Alejandro Lazo, Jeanne Kuang, Lil Kalish, Agnes Lee and Erica Yee / CalMatters
Some of the lowest wage workers are getting their livelihoods stolen by their own employers.
Employers deny workers overtime premiums, ask them to work “off the clock” or take their tips.
In California, workers lost nearly $2 billion from not being paid the minimum wage in 2015, according to the Economic Policy Institute, a left-leaning think tank.
Most often the victims of wage theft are women, immigrants and people of color, researchers say; many work in restaurants, construction, hotels, car washes, garment businesses, farms, warehouses, and nail salons. These workers are among those who bore the brunt of job losses during the pandemic and have the most ground to make up.
For years, California’s lawmakers have tried solving the wage theft problem by strengthening labor laws. Most workers who file wage theft claims wait months or years before getting a resolution; only a fraction who prevail get repaid lost wages.
Usually no one goes to jail
Last year California made most wage theft a criminal offense. It also did away with the garment industry’s system of paying workers by the piece instead of by the hour. Now lawmakers are considering creating a statewide council to set wage and work conditions for the fast food industry. Here’s what you need to know about wage theft in California.
What is wage theft?
The Economic Policy Institute has cited examples, such as an employer taking illegal deductions, confiscating tips or failing to pay tipped workers the difference between their tips and minimum wage, and misclassifying employees as independent contractors to pay a wage lower than the legal minimum.
How big is the problem of wage theft?
One way to look at it is how much workers try to recover in unpaid wages.
Last year California workers filed nearly 17,000 claims totaling more than $300 million in stolen wages, according to a database provided by the Labor Commissioner’s office. That may be an undercount; the office’s public web site indicates as many as 19,000 claims filed last year. State officials haven’t explained the discrepancy.
Either way, that’s down from prior years, when on average 30,000 workers annually claimed $320 million in unpaid wages, the office told the Legislative Analyst’s Office in 2020. Workers recovered about $40 million, or one-eighth, of those claims, the LAO said.
Wait times: How long does it take to get back stolen wages in California?
The state violates its own deadlines with wage theft cases.
By law the individual wage claims workers file with the Labor Commissioner’s Office are supposed to reach a hearing in 120 days. Then the office gets 15 days to decide whether or not the worker is owed money and how much.
That can become a court judgment allowing the worker to claim the money.
While the vast majority of cases settle before the hearing, other workers have faced long delays just to get a hearing before the Labor Commissioner’s Office. The average case filed last year that actually got a decision took double the time allowed by law. Thousands of cases filed in 2021 remain pending.
Who is impacted most by wage theft?
Wage theft is most prevalent in low-wage industries, according to advocates who say such workers often are not unionized and are reluctant to endanger their livelihoods by objecting to the theft.
Many of these jobs, other than construction, are service-sector jobs with a history of employing immigrants or minority workforces.
What does wage theft cost a typical worker’s family?
An Economic Policy Institute report found California workers who were victims of minimum wage theft — who were paid less than the legal minimum wage — lost out on $64 in pay a week, or about $3,400 a year in 2015, the most recent data available. Adjusting for inflation, that’s about $80 stolen each week, or $4,250 a year, based on June’s record 9.1% inflation rate.
For workers in low-wage industries, that means less food on the table, a harder time paying rent, or delayed trips to the doctor.
A week’s worth of stolen wages can mean an empty 12-gallon gas tank in a car.
A year of lost wages is the equivalent of three months of child care in California, or nearly one-and-a-half months’ rent in San Jose, nearly two months’ rent in Sacramento, and a little over a months’ rent in Los Angeles, according to Rent.com.
Ironically, a year of stolen wages used to equate to a year of groceries for a family of four, but not this year. According to the Bureau of Labor Statistics, now it would pay for only 75% of that typical family’s annual grocery bill.
California’s history of trying to tackle wage theft
California lawmakers passed several laws in recent years to strengthen worker protections in industries where contracting is common, and to help workers collect unpaid wages.
Contracting allows big firms to escape liability for wage theft, advocates say, because the big firms hire contractors, who directly employ the workers and are often accused of wage theft.
If they were jointly liable, then the larger firms would be legally on the hook for any unpaid wages along with their contractors and subcontractors.
How do California workers get their money back?
California law allows workers several ways to accuse employers of wage theft and to open a case for recovering alleged losses. The vast majority of claims are made by individual workers in an administrative hearing system run by the Department of Industrial Relations’ Labor Commissioner’s Office. In theory it’s intended to be a quick, inexpensive, accessible way to resolve complaints without needing to go to court, with opportunities to settle each step along the way.
Filing a complaint with the Bureau of Field Enforcement. The bureau, which also falls under the Labor Commissioner, conducts larger investigations of workplaces and issues citations or brings suits against employers that it says committed wage theft. The bureau relies on complaints and testimony from workers. Unlike the individual wage claims, these cases tend to be worksite-wide, and the bureau targets specific industries, some of which were picked by the Legislature.
Filing a lawsuit. A worker can file a private lawsuit against the employer for labor law violations. This is relatively rare, because it involves the worker hiring an attorney. If a worker finds a lawyer willing to take it on, the worker also can file suit under the state’s Private Attorney General Act, which lets a worker sue the employer on behalf of the state. This takes the burden off the state to conduct its own investigation of every complaint, and the worker could represent all coworkers without having to get a judge to deem it a class action.
Seeking federal action by the U.S. Department of Labor. An employee must allege that federal labor laws were violated. The employee may file a wage-and-hour complaint with the regional offices in Fresno, Los Angeles, Sacramento, San Diego, Orange County, Walnut Creek, San Jose, West Covina or Ontario.
Where do people most often file wage theft claims?
Workers file wage claims based on where they performed their jobs, legal experts say.
A CalMatters analysis of claims filed with the Labor Commissioner’s office shows San Bernardino and Los Angeles – two cities with millions of low-wage workers in warehouse, garment, restaurant, and other industry work – had the highest numbers of individual wage claims.
The data paints a partial portrait of where wage theft occurs across the state. It includes claims at the Wage Claim Adjudication unit for 2021 gathered from the department’s search portal and from a public records request. It does not include the Bureau of Field Enforcement cases, which involve multiple workers at individual employers.