State lacks resources to combat wage theft
For Romelio Aldana, every day counts. He pays attention to the weather each morning, because it impacts his ability to work as a day laborer. He counts the days of every month. The shorter the month, the faster he has to make rent. Some nights, he falls asleep worried he won’t have work the next day.
He also worries about the kind of contractor he’ll end up with. Will it be the one who pays, or will he go home emptyhanded? Aldana, a legal resident of the United States from Mexico, has gone unpaid four times, most recently in early 2018.
The state considers such incidents “wage theft,” a term for a broad range of infractions of the California Labor Code, and has visibly campaigned on the issue, pursuing employers for underpaying employees, not giving them mandatory breaks and otherwise violating wage law.
Yet nine months after Aldana’s claim was filed with the Labor Commissioner’s Office, when his case came up for a scheduled settlement conference, he was unable to attend due to a personal matter. His case was dropped and his efforts came to naught. And his story illustrates how reclaiming stolen wages remains a challenge for workers.
Wage theft is rampant in California. A 2018 study by the Corporate Research Project found that California companies accounted for a large share of the $8.8 billion in wage and hour violations reported nationwide since 2000. Wage theft can affect workers in every industry, but it hits the most vulnerable communities the
“I thought to myself, ‘What is this office good for, then?’ ” Miguel Gonzalez, who has spent 22 years as a laborer
hardest: immigrant workers, like Aldana, who are least likely to be able to successfully file a claim against an employer, either because of the complicated process or out of fear of retaliation.
The crime is seldom reported. The roughly 35,000 claims filed annually with the state Labor Commissioner’s Office amounts to less than 1% of actual incidents of wage theft, according to the UCLA Labor Center. For those workers who do get a ruling in their favor, the likelihood of receiving their wages is low. A 2013 report on the wage claim process in California found that only 17% of workers were actually able to recover their wages. And a lack of funding has hamstrung the enforcement of labor laws, so it takes longer than it should for cases to be resolved.
An analysis of roughly two years’ worth of data obtained from the Labor Commissioner’s Office through a Public Records Act request shows that eight of the 19 district offices in the state received roughly 33,600 claims between Jan. 1, 2017, and Nov. 7, 2018. The eight offices were in Bakersfield, Fresno, Los Angeles, Oakland, Sacramento, San Diego, San Francisco and San Jose, which were listed by the U.S. Department of Labor as some of the top cities in California for wage theft.
The Labor Commissioner’s Office refused to provide a full copy of its database for the last two years because it said that it could not vouch for the complete accuracy of the information stored in its case management system due to errors and duplications that occurred when its district offices transitioned to a new system in 2017. Because of those errors, and what a spokesman described as a lack of quality control, it claims that any totals for amounts that have been paid to workers might not be accurate because settlements could occur outside the official process.
After identifying and removing duplicate claims filed with the eight district offices, the analysis found that more than $87 million was estimated to be owed to workers in wages during the period covered by the public records request. Of the 19,000 cases closed within those 22 months, a quarter were dropped because the worker did not appear at either their conference or hearing, or notified the Labor Commissioner’s Office of their intent to withdraw.
Roughly 5,200 claims were identified as settled, paid or having a judgment. It took on average 206 days to close the cases, not the 120 called for by state law. Of those cases, roughly $10 million of the $23 million owed is recorded as remaining to be paid.
The analysis identified an additional 8,900 open cases that had passed the 120day mark, 75% of which had yet to even have a hearing scheduled. The district offices with the largest backlog were Los Angeles and Oakland.
The state can’t provide an accurate account of its claim system or how much money is recovered. A 2017 report released by the state’s Legislative Analyst's Office regarding proposed budget increases to the Labor Commissioner’s Office expressed concern that the agency’s “data collection and analysis capabilities may not have sufficiently developed to ensure the most effective use of the proposed increased staff.”
A representative of the labor office said officials “expect that the condition will be improved over time,” adding that potential errors in the database do not affect other programs in the division, such as those dealing with investigations and retaliation.
