As more low-wage workers report bosses cheating them of pay, states, cities target employers

As wage theft rises, states and cities crack down

CHICAGO — Fabian Gutierrez logged more than 60 hours a week slicing meat and stocking shelves with cheeses and milk at a neighborhood grocery for less than minimum wage and no overtime.

The 32-year-old Mexican immigrant said he put up with the situation for months because he was desperate to support his wife and young daughter. And like many co-workers, he was afraid to challenge his boss.

“All of us took abuse. We were disrespected,” said Gutierrez, who found help at a workers’ rights center, joined with other workers to sue the owner of La Fruteria and now works at another grocery store that he says treats him better.

Across the nation, the long-simmering problem of employers who don’t pay their workers appears to be getting worse, especially for immigrant laborers.

In the absence of aggressive federal action, some states and local governments have begun to tackle the issue on their own. They say employers who don’t pay overtime or minimum wage are unlikely to pay into state workers’ compensation or unemployment insurance funds — bilking taxpayers even as they’re cheating workers.

Workers rights centers say wage theft has become the No. 1 complaint they’ve heard in recent months.

In Chicago, Working Hands Legal Clinic, which is helping Gutierrez, received 161 complaints of wage theft from January through June 2008. That jumped by more than 60 percent to 252 complaints during the same period this year.

The Los Angeles-based National Day Laborer Organizing Network says at least 50 percent of day laborers — there are 120,000 on a given day in the U.S. — experience some form of wage theft.

About 68 percent of low-wage workers reported wage theft in 2008, regardless of citizenship status, according to a study released earlier this year that surveyed 4,400 low-wage workers in major U.S. cities, the first such extensive review in years.

“It’s not confined to the margins, or a few rogue employers. Employers realize that workers are desperate,” said Nik Theodore, a professor at the University of Illinois at Chicago and lead author of the study conducted with the University of California, Los Angeles and the City University of New York. “It looks like standard business practice in many industries.”

Wage theft has even emerged in industries where there haven’t previously been many complaints, like fairs and carnivals, according to the Workers’ Rights Law Center of New York. Earlier this year, Dreamland Amusements Inc. agreed to pay $325,000 in back wages to Mexican workers in New York after the company was accused of forcing them to work 70 hours a week at less than minimum wage.

Low-wage immigrant workers are particularly vulnerable because most are paid in cash, making record-keeping difficult. Many fear a call to immigration authorities, even if they have legal status to work in the U.S.

Gutierrez, a soft-spoken, husky man who declined to discuss his immigration status, said he and other workers were scared to bring up the problems with their employer because they feared they might be deported. Eventually, Gutierrez said, he overcame his fear because he wanted to make sure others weren’t wronged.

Gutierrez’s former boss, Tony Macias, owns several grocery stores throughout Chicago. His attorney, William J. Raleigh, said Macias didn’t know he had to pay overtime.

Until recently, such lawsuits have been the main way for workers to fight back. But lawyers often won’t take the cases since they take months to resolve, the payoff is low and collection is difficult.

“Even if we win, that’s usually just the beginning,” said Milan Bhatt of The Workers’ Rights Law Center. “By the time the litigation is resolved, they’ve closed shop and moved elsewhere.”

Some states are looking for creative solutions. California and New York created multi-agency task forces that raid problem industries, such as car washes and grocery stores, and focus on regions where workers repeatedly report violations.

“Having everyone go out together shows a very powerful message that you can’t just pay the piper and keep going,” said Terri Gerstein, New York’s deputy labor commissioner for wage and immigrant services.

Advocates say enforcing wage and hour laws even for laborers in the country illegally keeps wages for all workers from being driven down and ensures that employers who follow the rules can compete.

California has also required some businesses to pay a state registration fee, which pays workers if violations are later found and funds a collections department, making fines enforceable.

Some worker advocates say combining efforts for massive raids is good publicity but nets little for workers because the focus is on recovering unemployment or Social Security taxes for the state rather than overtime wages for the employee.

In response, New York Labor Commissioner M. Patricia Smith has worked with community-based groups and even unions, which are often the first to receive labor complaints, in a nationally recognized effort to identify employers violating labor laws.

“Unlike with a state agency, people don’t feel nervous coming to us and sharing their stories, even undocumented folks,” said Andrew Friedman, co-executive director of Make the Road New York.

Washington, Oregon and Massachusetts are beginning to adopt some similar approaches and adding their own twists, such as hefty fines and online complaint filing.

In Miami-Dade County, a nongovernmental wage theft task force is pushing to create a low-cost, streamlined complaint process. San Francisco already has a similar ordinance, and Los Angeles and New Orleans are considering such proposals.

Still, advocates say the federal government needs to step up enforcement. Despite reports from the ground that wage theft is on the rise, the U.S. Department of Labor reported a 25 percent drop in registered complaints from low-wage workers from the start of the Bush administration through 2008, the most recent data available.

A recent Congressional report slammed the Labor Department for frequently failing to investigate or even register some complaints; a bill in the House would extend the federal statute of limitations on some violations to give the department more time to investigate them.

Labor Secretary Hilda Solis has added about 250 wage and hour inspectors, and last week, the department signed an agreement with the New York labor department, Mexican Consulate and several other groups to create a call center that will provide Hispanic workers in the New York area information about their labor rights.

For now, Gutierrez and his former employer are trying to work things out in court, but he’s unsure if he’ll get all the back pay he says he’s owed.

“I want my voice to be heard,” he said. “We don’t do the work for free.”

Laura Wides-Munoz reported from Miami.

On the Net:

Make the Road New York: www.maketheroad.org/

Working Hands Legal Clinic: www.workers-law.org

Workers’ Rights Law Center of New York: www.workersrightsny.org

National Day Laborer Organizing Network: www.ndlon.org

(This version corrects Friedman’s title to co-executive director instead of co-director and adds the full name of his group, Make the Road New York.)