Wage Theft Tue Apr 27 2010

Wage Theft Crime Spree: What Will Stop It?

By Matt Muchowski

You work assuming you'll be paid, but too often, workers are simply denied what they're owed. It happened to Kim Kambra who worked at Jericho Products in Springwood. "They didn't pay me. I worked over 55 hours a week and they paid me for one week out of the last 10 weeks. My house went into foreclosure and I lost the legal rights to my house even though I still live there."

Kambra was one of many Jericho employees who were not paid. Computer programmer Bill Van Dusen worked for 12 years at Jericho but for three months in 2008 and another three months in 2009, Dusen was not paid. "I had to use the money we saved for our kids' education to pay our bills."

Jericho went beyond not paying their employees. The company "stole our deductions for health insurance and child support. They collected that but didn't pay it to the proper person they needed to pay it to," according to Van Dusen.

However, Jericho's owners have been paid handsomely. Kevin Lynch, one of the owners of Jericho Products would have wild venison for his dogs and chrome parts for his car delivered to the company while three employees' homes went into foreclosure.

Jericho isn't the only company in the Chicago area cheating its employees. Victor Hernendez worked at Park Management in Chicago but is owed 21 thousand dollars from the company. He filed a complaint with the Illinois Department of Labor in 2008, and while the IDOL has agreed with his complaint, Park Management still has not paid him.

Liz Rush, an employee at Renzenburger Warehouses, became active with the Warehouse Workers for Justice after she was forced to work overtime without being paid. "'It's your job. It's your job. You'll get written up,' [managers] say, so we do things with no pay just so we can keep our jobs."

Its not just a few corporations getting away with such behavior. Adam Kader from ARISE Chicago's Worker Center explained, "We see non-compliance [with labor law] as the standard," in low wage jobs.

The study "Unregulated Work in Chicago" produced by the Center for Urban Economic Development at the University of Illinois at Chicago, estimates that "in a given week, approximately 146,300 workers in Chicago and suburban Cook County have at least one pay-based violation. Extrapolating from this figure, front line workers in low wage industries lose more than $7.3 million per week as a result of employment and labor law violation."

"We're not just talking about the underground economy or a few rogue employers," Professor Nik Theodore, who helped write the report, said. "We're talking about some of the largest, fastest growing industries in the Chicago area. Key clusters such as retail, restaurants and grocery store. Caregivers like home healthcare workers and domestic workers. Residential construction, warehouses, segments of the manufacturing sector. Personal services like laundries and beauty salons and building services like janitors and security guards."

The study used respondent driven sampling, a survey method where workers referred other workers, allowing the study to establish trust better that other surveys. This method allowed the survey to reach low income front line workers in many different industries, an estimate 310 thousand such workers in Cook County.

Twenty-six percent of workers in the sample were paid less than the legally required minimum wage in the previous work week. Of those who worked more than 40 hours during the previous week 67 percent were not paid the legally required overtime rate.

Many workers faced meal break violations as well. Three quarters of the sample worked enough for a break but 43 percent received no break, had breaks shortened due to employer interruption, or had their break interrupted in other ways.

Of the tipped workers in the study, 15 percent were not paid the tipped worker minimum wage.

Twenty-six percent of the workers in the study made a complaint or attempted to form a union. Of those 35 percent experienced one or more forms of illegal retaliation from their employer or supervisor. Fired, suspended, threatened to call immigration, or cut hours or pay.

This crime spree in wage theft has a real impact on the economy in Illinois. Theodore explained that it is "bad economics to think we can rebuild the economy on the back of illegal workplace practices." Citing a race to the bottom between companies that have to compete against corporations that don't pay their employees, leading to wages being depressed across whole industries.

Government Regulators have Limited Resources to Enforce Laws

The Illinois Department of Labor is one of the smaller agencies in Illinois. With only 87 employees, the IDOL must respond to 8,000 to 9,000 complaints a year regarding wages.

Bert Rodriguez, Assistant Director of the IDOL, explained that they "try to resolve the issue at our level. Trying to mediate the issue and hopefully get the worker the back wages due or address whatever workplace violation uncovered. In a lot of cases we are unsuccessful in those efforts. In a lot of cases we find uncooperative employers." The IDOL will, "partner with the office of the attorney general... once we make a determination," if the case is worth it.

The Illinois Department of Labor often does not have the resources or authority to pursue the cases it is presented with. Which is why a coalition of community groups called the Just Pay for All Campaign is pushing for a bill that would strengthen the IDOL's ability to seek lost wages and punish employers that steal wages. It would allow the IDOL to pursue cases without needing to go to the Attorney General's office, potentially resolving disputes months sooner than it currently takes.