In 2015, a state oversight agency known as The Little Hoover Commission released a report on how to address California’s underground economy, in which wage violations are common, alongside tax and insurance fraud. The report found that the state provides “insufficient resources for enforcement,” adding that “many cheaters break the rules because getting caught is unlikely. If they are caught, few are charged in court. When found guilty, the profits from cheating often outweigh the fines and penalties.”
This wasn’t the first time that the need for increased funding to enforce wage and hour laws had been raised. In 2013, a report from the UCLA Labor Center and National Employment Law Project examined the effectiveness of California’s wage claim process and said the same thing. It found that only 17% of workers who have a wage claim decided in their favor were actually able to recover their wages. This was, in part, due to a loophole in the labor code that allowed employers to avoid paying judgments by transferring assets into a new business. At the time of the report, 60% of all business entities ruled against were considered inactive by the state.
Tia Koonse, an author of the UCLA report, said that over the course of her decadelong career representing victims of wage theft, she has never seen a worker receive everything they are owed.
“The employer knows the same thing the worker knows: that collecting on your judgment of unpaid wages is almost impossible,” Koonse said, citing a long and complicated legal process that often requires time, expertise and legal representation. For workers earning minimum wage or less, a settlement in the pocket is an offer that is hard to refuse. But Koonse and her report make it clear that those workers who end up seeing even a portion of their wages are the exception and not the rule.
In 2015, the state legislature passed a bill that closed certain loopholes and added new enforcement tools that allowed business owners to be held personally liable for wage theft. But that bill, SB588, only expanded the office’s ability to enforce judgments, not necessarily its ability to investigate and process wage claims.
The next year, thenGov. Jerry Brown proposed a multiyear plan to increase funding and staffing positions for the Labor Commissioner’s Office, largely for the Bureau of Field Enforcement, which investigates violations of labor standards for groups of workers. At that time, the bureau had 82 budgeted investigator positions but a 20% vacancy rate.
Since then, the Labor Commissioner's Office has had roughly 75 positions and $16 million added to its budget, mostly for the enforcement bureau, according to the 2019 California budget. Currently, the Wage Claims Adjudication unit, where most workers have their wage claims processed and evaluated, has approximately 201 positions, including support staff and deputy labor commissioners who rule on wage claims, across 18 offices. The Judgment Enforcement Unit, which helps inneed workers collect their awards after a judgment, only had 16.
Koonse says there is still a long way to go. The International Labor Organization, an agency within the United Nations, recommends one labor standards investigator for every 10,000 workers, she notes. In California, where the UC Berkeley Labor Center says a quarter of the state’s 19.5 million workers are employed in lowwage industries, that ratio is roughly one to 85,000.
“I would say that the agency is not nearly as wellstaffed or funded enough to actually address the scope and magnitude of wage theft in our state,” Koonse said.
Torres, a deputy labor commissioner in Oakland, says that while many government agencies want more funding and staff, it’s ultimately a process out of their hands. The agency, he said, has “to work with the resources we have.”
But Koonse said that the lack of funding has resulted in an inability to enforce even “the most basic provisions of the labor code.”
Many, like Aldana, can end up waiting for years for the opportunity to see just a portion of what they are owed. But some never see anything at all.
On May 22, 2014, Miguel Gonzalez walked into the towering lobby of the Elihu M. Harris State Office Building in downtown Oakland for the first time. The 22story building houses several government offices, so security is heavy. Other undocumented workers often avoid the area. But he wasn’t nervous.
When Gonzalez arrived in the U.S., he didn’t expect that getting stiffed for his pay would be a recurring theme in his life. Gonzalez has worked as a day laborer for 22 years. Three times his bosses didn’t pay him. The fourth time, the 50yearold Mexican immigrant had had enough. He was heading to the 8th floor to the Labor Commissioner's Office to file a wage claim against a contractor who had hired him to clean out a burnt house for $120 a day.
Sixteen months after filing his claim, Gonzalez won his case and was set to receive $3,728 in wages and penalties. To date, he has only received $240.
“I thought to myself, ‘What is this office good for, then?’ ” Gonzalez said. “I don’t understand the laws in this country. If I was to steal a fry from a restaurant, or whatever, I would easily be arrested, even if I don’t have a gun. But, where there is a more serious crime like this one, people are let free.”