Workers and activists in Los Angeles Fight for Wage Enforcement
Luis Jimenez was a server at a restaurant for 13 years. Even though he does not have a 401(k), retirement benefits, savings, and vacation time, he “genuinely” enjoyed doing his job.
But it got a little more difficult to feel passionate about his job when he looked at his paychecks every month for the last three years working at the restaurant. He says he noticed the dollar amount on his paychecks was some hundred dollars short of what he expected to receive.
“Instead of $8, he (the employer) would pay us $7,” Jimenez said. He has filed a lawsuit against his employer for allegedly stealing money from his tip pool.
Approximately $26.2 million of wages get stolen from workers every week in Los Angeles, which totals up to approximately $1.4 billion a year, according to a 2014 study by Human Impact Partners, a health-focused analysis organization.
To put this number into perspective, if we assume an average house in L.A. costs $600,000, one can buy 43 houses with the wages stolen from workers in just one week.
The 2014 Human Impact Partners study also found that individual low-wage workers nationwide lose about 13 percent of their total annual earnings every year, and Los Angeles workers display the most severe case of wage theft in the nation.
“L.A., the wage theft capital of the United States, a title none of us should be proud of,” said David Huerta, president of SEIU, United Service Workers West.
Jimenez and members of Huerta’s organization might finally have a chance to combat wage theft effectively with the help of the local government.
The L.A. City Council met on May 5 to discuss the impact to the city and its residents of raising the minimum wage in Los Angeles to $15. Included was a motion to establish an Office of Labor Standards for wage laws enforcement at the local level.
“Stealing wages from working men and women is just wrong. It’s disgraceful and the end begins today,” said District 1 Councilmember Gilbert Cedillo in a special meeting of the Economic Development Committee.
Wage theft can take many forms, including not paying workers the legal minimum wage and/or not paying overtime, forcing them to clock out before they finish their duties, stealing workers’ tips from the tip pool, and denying them meal and rest breaks.
Because of financial insecurity from not being able to collect their earned wages, victims often experience insomnia, depression, anxiety, feelings of worthlessness, eroding family structures, the Human Impact Partners study found.
“It (wage theft) is a constant downer,” said Jimenez, who alleges that his employer took a portion of money out of his and his co-workers’ tip pool. “I’ve just tried over the last year to not get emotional about the things I can’t control. I try not to bring those negative thoughts and feelings when I think about how much money I’ve lost over the last three years.”
Jimenez said he cannot imagine what his life would have been like if he had kids.
Many members in her organization who are victims of wage theft experience a lot of stress, trauma and anxiety, said Lola Smallwood Cuevas, founder of the Los Angeles Black Worker Center.
“It makes me angry to see the condition of mothers and fathers who are not asking for a lot, they are not trying to be the ‘1 percent,’ they are just trying to put food on the table, keep the roof over their heads, maybe take their families to a dinner every now and then, and to live a sincere life with dignity,” she said.
Some victims of wage theft are forced onto the streets because they cannot keep up with their necessary daily expenses, even when they take on multiple jobs, said Tia Koonse, legal and policy research director at the UCLA Labor Center.
“I have spoken to many workers who wound up homeless when their employers cheated them,” Koonse said. “Wage theft is a violation of the fundamental promise of work, and free labor is something we decided was unacceptable more than 150 years ago.”
“Free” labor may be “unacceptable,” but Jimenez’s co-worker, who filed a wage claim alongside Jimenez six months ago, said he had no choice but to struggle emotionally.
“I felt slighted, and to some point, helpless,” said Nick Psinakis about learning his employer allegedly took money out of his tip pool for more than three years. “It makes me feel like I’m being taken advantage of. It’s hard to want to work for people that are taking money from you. It’s hard to work knowing that you’re not going to get paid what you deserve.”
Psinakis added that it is an unfortunate trend that minority workers tend to be more vulnerable to wage violations. The National Employment Law Project (NELP) in 2010 showed that immigrant workers, women, and people of color in low-wage industries are more likely to experience wage theft.
“Black workers are 50 times more likely to experience wage theft,” said Smallwood Cuevas of the Los Angeles Black Worker Center. “L.A.’s labor market is saturated with exploitation, and employers are banking off of the fact that they can not pay the minimum wage because they think that these workers (immigrants living here illegally) don’t have the right, so they can’t complain.”
Some observers worry that this kind of job discrimination might affect the future of these workers’ children.
“I’m really not surprised,” said Michelle Nguyen, a USC student who studied immigrants in America. “It’s always those groups of people who get discriminated against. It can demotivate them, and their children may assimilate downwardly.”
She believes that discrimination against these workers and not paying them the wages they earned would prevent them and their children from rising up in socioeconomic status.
By not being able to collect the wages they earned, these workers are unable to provide their children the resources needed to be upwardly mobile, said Nguyen.
This is why labor activists are calling for anti-racial discrimination law in the draft of the new City Council ordinance that attempts to address wage enforcement in L.A.
“Black jobs matter,” said Loretta Stevens, co-director of the Los Angeles Black Worker Center, in front of the Economic Development Committee. “Any definition of wage theft must also include racial discrimination, the hiring of workers and exclusion from jobs and equal opportunity, because of the color of your skin.”
Wage theft affects not only certain individuals and their families, but society as a whole, says John Howland, an advocate for the L.A. business community.
“Ninety-nine percent of businesses in the city do the right thing (abide by wage laws) but are put in a competitive disadvantage by these bad actors,” said Howland, who is director of government relations at the Central City Association of Los Angeles.
