly immigrant workers in California who clean buildings, pick crops, wash cars, sew garments and perform other minimum- and low-wage jobs won monetary judgments against their employers but were never paid, according to a new study to be released Thursday.
From 2008 to 2011, only 17% of court-ordered claims for back pay and labor law penalties were collected, according to the report by the National Employment Law Project and the UCLA Labor Center titled “Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workers.”
Just 42% — $165 million out of $390 million — was recovered after being verified by government regulators, even after judges signed orders and employers signed settlement agreements.
Meanwhile, companies representing three-fifths of unpaid-wage judgments legally vanished, the report said.
“Businesses are dissolved, licenses canceled, and it’s very hard for workers to get their money,” said Eunice Cho, a staff attorney in the National Employment Law Project’s Oakland office and coauthor of the report.
Avoiding court-ordered back wages and penalties is a symptom of an amorphous underground economy that experts say involves cash payments for goods, services and labor that deprive California and local governments in the state of an estimated $7 billion a year in tax revenue, according to a 2011 legislative research report. More than a quarter of Los Angeles County workers are paid in cash, according to a decade-old study by the Economic Roundtable, a Los Angeles public policy research organization.
For each of the 27,000 janitorial companies legally registered in California, there are two to three underground firms in the same business, said the Maintenance Corporation Trust Fund, a nonprofit group that helps victims of wage theft. The organization is bankrolled by large janitorial service employers as part of agreements with labor unions.
“The lowest bidder gets the contract,” said Lilia Garcia, the fund’s executive director. “The way the irresponsible business gives the lowest bid is by breaking state wage and hour laws, not paying taxes and not paying workers’ compensation insurance.”
In one such case, the labor commissioner’s office this month said it issued citations against a Los Angeles garment maker for almost $300,000 in wage and hour violations after an investigation uncovered that the company had changed its name to avoid paying previous citations.
“This case demonstrates our commitment not just to addressing wage theft but also to cracking down on the shell games used to avoid detection,” said Labor Commissioner Julie Su.
Advocates for low-income workers are hoping to get a new tool to collect judgments more speedily, before potential scofflaw employers can switch their identities to avoid payment. They’re backing a bill introduced this session in the Legislature, AB 1164, by Assemblywoman Bonnie Lowenthal (D-Long Beach). The proposal, dubbed the Fair Paycheck Act, would slap a wage lien on an employer’s property to ensure assets are available to settle any unpaid wages after a judgment is rendered.
The measure, though, stalled in the Assembly Appropriations Committee. It ran into a solid block of opposition from the California Chamber of Commerce, which added the proposal to its list of “Job Killer” bills.
A who’s who of other major business trade groups and chambers of commerce also pilloried the proposal, saying it “would cripple California businesses by allowing any employee, employee representative or the Labor commissioner to file super-priority liens on an employer’s real property ... for an alleged, yet unproven wage claim.”
Lowenthal intends to revive her bill next year.
“AB 1164 is about fairness,” she said. “Every Californian deserves to be paid the wages they are due.”