County Supervisors Move Against Wage Theft, Raise Minimum Wage

  • 08/06/2015
  • Reporters Desk

By Paul Rosenberg, Senior Editor

On July 21, a majority of the Los Angeles County Board of Supervisors passed two measures to raise the minimum wage to at least $15 an hour by 2020, affecting an estimated 155,000 workers.

The board also unanimously passed a third motion taking aim at wage theft. That unanimity highlights both a severe problem and a corresponding political dynamic.

“Poverty is very, very expensive,” said Los Angeles Mayor Eric Garcetti in his comments to the board. While the main thrust of his testimony was directed at raising the minimum wage, it was equally applicable to the issue of wage theft.

Six years ago, a groundbreaking report, Broken Laws, Unprotected Workers, found that wage theft from low-wage workers in just three cities—Los Angeles, Chicago and New York City—totaled $2.9 billion the year before. As Random Lengths reported at the time (“Robbed On The Job,” RLN, Sept. 25, 2009), this was “a rate more than double that of reported theft in California.”

President Barack Obama’s first Secretary of Labor, Hilda Solis, authored the July 21 motion. It directs staff to produce two written reports aimed at informing and motivating the board to take future action to substantially enhance county law enforcement against wage theft.

“It’s important to provide enforcement tools against those [who] would take advantage of our employees,” said Solis, shortly before the vote.

The first report, due in 60 days, will be “an analysis of the county’s legal authority to regulate wage theft…and its authority to enforce municipal, state, and federal wage theft laws.” The second, due in 90 days, calls for a “recommendation for the most effective and efficient model by which the county can enforce wage theft regulations.”

The first minimum wage measure covers workers in unincorporated areas of the county, as well as employees of county contractors. It was opposed by both Republicans on the board, Mike Antonovich and Don Knabe. The second minimum wage measure covers county employees. Only Antonovich voted against. All three Democrats—Solis, Mark Ridley-Thomas and Sheila Kuehl—voted for both minimum wage measures.

The lack of opposition to the wage theft motion underscores the broad-based nature of support that anti-wage theft measures enjoy. What’s been missing in the past has been, first, awareness of the problem; second, data about its extent; and third, organizing to focus political attention on the need to do something. Six years after Broken Laws, Unprotected Workers, all three of those missing pieces are finally being put into place.

Victor Narro, a project director of UCLA Davis Center, laid out some of the basic facts in his public comments.

“Wage theft is 20 percent higher in Los Angeles County than the national average,” Narro said. “The UCLA Labor Center published an extensive survey in which we found in any workweek, eight in 10 low-wage workers in Los Angeles, about 655,000 total, suffered from wage theft; 80 percent of these workers worked overtime [and] are not properly compensated; another 80 percent of these workers are denied their right to meal and rest breaks. All this amounts to $26.2 million per week stolen from workers in wage theft violations, which is estimated at $1.4 billion a year.”

Narro boiled it down to what it means per worker.

“Individually, these workers lose $2,000 annually out of an average earning of $16,500, which means that more than 10 percent of their earnings are lost in wage theft,” he added.

But there’s also a significant impact on government.

“Every year we estimate wage theft robs the state and local government between $103 and $153 million in lost tax revenues—

$11.7 to $25.5 million of which is lost to the county of Los Angeles,” Narro said.

The issue of wage theft costs to Los Angeles County is significant because Antonovich, who opposed all the minimum wage increase measures, supported the wage theft motion, but questioned the cost involved in taking action.

“Wage theft is irresponsible and ought to be punished to the full extent of the law, but the problem that we have is that the county has many unmet needs,” Antonovich said. “I don’t know how an additional cost to our budget, to our general fund, is the appropriate manner to handle this issue.”

But Narro’s figures suggest that enforcement costs would be far less than the costs of continued lawbreaking—a point Solis also made in response to Antonovich.

“What we’re trying to get at is the loss of revenue, the money that goes to the underground economy, which is in the hundreds of millions of dollars,” Solis said. “That will come back to us.”

“As the county considers raising the minimum wage, it’s important to understand enforcing that wage is just as important as raising it,” Narro continued. “All 10 municipalities in California that have raised their minimum wage have authorized and funded enforcement of the wage theft.”

The board also heard from labor leaders, lawyers and ordinary workers. In her testimony, Maria Elena Durazo, vice president of UNITE-HERE, the hotel, casino and food service workers’ union, quoted Marin Luther King Jr.

“Whenever you are engaged in work that serves humanity and is for the building of humanity, it has dignity and it has worth,” she added. “One day our society must come to see this. That day has arrived in Los Angeles. That day is today.”

Although wage theft impacts workers in many different industries, the per-person costs are particularly devastating among port drivers, two of whom offered direct testimony. Edwin Ortiz, a driver for Harbor Rail Transport, owned by X.P.O. Logistics, testified about how that company steals from workers like him.

“X.P.O. is a multibillion-dollar corporation traded on the New York Stock Exchange,” Ortiz said. “They bill themselves as one of the top 10 logistics companies in the world. Despite being worth billions of dollars, they are stealing pay from drivers like me through illegal deductions…That’s the reason I’m making the claim with the California Labor Commissioner to get my money back. In April, X.P.O. bought a French company for $3.5 billion dollars in cash.”

He explained that he and his coworkers couldn’t help but wonder if X.P.O. had that cash because it had been stolen from their paychecks.

Also testifying was Carlos Quintero, a port driver for Pacific Line Transportation.

“I am a victim of wage theft and my company owes me over $200,000,” Quintero said. “Here is evidence of receipts for fuel, tires, lease payments, insurance, brake repairs, windshield wipers, truck washes, administrative fees, hundred of thousands of dollars they deducted from my paycheck every week.

“With the deductions, I’m below minimum wage and your vote today to raise the minimum wage won’t help me or my family at all. Why? Because as a misclassified independent contractor, I’m not even entitled to the current minimum wage, not entitled to overtime, [and not entitled to] worker’s compensation, disability. They say I’m not even entitled to anything…. But that’s not true because the government has already ruled that I am an employee, that I have employee rights.”

And yet, his struggle isn’t over, Quintero explained.

“My company, for a while, even agreed with the government,” he said.“They reached a settlement and posted up signs in the offices in the company, but they never stopped the illegal deductions. They never gave me a W-2 form. They never even started paying the payroll taxes that I’ve been paying for them for years. So I’m on strike again. This is my sixth strike in two years. This time I’m not going back until they re-classify me as an employee and stop the wage theft.”

The staff studies that have been authorized are intended to find the best way to help curb such abuses, not just for Los Angeles County, but in coordination with other levels of government.

“I know that we have some other agencies that want to work with us, the state labor commissioner’s office as well as the federal wage and hours division,” Solis said. “So I know that we’ll have a lot of interest here.”

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