Wage Theft Is Common for Low-Level Workers, and Officials Are Starting to Take Notice

Government

Wage Theft Is Common for Low-Level Workers, and Officials Are Starting to Take Notice

The task of documenting workplace abuses has typically fallen on advocacy groups and unions, not law enforcement. But new county and state proposals suggest elected officials are taking workplace violations more seriously. 

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A series of proposals under consideration by the San Diego County Board of Supervisors aim to rein in workplace abuses that disproportionately impact immigrant workers in many of the same industries identified during the pandemic as essential.

Elected officials directed county staff in March to come up with an ordinance that requires subcontractors on development projects approved by the county to publicly disclose more information, including proof that they have workers’ compensation insurance. In May, Chairman Nathan Fletcher also recommended the creation of a new Office of Labor Standards and Enforcement to “correct patterns we see over and over again” in workplaces.

Labor leaders and workers told Voice of San Diego they’ve seen or experienced exploitation that includes not being paid for all the hours they worked and not being allowed to take days off when sick or injured.

The task of documenting such abuses has typically fallen on advocacy groups and unions, not law enforcement. With both proposals, though, the county is signaling that it’s taking workplace violations more seriously and trying to serve as a bridge between prosecutors and workers who often feel they can’t come forward because it might get them fired or even deported.

But the new disclosure requirements would only likely extend to developments in unincorporated areas. Cities are where much of the new construction is taking place and where transparency is not as strong.

Two men who’ve worked on a number of residential construction projects locally agreed to be interviewed on the condition that Voice of San Diego not use their real names for fear of retaliation.

One of those men, Miguel, said a subcontractor demanded he put down a $700 deposit for the right to work last year during the pandemic. He said a supervisor later threatened to fire him after he tried taking a day off to recover from an injury. On another occasion, he said, the subcontractor punished him for simply requesting that future payments come in a physical check instead of cash.

“They waited two to three months to give me work again,” he said in Spanish, “because I wouldn’t let them pay me in cash.”

Because of the precarious nature of construction work, most don’t push back — they can’t afford to.

In March 2020, at the beginning of the pandemic, another worker, Jose, said he was laid off. But days later, a supervisor from the company called him and said he could return, but only if he agreed to be paid in cash.

After he came back, Jose caught a glimpse of someone else’s paperwork in the office and was surprised to see he was earning $13 fewer per hour, he said. He brought it up to his supervisor and remembered the response: “Don’t worry. At least you have work.”

Still, Jose did get paid in cash from time to time. But even then, he said, he would find $100 to $200 missing from the total he was owed. He said he got so fed up with the subcontractor’s shrugs and evasions that he started taking jobs elsewhere.

“All this money, I don’t know where it’s going,” Jose said in Spanish. “All the money they took from me, I don’t know what they did with it.”

Both Miguel and Jose are authorized to work in the country — Jose is a U.S. citizen — and they both expressed concern that if they have been exploited, the situation is likely worse for some of their colleagues whose immigration status doesn’t allow them to be in or work in the country.

The construction industry relies heavily on unauthorized immigrants as workers, said Kimberley Robidoux, a local attorney who works on immigration employment matters with companies.

“A lot of times it’s the nature of the industries, they are tough, grueling jobs and it becomes difficult to find U.S. workers who want to do those positions,” Robidoux said. “There have been reports of some companies or individuals in companies exploiting undocumented workers and holding that over them.”

In other industries, like agriculture, there have even been documented abuses of workers with visas, which led the U.S. Government Accountability Office to call for increased protections of foreign workers.

A janitorial company, Prizm Janitorial Services, has also come under fire locally for wage theft — and it did so while under city contract.

A 2016 audit of Prizm found the city had paid Prizm roughly $600,000 for janitorial services, inewsource reported, but its payroll records showed it only paid its workers about $200,000.

