Silver Taube: We must step up wage theft regulation in Santa Clara County

“We’re being robbed,” said Georgina Hernandez, a janitorial worker whose former employer was ordered to pay workers over $1.7 million for multiple wage theft violations in 2014. Five years later, Hernandez and other employees have not received a dime.

ms. Hernandez is not alone. A 2014 report the Eastern Research Group prepared for the Department of Labor estimated there were 372,000 weekly minimum wage violations in California that resulted in $22.5 million in weekly lost income—49.3% of the earned income of those experiencing the violations.

Few workers recover the wages owed to them. A landmark study by the UCLA Labor Center and the National Employment Law Project found only 17% of California workers with a wage theft judgment recovered any payment between 2008 and 2011.

At a May 12 issue briefing on SEIU and Fight for $15’s report, Skimmed and Scammed: Wage Theft From California’s Fast Food Workers, Deputy Labor Secretary Julie Su said “wage theft is still in simplest terms, often an interest free loan that business owners get from their employees, many of whom are working paycheck to paycheck” and far too often victimizes “low wage vulnerable workers, many of whom are women, immigrants, and people of color.” The report’s survey data revealed a staggering 85% of fast-food workers experienced wage theft.

The Santa Clara County Wage Theft Coalition formed in 2015 with the goal of enlisting local governments to enact measures that incentivize the payment of wage theft judgments by requiring disclosure of those judgments and refusing to issue permits, licenses and contracts until a judgment is satisfied.

As a result of the coalition’s advocacy, San Jose enacted a wage theft policy on July 6, 2016. The policy requires disclosure of unpaid wage theft judgments or final decisions and disqualification if they are not paid. The policy’s flaw is that it excludes public works and fails to apply to judgments and Civil Wage and Penalty Assessments issued to contractors and subcontractors on public works projects. Significantly, an abysmal 2% of construction wage theft claims are collected, according to the state’s data.

After a significant delay, San Jose is on the verge of enacting a Responsible Construction Ordinance which requires private contractors and subcontractors to disclose wage theft judgments and withholds Certificates of Occupancy until wage theft judgments are satisfied. Sunnyvale and Milpitas have enacted a similar ordinance. The Milpitas ordinance requires disclosure and payment of a wage theft judgment or the payment of a lien release bond equal to the amount of the judgment before a Certificate of Occupancy issues.

The San Francisco Electrical Construction Industry Director of Research and Advocacy Alex Lantsberg identifies the problem that the Responsible Construction Ordinance and the addition of public works to the existing wage theft policy address: “We see over and over again how non-union contractors really use the exploitation of workers as a fundamental business strategy, undercut union contractors, profit, and hurt workers.” San Jose’s enforcement agency, the Office of Equality Assurance, must also be fully funded to enforce prevailing, living and minimum wage violations.

San Francisco recently passed an important ordinance to combat wage theft in the construction industry. This ordinance requires owners of certain residential construction projects to maintain a labor compliance bond and conditions release of such bond on specified reporting and labor standards compliance for work on the project. It amends the building code to require owners of such projects to file a labor compliance bond as a condition of receiving a permit for construction.

There is also a need for an ordinance that addresses rampant wage theft among day laborers. According to a report by UCLA and the University of Chicago at Illinois, 45% of all California day laborers have been denied payment for all work they completed in the two months prior to the survey, and 48% have been underpaid during the same time. Mountain View is currently considering such an ordinance.

The wage theft coalition also zeroed in on revocation of Santa Clara County’s health permits as a disincentive to wage theft in the food service industry and an Office of Labor Standards Enforcement (OLSE) to enforce a food permit program. San Francisco’s Public Health Department had previously relied on a state law to empower it to revoke health permits if food service businesses fail to satisfy wage theft judgments.

In this well-designed program, the Santa Clara County OLSE sends out notices to all food service businesses with a date by which they must pay judgments or lose their health permit. The program has been successful in recovering workers’ wages.

A local ordinance requires Houston, Texas to create and maintain on its website a publicly accessible database of all employers with unpaid wage theft judgments. Santa Clara County should do the same.

In the fast-food sector, AB 257, a bill sponsored by Fight for $15 and SEIU and passed by the state Assembly, would require parent companies like McDonald’s to share responsibility with local franchise owners for preventing wage theft. It would also empower counties like Santa Clara to create a sector council with government, workers’ and business representatives, to set industry standards in collaboration with a statewide council.

The OLSE has established a Retail Food Advisory Council (RFAC) with business, workers and government participants to provide the OLSE with recommendations for supporting the county’s efforts to advance labor standard compliance in the industry.

As an initial step, RFAC members proposed an academic institution conduct a survey of workers in retail food establishments on the issues of wage theft, retaliation, health and safety, sexual harassment and violence. Such a survey will buttress the council’s recommendations for labor standard compliance in the industry.

To echo janitorial worker Georgina Hernandez and Deputy Labor Secretary Julie Su, we must stop businesses from robbing workers and receiving interest free loans that hurt both vulnerable workers and businesses that follow the law.

San José Spotlight columnist Ruth Silver Taube is supervising attorney of the Workers’ Rights Clinic at the Katharine & George Alexander Community Law Center, supervising attorney of the Santa Clara County’s Office of Labor Standards Enforcement Legal Advice Line and a member of Santa Clara County’s Fair Workplace Collaborative. Her columns appear every second Thursday of the month. Contact her at [email protected]

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