The U.S. Labor Department has scored three recent legal victories – including a ruling against DirecTV in Washington State – in its fight against the widespread use of contrived contracting schemes to illegally underpay workers. The court disputes all stem from alleged violations of minimum wage and overtime protections. In the case of DirecTV, the Labor Department won a ruling that allows its litigation to move forward against the company. A federal judge found that DirecTV qualified as a joint employer of 82 satellite dish installers in Washington State who worked for a now-defunct subcontractor called Advanced Information Systems or AIS. The Labor Department says the installers were paid piece rates for every job they did; they were not compensated for travel time between jobs or the amount of time a job took.
When workers get cheated out of wages, it’s often not enough just to win a court order for back pay. Often the court ruling is a hollow victory because the employer has gone out of business or claims to have little or no money to pay the judgment. That’s the challenge likely facing 101 workers who a jury last month awarded $1.3 million in back pay and damages from the co-owners of a restaurant and a spa in Bellingham, Wash. A lawyer for the employers said there is no way they will be able to pay. The case, detailed in a FairWarning story InvestigateWest published last year, was brought by the U.S. Department of Labor against Huang “Jackie” Jie and Zhao “Jenny” Zeng Hong and their businesses. The government’s civil suit highlighted the issue of low-skill immigrant workers who are victims of wage theft but resist complaining to authorities because they fear retaliation by their employers.
Seattle Mayor Ed Murray signed legislation earlier this year to raise the city’s minimum wage to $15 an hour. Credit: City of Seattle
Under Mayor Ed Murray Seattle has passed a historic $15 minimum wage, is redoubling efforts to fight wage theft by employers and is about to become the second major city in the nation to set up a city office specifically to enforce labor laws.
But as the City Council meets Thursday for its second of two public hearings on Murray’s proposed budget, worker advocates say Murray’s spending plan would undermine Seattle’s progressive labor ordinances. There’s not enough to staff the enforcement office or make sure workers know about the laws and whom to call if they are violated, critics say.
And compared to the budget in the only other American city to embark on such a campaign, San Francisco, Seattle’s budget does indeed look pretty small.
“The amount of money allocated was very low,” said Hilary Stern, executive director of Casa Latina and a member of a panel of advisors Murray assembled on the issue.
So Thursday worker advocates will be asking the City Council to boost funding for the labor-enforcement office and for community groups such as Casa Latina that are supposed to go out into the community to make sure workers know about the $15 minimum wage and the city’s ban on wage theft.
Last month a group of stakeholders appointed by Murray, including business owners, labor advocates and wage experts, finished hammering out what needed to be in the mayor’s 2015-16 budget. Known as the Labor Standards Advisory Group, these 16 people issued seven pages of recommendations for Murray and the City Council.
So, what was recommended and how did that end up translating into the budget?
Many wage theft cases involve relatively small amounts of money, often promised in an oral agreement and paid in cash. Not so with a lawsuit filed against O’Brien Auto Group in King County Superior Court today, which could impact hundreds of current and former employees who allegedly were promised more than they were paid for selling cars at the company’s dealerships.
The suit was brought by an immigrant from India who seeks to broaden his complaint to a class action, and who also filed a second suit Tuesday accusing O’Brien of discriminating against him because of his racial background.
The O’Brien Auto Group claims to be the largest auto dealer in the Pacific Northwest, with annual sales exceeding $500 million. Repeated attempts Tuesday to reach managers of the O’Brien company for comment on the suits were unsuccessful.
If true, the allegations would comport with a pattern InvestigateWest revealed in August: Employers failing to pay overtime, minimum wage or, as alleged in this case, promised commissions.
The lead plaintiff in the proposed class-action suit, car salesman Ruhul Kayshel, worked at O’Brien Auto Group’s Toyota-Scion of Kirkland dealership from October 2012 to July 2014. The suits say he was fired after complaining to human resources about what he described as blatantly racist comments made by one of his supervisors.
Often working as many as 84 hours a week and selling 40 cars a month, Kayshel was among the top O’Brien salesmen in the region, he says. In the suit, Kayshel claims that Toyota-Scion of Kirkland failed to pay him as stipulated in a sales compensation plan.
This is part of what Seattle attorney Stephen Teller, who specializes in discrimination and employment law, describes as a “widespread pattern of wage theft by paying salespeople smaller commissions than (O’Brien) owes them under their employment contracts.”
When asked how much the dealership owed him, Kayshel was quick to respond, “hundreds of thousands of dollars.”
