Is Wage Theft Still a Problem in California?

Since becoming a lawyer, I’ve had many casual conversations with family, friends and colleagues about the work I do. I’m asked (more often that I’d like to admit) whether or not things like wage theft are actually a significant problem in today’s modern workforce. Depending on where I’m asked this question, and who’s asking it, I’m often inclined to pinch the bridge of my nose, squint my eyes and let out an audible sigh. Sadly, I do find myself explaining to folks that, yes, in fact wage theft is alive and well in America and definitely in the Golden State.

Here is a Simple Wage Theft Example

For evidence of this unfortunate business practice, one need look no farther back in history than June 2017, when reports surfaced that Los Angeles City Attorney Mike Feuer intended to take legal action against fast food behemoth Carl’s Jr.

The reason? The company stands accused of failing to pay 37 workers the legal minimum wage of $10.50 an hour at seven Los Angeles locations. According to KCET.com, the city alleged the company engaged in the wage theft between July and December of 2016.

Under the city’s action against the company, Carl’s Jr. is facing a total of $1.45 million in restitution and penalties. The alleged lost wages totaled more than $5,000.

While it might shock some folks that a company with such a high profile as Carl’s Jr. would potentially engage in such shady employment practices, keep in mind that Andrew Puzder, former CEO of Carl’s Jr.’s parent company CKE Restaurants was tapped as President Trump’s first pick for U.S. Labor Secretary. Puzder served as CEO from September 2000 until March of 2017.

Although his nomination was derailed after old allegations of domestic abuse surfaced, it raised unsettling questions about how powerful business interests view workers.

In December of 2016, OC Weekly examined a 2009 interview with Puzder archived by Cal State Fullerton’s Center for Oral and Public History. In the interview, Puzder reportedly lamented the state of the law in California. “I think the big change in California, it’s really become a kind of socialist state,” he said proceeding to disparage business practices such as mandatory breaks for minimum wage employees. “Have you ever been to a fast food restaurant and the employees are sitting and you’re wondering, ‘Why are they sitting?” Puzder asked. “They are on what is called a mandatory break.”

Sadly, and unsurprisingly, Carl’s Jr. isn’t the only company in California to have accusations labor of labor violations leveled at them.

Here is more information on meal breaks and rest breaks. Here is the basics of California overtime law.

Wage Theft from an Economic Point of View

A May 18, article published by the San Jose Mercury News highlighted recent figures compiled by the Economic Policy Institute. The statistics showed California’s low-wage workers losing close to $2 billion a year in minimum wage violations.

The Institute’s report argued that wage theft hurts low-income workers in every demographic category, but particularly young people, women, people of color and immigrant workers. The study’s authors estimated that if California’s numbers were representative of the rest of the country, American workers could be getting cheated out of more that $15 billion a year — enough to build Trump’s border wall.

The above-mentioned examples highlight just some of the more recent examples of wage theft in the Golden State.  Depending on whom you ask, an argument could be made that the problem has been a systemic issue for many years.

In 1988, the Los Angeles Times reported on a contractor in Costa Mesa who allegedly refused to pay three immigrant workers a combined total of $1,800 in back wages. After the workers notified police, the case was referred to the district attorney’s office. A warrant was issued and the contractor was charged with grand theft of labor wages. At the time, a spokesman for the Costa Mesa Police Department said it was the first arrest of its kind in city history.  I can’t help but wonder how many times similar situations had happened before, and have happened since.

Conclusion on Wages

Long story short, I believe wage theft is a big problem in California — probably bigger than even most employment lawyers and other labor experts realize. I personally see the effects this crime can have on my clients, effects that often go unnoticed by media reports. These include stress-related illness, depression and difficulty paying basic bills such as rent and groceries.

If there’s any bit of good news for people who feel they’ve been denied their rightful payment for their hard work, it’s that employment lawyers typically take cases on a contingency basis. Usually there is no fee for consultation. In addition, there are laws to protect workers from retaliation from employers, should they report wage theft. While the decision to go to a lawyer and blow the whistle on an unethical employer isn’t always easy, the option is there, and is something to be considered when the going gets rough.

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