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Which L.A. Employers Are Accused of Stealing Paychecks?

LOS ANGELES, CA - OCTOBER 7, 2014: Labor groups and workers, including John Beard, with the LA Black
LOS ANGELES, CA - OCTOBER 7, 2014: Labor groups and workers, including John Beard, with the LA Black | Photo by Katie Falkenberg/Los Angeles Times via Getty Images

Every day thousands of people report to jobs they may never get paid for.

Employers failing to pay workers the full wages they are legally entitled to, including by not paying required overtime or misclassifying their employment status, constitutes wage theft.

"Wage theft happens any time a worker goes to work and is not paid everything that she's supposed to be paid," says California Labor Commissioner Julie Su. "It's not isolated to any particular industry or age group or race or immigration status."

Los Angeles is the wage theft capital of the United States. Workers here lose $26 million to wage theft every week according to the UCLA Labor Center. The crime has major impacts on local economies. It decreases taxable income, lowers wage standards, and in California alone is estimated to cost the state $7 billion in lost payroll taxes.

A closer look at wage theft belies any misconception that it affects only low-income immigrants in certain industries. In the decision by the Labor Commissioner, Markus Hagen is owed almost $150,000 for his work as a designer in the entertainment industry. He claimed in a lawsuit that he didn’t get paid what he was promised for over a year before resigning his employment.

SoCal Connected used a public records request with the state Division of Labor Standards Enforcement to obtain a list of 250 of the largest wage theft judgments in California at the beginning of the year. They each were ordered to pay their former employees an amount ranging from $3,400 to $9 million in wages.

Los Angeles City Wage Theft Infographic

View the list of 250 companies with wage theft judgments from five industries in California here.

At the port of Los Angeles, 900 truck drivers filed wage theft claims with the California Labor Commissioner. In one lawsuit filed against Fargo Trucking Company Inc., 39 truck drivers claimed they were misclassified as independent contractors.

One of the drivers, Clemente Moran, worked for Fargo Trucking from February 2010 through November 2013. On average, Moran worked 10 hours a day, five days a week. He was responsible for covering the cost of insurance for the truck, was required to pay a fuel surcharge and was not allowed to park the truck at the company lot, according to court documents.

Moran’s claim says that the company took over $95,726 from his pay and failed to reimburse him for over $130,000 in business expenses, including truck lease, insurance, tax and license fees, and port fees.

His case is not unusual, according to Barbara Maynard, communications director for the advocacy group Justice for Port Drivers. She says drivers can end up bearing a tremendous financial burden.

"The company charges them to use the company truck. They charge them to maintain the company truck, to buy new tires. They even charge these guys to park the company truck at the company lot overnight. They can’t even take it home," Maynard says.

Each week, Maynard says, "It could take them until Wednesday or even Thursday before they make even $100."

Marco Sanchez was paid only about $5 per hour when he was working 80-hour weeks for an average of $467 as a garment worker for CS Sublimation Inc., according to a decision by the Labor Commissioner. A state Division of Labor Standards Enforcement (DLSE) judgment from 2016 says Sanchez is owed more than $100,000. Sanchez is still waiting on payment according to a statement from the Labor Commissioner’s Office

Neither company has responded to a request Monday for comment.

Watch SoCal Connected's episode 'Freelance Nation'

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Unfair treatment extends beyond pay issues for workers who complain and have to deal with retaliation from employers. DLSE, the agency charged with enforcing California’s labor laws, says immigration-based retaliation claims rose from  nine between 2014 to 2016 to 115 from 2016 to January 2018.

"This usually comes in the form of, ‘If you report me I'm going to call ICE (Immigration and Customs Enforcement). I can have you deported. You know you're illegally in the country, so you have no rights,'" says Su.

She says her Labor Commissioner’s Office is seeing not only growing retaliation against immigrant workers, but also "an emboldening of employers who are making these kinds of threats blatantly."

Worker advocates such as Bet Tzedek attorney Sebastian Sanchez say employers feel empowered by Trump administration deportation policies. "We've seen retaliation claims based on just firing workers but also, bringing up immigration status is something that was not happening in the recent past," Sanchez says.

KCET spoke to several undocumented workers in Southern California who are living in the shadows struggling to make ends meet. They asked that we not reveal their names or employers, to protect them and their families.

An immigrant from El Salvador who works as a parking attendant says he has been in the United States for over three decades. Sitting in a park just before dropping his daughter off at college, he recounted in Spanish how a former employer threatened to call immigration authorities when he complained about paychecks bouncing.

"He said he was going to report me," the worker says. "He said it angrily, and I said, to the contrary, I should be reporting him because he wasn’t doing the right thing. I was doing my job and he was taking my money."

Watch SoCal Connected's episode 'Stolen Paychecks.' To watch this video in Spanish click here.

Advocates and attorneys believe fear of retaliation may lead to vast underreporting of wage theft.

Sanchez says wage theft angers workers but they often accept it as an unfortunate part of life. "They do an internal calculus. They decide, 'I'm going to accept this amount of exploitation because there are limited job opportunities for me.'"

An undocumented ranch hand who has lived and worked in America for nearly 20 years says when he filed a wage theft claim he got an anonymous text saying he would be reported to ICE. He believes the message came from his employer. He says he is panicky and sick with fear because he has seen ICE cars driving through his neighborhood.

"I don’t know if they are coming for me, but I go and hide," he says.

Su says the Labor Commissioner’s Office has a longstanding policy of enforcing wage laws regardless of immigration status. Since August 2017, Su’s office has filed four retaliation suits in California.  

Responding to its reputation as the wage capital of the nation, the city of Los Angeles established the Office of Wage Standards, (OWS) in 2016. The enforcement bureau was established to receive and investigate complaints of employers who are accused of not properly paying their workers. Since it was formed it’s collected nearly $247,000 in back wages for 1500 workers.

City Wage Theft Data

In June of 2017, OWS and Los Angeles City Attorney Mike Feuer announced it would seek $1.45 million in fines and penalties from food chain Carl’s Jr. for not paying 37 workers the minimum wage.

"Our offices will always aggressively stand up for workers to ensure they get the wages they’re owed, and all the protections and benefits the law demands," said Feuer at the time.

The $1.45 million was reduced to just $82,000 in November by an administrative hearing officer hired by the city.

Najeb Khoury, the hearing officer who decided the case, found there was no "ill-intent that caused harm" by Carl’s Jr. when managers failed to pay six months’ of minimum wages to the 37 workers. The company had paid the workers their back wages when the city attorney went before television cameras and made his announcement.

Attorneys for Carl’s Jr. argued to the hearing officer the company shouldn’t pay a million dollar fine for a $4,575.47 "mistake."  Khoury agreed and reduced the penalty.  

Carl’s Jr. has yet to pay the $82,000, according to the City Attorney’s office.

"There is no incentive for Carl’s Jr. or any fast food chain not to turn a blind eye to wage and hour violations if the penalty is only going to be a tiny fine in comparison to their overall net worth," said Anne Richardson, an employment law expert with Public Counsel who reviewed the decision and hearing brief.

Penalties and fines are meant to be significant and make sure employers take seriously their obligations to workers, according to Richardson.

For workers who have a judgment against their employer, collecting on it can take months or years to see results. The ranch hand has been waiting since October 2017 for more than $9,000 from his former employer and meanwhile works whatever job he can find.

"I work one or two hours as a gardener.” he says. “Not making more than $20 or $30 a day. That’s not enough to pay rent, to eat. That’s not enough."

2/9/18 Update: This article was updated to include new information after the Division of Labor Standards Enforcement notified KCET of an error in its data. 

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