Salaries and wage expenses account for 22 percent of operating expenses in construction, mining, and manufacturing industries, while 18 percent in retail and wholesale trade, a 2008 report by the Society for Human Resource Management showed.
A lot of businesses that are paying the minimum wage are going to go out of businesses because their competitors are not paying the legal minimum wage, L.A. City Council District 5 Councilmember Paul Koretz said in the May 5 meeting.
He added that the motion to establish a government body that enforces wage laws in L.A. needs to happen not only for the workers but also to protect the employers who are abiding by the laws.
In July 2014, his colleague Councilmember Cedillo introduced the motion to draft a wage theft ordinance to criminalize the practice of wage theft in Los Angeles and stop up tracking and enforcement.
The Budget and Finance Committee is currently reviewing the city’s options to fund the ordinance that calls for approximately $400,000 for initial staffing of five management analysts in the Public Works Department or five investigators under the Office of the City Attorney.
The motion also calls for an additional $100,000 for public outreach, equipment, and other resources to launch the new division, including multi-language campaigns that would educate employers and workers about wage enforcement.
The total estimated fund of $500,000 to establish the Office of Standard Labor will be delineated in the General Fund of the 2014–15 Year-End Report if the ordinance is passed. The new division setup will not impact the Mayor’s proposed budget for 2015–16.
Based on research into San Francisco’s wage enforcement model, which currently has 25 positions, staffing for the new division in Los Angeles is expected to reach 100 employees because of the city’s population. But the office should begin with five staff members because the issue of wage theft cannot be put off any longer, Koretz said in the May 5 meeting.
Wage theft, which triggers local wage enforcement, affects more than the city’s budget. State and federal government tax revenues are also impacted. And the financial losses come right out of taxpayers’ pockets.
“I could collect unemployment and make more money collecting unemployment than I could, working here 30 hours a week,” said Jimenez on working hard but not getting paid. “To me, I don’t know if anyone can explain economically how that works. A 30-hour job should make you way more money than what you should get collecting unemployment. It shouldn’t be an issue, but it is for some people.”
The California government lost approximately $14 million in tax revenues because of minimum wage violations in 2010, according to a December 2014 report on the social and economic effects of wage violations issued by the U.S. Department of Labor.
“Wage theft in L.A. County alone costs between $103 and $153 million in lost tax revenue to the state and local government, $11 to $25 million lost of the city and county alone,” said Koonse, the UCLA researcher.
A U.S. Department of Labor report in December 2014 also showed that minimum wage violations led to $5.5 million in additional breakfast benefits in California in fiscal year 2011.
“Those who deprive people of wages they’ve earned, forcing people to rely on food stamps when otherwise that might be the case, are burdening taxpayers in an unjustified manner,” said Paul Neuman, Koretz’s spokesman.
Although victims of wage theft can file wage claims through the California Division of Labor Standards Enforcement (DLSE), a 2013 study by NELP and UCLA Labor Center found the procedures were too time-consuming and ineffective to help complaints recover wages employers stole from them.
Workers were only able to recover 42 percent of total wages that DLSE could verify employers owed to the workers between the years of 2008 and 2011, the study found.
The NELP study also found that in the same years, only 17 percent of workers who filed wage claims and received judgements were able to recover payments, and in most cases, received only about 10 percent of the DLSE-verified owed amount.
The legal process of filing a claim is also costly and tiresome.
“I’m not a rich person, I don’t have lawyers,” said Jimenez, who is glad to have found ROC-LA to support him emotionally and financially in his ongoing battle against his former employer.
That boss has counter-sued him for defamation. “It’s a time consuming process, it’s a headache, and it’s something I don’t want to be dealing with,” Jimenez said.
Already six months into the legal process, Jimenez and his co-worker Psinakis, still have not been able to collect one cent of what they claim their employer owes them. They expect the process to go on for another two to three years before they can begin collecting that money — if they win their case.
One recommendation in the City Council motion for wage theft enforcement is to place a lien on employers’ real property to ensure collection after judgement. Some business owners say this recommendation places an unfair burden on them.
“The burden of proof and the guilty until proven innocent placed on the business owners is a reversal of the usual legal process,” said Crystal DaCosta, chair of Beverly Hills/ Greater Los Angeles Association of Realtors Public Policy Committee. “I believe the unintended consequences (of the new ordinance) will do more harm to low wage earners than help them.”
DaCosta argued that placing liens on personal property might result in fewer new hires, more layoffs, and small businesses going out of business or relocating to another city because of the burden, both on money and time, placed on them in the process of defending themselves in wage violation cases.
“Go after the bad guys, please do not punish the good ones,” said Howland who seconds DaCosta’s concerns on behalf of the L.A. business community.
Wage theft victims have inspired activists like Koonse, Smallwood Cuevas, and ROC-LA’s Sophia Cheng to stay involved in their battle for wage enforcement.
“I feel inspired by worker leaders who transform their personal experience of wage theft into a movement for all workers,” said Cheng, community organizer of ROC-LA.
Jimenez, Psinakis, and activists of wage enforcement in L.A. said they will continue to fight until justice is served. The ordinance for wage enforcement is expected to be voted on late in May of this year.
“I hope to see results,” Jimenez said. “It’s going to be a really tough fight because there’s a lot of money that’s fighting against us. Money talks in politics and unfortunately we’re not the money. We just want more of it, and not because we’re being greedy, but because we believe we are indeed entitled to it.”