“The amount of payroll does not appear to be sufficient to support the labor hours needed to perform the actual janitorial work on these contracts with the city,” the audit said. “This points to a potential overbilling to the city, underpayment to the workers or a combination of both.”

The company, according to the audit, required workers to get their own business licenses, so they could be classified as independent contractors. The audit also found the company paid some employees in cash with handmade receipts for which it couldn’t provide stubs. Employees weren’t given sick leave or paid overtime.

Blanca Macias, who worked for Prizm between late 2014 and early 2017, told Voice of San Diego that she was often paid by task, not hour, so when she calculated her wages per hour, they came out as low as $9 an hour.

Macias said she was told to take out her own business license so she could work as a subcontractor and make more. She did, and made more money but was still wasn’t being paid for all of the work she did. She said she asked to cut back on her duties since she wasn’t being paid for everything she was doing, but the company denied the request.

“They told me I have to do the entire route or they would take away all my work,” Macias said in Spanish. “I felt trapped. I needed the work. I needed that salary. I had rent, a car payment, a family. I didn’t have another option.”

Macias, who is now 52, said she got no sick days and at one point was even asked to bring in family to do some of the work assigned to her so the company didn’t have to pay her overtime.

After the grueling work began to take a physical toll, Macias quit. She’s now on disability due to injuries she got on the job. She said she filed a complaint with the city for the company’s violation of the city’s Living Wage Ordinance in 2017, but no action has been taken yet.

More recently, Councilwoman Vivian Moreno brought up the issue in a City Council Budget Review Committee hearing as an example of where the city is “falling short” when it comes to contract management.

Prizm couldn’t be reached for comment.

In addition to the efforts at the county to make contracting more transparent, there’s also an effort in the Legislature to punish employers who intentionally steal from their workers. A bill written by Assemblywoman Lorena Gonzalez would make employers criminally liable for wage theft totaling $950 during a consecutive 12-month period. The California Chamber of Commerce, a statewide business group, was initially against the bill, but dropped its opposition last month at a hearing.

Javier Santizo, a carpenter, told the Assembly Public Safety Committee in April that workers like him would often clock in from 7 a.m. to 7 p.m. He said a contractor once required him to submit two separate Social Security numbers to avoid paying overtime.

“Here in the construction industry, it’s become a culture where workers are afraid to speak because they don’t see any action to help them,” he testified.

Research shows that stories like Macias’, Miguel’s, Jose’s and Santizo’s are widespread and extend into many of the industries across the United States, not just construction and janitorial work.

Proposals recently introduced by County Supervisor Nathan Fletcher would bring more transparency to the construction industry and create a new office to monitor and enforce labor standards. / Photo by Adriana Heldiz

 

One notable study in 2008 surveyed more than 4,000 workers in the three biggest labor markets: New York, Los Angeles and Chicago. It found that the core protections many Americans take for granted — including access to workers’ compensation when injured — barely exist in retail, restaurants, home health care and construction, to name a few.

A quarter of workers were paid less than the legally required minimum wage or didn’t get the legally required overtime rate. The researchers estimated that the average worker lost 15 percent of their earnings due to workplace violations, which comes out to $56 million per week if extrapolated across the country.

Retaliation was rampant, too. More than 40 percent of workers who complained said they were fired, suspended or threatened with fewer hours or a call to immigration authorities. Foreign-born workers were nearly twice as likely as their U.S.-born counterparts to have a minimum wage violation while Black workers had a violation rate triple that of their White counterparts.

The companies that offered health insurance, time off and raises had fewer violations, which suggested to the researchers that “employers’ decisions about whether or not to comply with the law are part of a broader business strategy shaping the workplace,” amounting to a competitive advantage in the market.

The exploitation has been allowed to flourish thanks in part to subcontracting. One business hires another business, and the separation shields the former from liability, providing plausible deniability. Though legal action is not common, a number of cases have made headlines in San Diego and other parts of Southern California.

