Officials say that just over $2 million stolen from workers by Washington employers in 2011 was returned to those workers last year. Investigations were conducted by the Department of Labor & Industries (L&I) as they enforced the state’s Wage Payment Act, written to protect employees against the crime called wage theft.
The law went into effect in 2006. In April 2011, the city of Seattle passed an ordinance making it a gross misdemeanor for employers to pay an employee working or hired within the city limits less than the law requires or less than they had contracted to pay. A company violating the law could lose its business license. Today (Feb. 27) the King County Council is scheduled to vote on wage protection legislation that will make businesses in willful violation of the state law ineligible for county contracts. (Update: The legislation was returned to a committee.)
Passing legislation at both state and local levels is a relatively new weapon in combating wage theft, but advocates say it's an important one in dealing with an increasing problem. A 2009 study based on a nationwide survey of employees in low-wage jobs reported that 68 percent had suffered the prior year from employers who knowingly paid less than the minimum wage, stole tips, or refused to compensate extra for overtime hours. The number of people reporting wage theft included both U.S. citizens and non-native workers. Progressive States Network estimates that for full-time employees earning $18,000 per year, income lost because of workplace wage violations averages close to $2,700 per employee.
Washington state has had an average of nearly 4,000 wage complaints each year since the law’s inception five years ago. L&I investigates whether an employer violated the minimum wage law, overtime wage rules, or the federal Economic Realities Test that distinguishes between independent contractors and employees — the ERT distinction being important because independent contractors are not covered by certain employment and tax laws.
Advocates from business and labor worked together on the bill that became Washington’s wage payment law, said L&I program manager Elizabeth Smith. “Worker advocates saw this as a path to workers being able to get their money back without having to spend on attorney fees. Business advocates saw it as helping employers get [complaints] resolved without a long-term legal liability hanging over their heads.” And L&I could take on more wage complaints because the law instituted a process more efficient than time-consuming court proceedings.
Local governments that pass legislation against wage theft help the state solve the problem, said Smith. “When Seattle passed their wage theft ordinance, we were watching it with great interest.” Making this type of theft a criminal violation that can cost employers their business licenses brings a differently serious deterrent into play. “A lot of people might not be swayed by an administrative violation” determined at the state level, even if they are forced to pay an employee’s back wages plus interest, “but the threat of a criminal violation might give them pause,” she said.
Smith worked with the Seattle attorney’s office and police department to dovetail the demands of the state law with city police operations, and she urged workers who file a complaint with the city to file with L&I as well. “Seattle can go after the employer and bar them from business licensing; L&I has revenue agents who can go after collecting wages for the employee.”
As might be expected, the economic downturn has challenged L&I’s efforts to recover lost wages for wronged employees. “Businesses going under — that’s one of the big things that results in wage complaints,” said Smith. “The employer says, ‘Yes, I owe the worker that, but I don’t have any money.’ ” Increased unemployment during a recession can also make low-wage workers so anxious about keeping their jobs that they won't risk antagonizing the boss. Thus there may be many wage theft cases L&I never hears about, she said.
Another frequent challenge is the lack of an employer-employee contract on paper. But employers are the ones responsible for keeping records, so even where they haven't, “we deal with all complaints,” Smith said. L&I then makes the best determination it can in the absence of written evidence.
The public should know more about the Wage Payment Act and about the existence of an agency that will go after employers to pay employees’ rightful wages, said Smith. “If you Google ‘My boss isn’t paying me, Washington state,’ and look at the online conversations, there’s no mention of calling L&I.” Workers in the industries about which the most complaints are made — construction, manual labor, food services, retail and sales — tend to be least well informed about their rights, she said.
Lack of information may be one reason why the city of Seattle has received only one wage complaint since last year’s ordinance went on the books, according to assistant city attorney Richard Greene. A public education campaign about the ordinance may also have made some employers more scrupulous in fulfilling their contracts with workers, he said, citing meetings at Casa Latina that received major media attention and one with Seattle’s Building & Construction Trades Council. City officials have planned meetings with worker advocate groups next month to consider more ways of spreading the word about the ordinance, in case more victims would call SPD if they knew about it, said Greene.
Still, many crimes go unreported, and for a variety of reasons, said Sgt. Sean Whitcomb, Seattle Police Department spokesman. “If it’s a question of immigration status, we want people to know that their status will not be a factor” in any complaint they file about nonpayment of wages. “This is theft," Whitcomb said. "It will be treated no differently than if somebody broke into your car and stole a CD player or left a restaurant without paying. If you entered into an agreement to provide work and are not paid, your employer stole from you.” SPD officers will investigate the crime and bring charges regardless of who the victim is.
King County is now considering imposing its own penalty on employers who commit wage theft. Councilmember Bob Ferguson and Council Chair Larry Gossett are co-sponsors of legislation to prohibit the county from contracting with businesses that willfully underpay workers.
Ferguson said he believes local governments “have a role in helping the state government move [wage theft law enforcement] forward.” Gossett is quoted in a press release as saying, “Employers who resort to these tactics are taking money away from working people and their families, and in this current economy, literally every dollar counts.” The county would base its decisions about any company on official L&I findings, Ferguson said.
Workers obviously benefit from the enactment and enforcement of wage theft laws. But so do employers, and not just in the resolution of complaints: the level playing field important to all businesses is unfairly tilted when illegal operations reduce the expenses of a few. Taxpayers win, too, when public coffers don’t lose tax revenue from wages earned.