Seattle Mayor Ed Murray with Councilman Nick Licata at Monday’s press conference. Photo: City of Seattle
Clutching a copy of Politico lauding his leadership in passing the $15 minimum wage, Seattle Mayor Ed Murray on Monday proposed creating a city office to police employers who cheat employees out of their wages or sick leave.
Murray’s proposed Office of Labor Standards would also crack down on employers who illegally use arrest records to guide hiring decisions. In general, the office would serve as a one-stop shop for both aggrieved workers and employers trying to ensure they comply with Seattle’s progressive labor laws, Murray said.
“We must be proactive in working with business and with labor in making sure that these laws are complied with and that they are understood,” Murray said at a news conference Monday. “My budget plan to the City Council will include new tools to help educate, and where necessary enforce, worker protection.”
Murray’s announcement is based on recommendations by a city advisory committee that included business and labor representatives. The new seven-person city office would represent an increase of 5.5 city personnel devoted to the issue. It would be housed in the Seattle Office for Civil Rights.
The new office would at first focus on educating business owners and employees about their rights and responsibilities, later moving into the role of investigator and enforcer of Seattle’s wage laws.
“Education will be the primary focus of this office in the near term,” said Murray. “This is not about gotcha, this is about helping folks.”
Representatives of Working Washington, UFCW 21 and Casa Latina picket the Queen City Grill in June. Photo: Allegra Abramo.
On a sunny mid-June evening, two dozen protesters in scarlet, green and gold T-shirts paced in a circle in front of Queen City Grill in Belltown.
“Wage theft is a crime,” they chanted. “Pay your workers or do the time.”
One protester’s sign: “You pay, we leave!”
The protest was organized to pressure the restaurant owner on behalf of former employee Fernando Moreno Ruiz, who said he was owed more than $5,500 in back wages.
Moreno Ruiz said he worked for the owner for more than six years. But last year, his paychecks started bouncing. Alone in the U.S. for the past decade, Moreno Ruiz counted on the wages to support his wife and two children in Mexico.
By December he couldn’t wait any longer. He quit. The lost wages almost cost him his marriage, he said, because his wife thought he didn’t want to send money home anymore.
“I tried to do honorable work, and he didn’t know how to honor me as a worker,” Moreno Ruiz said of his boss.
The protest against Queen City Grill was organized by Casa Latina, which runs a day worker center and educational programs for immigrants. The Seattle organization gets hundreds of calls a year from workers like Moreno Ruiz who say employers have failed to pay them some or all of their agreed wages.
The protesters marched for only 10 minutes before Moreno Ruiz and a Casa Latina organizer were called into a back office.
The owner, Robert Eickof, never came out of the office, nor did he respond to several phone calls later from InvestigateWest seeking comment.
But after a few minutes, Moreno Ruiz emerged. Back out on the sidewalk, he beamed as he flashed $800 in crisp $100 bills and a promissory note for the rest.
A broken system
Seattle may soon find that passing the $15 minimum wage was the easy part. The real challenge will be making sure workers actually get what they deserve under the law.
However satisfying that June evening in Belltown proved for Fernando Moreno Ruiz, that is not the way the system is supposed to work.
In the last eight years both the Washington Legislature and the Seattle City Council passed laws to address what’s coming to be understood as a huge problem: Wage theft. That’s withholding wages or denying benefits rightfully owed to an employee. It’s a misdemeanor under city and state law. Widespread violations of minimum wage laws, overtime provisions and other examples of wage theft have been well documented in recent decades.
And yet in hundreds of cases annually, Washington fails to retrieve workers’ shorted wages, a review of state records by InvestigateWest shows. Meanwhile, the city ordinance has yet to bring about even a single prosecution of employers who withhold pay, InvestigateWest found.
For many Washington workers hoping to recover a few thousand dollars or less in wages, their best alternative is often to file a complaint with the Department of Labor & Industries. But justice is often neither swift nor certain. Labor & Industries has just 16 investigators to pursue up to 4,000 cases per year. The complaints include alleged minimum wage violations and outright refusal to pay for work done.
Since 2009, Labor & Industries has collected more than $11.6 million in unpaid wages for workers in Washington. Yet that’s only a little more than half the total wages the state has declared workers are owed: Nearly $10 million in unpaid wages remain uncollected, even as the average wait for a worker to recover the pay due has shortened to just over the state-mandated 60 days.
Hover over each bar to see how major industries in Washington state measure up in total upaid wages and how much the state has collected.