In 2009, for instance, the Los Angeles city attorney filed criminal charges against the owners of four car washes for allegedly failing to pay the minimum wage and provide employees with breaks. Prosecutors accused one of the managers of brandishing a club and machete to threaten workers who were attempting to organize a union. Some of them had been earning a mere $35 to $40 a day while others had been working for tips alone.

Even then, the criminal charges in Los Angeles followed a series of lawsuits filed by a nonprofit.

Trust is a major obstacle to bringing cases to fruition, because many of the workers are uncomfortable coming forward for fear that it might get them blackballed from the industry or even deported. At a roundtable discussion in early May, Carol Kim, the Building Trades political director, compared construction workers to gig workers.

“We go from job to job to job,” she said. “That makes it hard for us to track employment concerns.” In addition to the proposals in front of the Board of Supervisors, San Diego County District Attorney Summer Stephan recently announced the creation of a new unit to prosecute criminal business practices. The state Labor Commissioner’s Office can impose fines — a general contractor who worked in Carlsbad was penalized $87,000 in 2019 for failing to cover employees with workers’ compensation insurance — but Stephan said civil consequences have not done enough to deter violations.

She also pointed to a secondary problem: unaccounted-for dollars mean less tax revenue for public agencies. In 2015, the Little Hoover Commission, an independent state oversight group, came to a similar conclusion. It argued that the misclassification and shortchanging of workers had a ripple effect. “State estimates,” the commission wrote, “suggest losses of $8.5 billion or more annually in uncollected tax revenue.”

There are federal agencies, like Immigration and Customs Enforcement’s Homeland Security Investigations and the Immigrant Employee Rights section within the Department of Justice, that also oversee workplace violations specifically relating to immigration. But ICE mainly ensures employees all have work authorization, rather than protecting workers from potentially abusive employers, and the Justice Department group mainly educates and mediates situations where there may be discrimination or other issues between immigrant employees and their U.S. employers.

Renee Amador, legal director at the Maintenance Cooperation Trust Fund, a statewide watchdog that monitors the janitorial industry, said workers don’t often recognize a violation because they don’t know how their payment was structured. They learn they’ve been misclassified when the promise of payment doesn’t show up at all.

Her group sometimes refers people to the labor commissioner, sometimes local prosecutors. It depends on the situation, she said, but generally she’s seeing more engagement with prosecutors.

“Traditional law enforcement, like the DAs of the world, haven’t taken acute interest in wage theft, and I would say, just in the last couple years we’ve seen a tremendous shift,” she said. “Law enforcement is actually treating it like … they would treat any other type of larceny or any other type of theft.”

Another recent report from the Economic Policy Institute, a national think tank, found low-wage workers in the 10 most populous states, including California, reported losing an average of $3,300 in wages per year due to wage theft and other crimes committed against workers by their employers. The report argues that criminal action brought by district attorneys or other prosecutors would likely deter wage theft and other similar crimes.

There’s no reason to believe the violations have abated since the national study was conducted in 2008. The Center on Policy Initiatives interviewed hundreds of workers in 2017 and found that formal complaints are rare and typically only happen when the theft rises to an egregious level.

The local nonprofit estimated that employers in San Diego and Imperial counties failed to pay the minimum wage 40,000 times during the course the previous year. “Yet only 82 workers filed claims with the state Labor Commissioner,” according to the report.

Both of Fletcher’s proposals are still being fleshed out.

Meanwhile, Matt Adams, vice president for the Building Industry Association, said his organization doesn’t have a position yet on the creation of a new Office of Labor Standards and Enforcement but will be keeping an eye on the subcontractor ordinance, as part of a working group created by the county.

Adams said most builders don’t know which subcontractor they’re going to hire until after securing a permit, so he was hoping the new rules wouldn’t slow down construction projects.

The county is receptive to this criticism. In Fletcher’s initial letter to staff, he wrote that disclosures would be triggered when a permit was issued and when subcontractors were selected.

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