The bill was sponsored by Illinois Senator William Delgado and passed in the Illinois Senate unanimously. Representative Elizabeth Hernendez sponsored the bill in the Illinois General Assembly.

Delgado worked with the Just Pay for All Campaign and the Illinois Chamber of Commerce to draft a bill that they could agree on. Jay Shapman from the Illinois Chamber of Commerce "felt that the original bill went too far, but came up with a version that we believe will go after the most egregious offenders," Delgado says.

According to Representative Hernendez, "The majority of our business community are following the rules... unfortunately there are business people using this as a model, so it's those few we are trying to get."

Katherine Kolon, a lawyer with the Working Hands Legal Clinic, described the legislation as bringing Illinois' labor law regime into line with other labor laws on the state and federal level. The bill would not raise taxes but would allow the IDOL to fine violators more quickly, as they would not have to go to the Attorney General's office in order to seek redress. The bill will be voted on by the General Assembly in the next few weeks.

Wage theft is coming under increasing scrutiny from the federal Department of Labor. Hilda Solis, the new Secretary of Labor, calls herself "the new sheriff in town," implying a renewed effort to crack down on business that steal from their employees.

On March 31 Solis spoke at UIC to unveil the new "We Can Help" campaign aimed at raising awareness among workers about the DOL's wage and hours divisions. The campaign seeks to let documented and undocumented workers know about their rights and that they can use the DOL. Solis has big aspirations for the 2nd largest enforcement agency in the federal government, "those who break our nations labor laws and prey on vulnerable workers, it ends today."

The Department of Labor under Solis has been able to increase funding back to its 2001 levels, before the Bush administration cut funding to that department. Solis's DOL has hired 250 new wage and hour investigators but, "hopes to do more."

However even with the larger budget and increased staff, the extent of the wage theft leaves the DOL to pick and choose which cases it pursues. According to Solis, "There is no way in the world we can go after every single complaint, we don't have enough staff to do it. But we can target certain segments of our communities where we know there are abuses going on." Solis wants the DOL to work with non-profits, labor, faith and community groups, to determine where the most egregious cases of wage theft are occurring.

According to Theodore, from 1980 to 2007 federal funding for the Department of Labor's Wage and Hour division declined 31 precent as the workforce increased by 52 percent. With the current staffing levels it would take the DOL 133 years to inspect each workplace once.

Even the "We Can Help" campaign might be woefully inadequate to raise awareness about what workers can do about wage theft. Will a few videos posted online and radio spots spook employers into paying their employees and informing workers of their rights?

Leone Bicchieri, the Executive Director of the Chicago Workers Collaborative explained that it was too early to tell. Bicchieri was "hopeful, but we'll have to see" whether the program has the desired impact.

In many ways the Department of Labor is the public option for those workers who can't afford a lawyer to seek redress for wage theft.

What Needs to Be Done?

Kim Kambra testified to the Illinois General Assembly Labor Committee, saying, "If I steal a piece of pizza, I'm going to jail... [Jericho products] have no consequences for not paying us. They owe us over 25 thousand dollars in wages. It's unfair to all the business that have to compete with them. It's unfair to us with families that have to support them and are losing our houses. The Department of Labor right now has no power to make them pay."

It is a testament to our society that so little is done to stop the practice of wage theft. What can be done to stem the crime spree?

According to Professor Nik Theodore it is important to keep wage theft on the agenda of lawmakers and it is imperative to increase resources to the Department of Labor to handle such cases.

However, workers who have had their wages stolen frequently turn to community groups to get their just compensation. The Chicago Workers Collaborative for example often uses workplace actions, legal pressure and grassroots organizing to get workers their stolen pay back.

According to Leone Bicchieri from the Chicago Workers Collaborative, "The first line of defense is workers themselves being organized. The management of a company can literally sense in the workplace when the workers are united and it changes the dynamic of that workplace."

ARISE Chicago has been able to recover over $3,800,000 in lost wages for workers who have not been paid. The Latino Union has used direct actions at employers who don't pay their workers in order to pressure employers. According to Bicchieri, passing a law is only a step towards stopping wage theft. Community groups need to be prepared to follow up on reports of abuse, and hold employers accountable to the standards in any new law.

This feature is supported in part by a Community News Matters grant from The Chicago Community Trust and the John S. and James L. Knight Foundation.