Biden's Nominee for Secretary of Labor Wants 'Wage Theft' Cops
California’s experience combatting wage theft has been a headache for employers without much in the way of restitution for workers.
Julie Su wants to be the nation's top cop on wage theft, and she means that quite literally.
Su, President Joe Biden's nominee to be the Secretary of Labor, believes that allegations of not paying workers what they are due are so serious that the accused—business owners—should be put in handcuffs.
As the head of the California Labor Department under Gov. Gavin Newsom, Su created the state agency's first-ever criminal investigations unit. Su vowed that the unit would go after those "who underpay, underbid and under-report in violation of the law." And the wage theft police were born.
"When we first implemented the unit, newspaper headlines warned of armed Labor Commissioner deputies coming to get employers in California and arrest them for crimes. And, well, we are!" Su boasted in a 2015 lecture. "We have filed over a dozen felony wage-theft cases with district attorneys across the state and we have had employers arrested and thrown in jail for the wage theft they committed."
"Wage theft" is a catch-all term for not paying workers what they are owed under the law, such as violating minimum wage or overtime regulations. It is a crime under the Fair Labor Standards Act and is enforced by the Labor Department's Wage and Hour Division. It can involve business owners sneakily ripping off employees. It can also result from honest confusion or mistakes regarding what is owed.
There is substantial confusion in employee/management relations about what workplace practices constitute theft, notes Saba Waheed, the research director at UCLA's Labor Center. "There's like a level of informality. It's so normalized that even viewing it as some kind of theft would be such a surprise to folks," Waheed says.
In one case, Ferra v. Loews Hollywood Hotel, LLC, the employer was found guilty of wage theft because it hadn't factored in the quarterly incentive payments it gave employees on top of their regular wages into the calculation of pay owed under state law.
Su however sees no difference between this confusion and somebody taking money at gunpoint. Most district attorneys, she noted in the lecture, "do not think they should be handling those cases when they have other really big important cases involving 'real' crime, such as robberies, rape, and domestic violence. My response is that wage theft is like robbery."
It was not an empty threat. A 2013 profile of Su by In These Times, for example, describes the arrest of father and son restaurateurs accused of failing to pay workers the minimum wage. Instead of leaving this to a regular law enforcement agency that would prioritize serious, legitimate cases of wage theft, here's a state agency with a newly minted police force that is exclusively about harassing business owners whenever it has any cause to do so.
This approach may be ineffectual at ending wrongdoing. The California Labor Commission has claimed to have recovered more than $39 million in lost wages on behalf of workers in 2021, but it received claims that year for $334 million, according to a Los Angeles Times report.
That means only about one in 10 alleged cases of theft resulted in a judgment for workers. Worse, a 2020 legislative audit found that most workers who won their cases were unable to collect.
California's cases were numerous in part because workers could file lawsuits through California's Private Attorneys General Act, which granted workers the same powers as the state to file lawsuits against their employers. Most such cases are settled out of court. Management-side attorneys call it a "cottage industry."
After California ordered hotel owner Balubhai Patel to pay an ex-employee $202,000 in back wages, he sued the state in Los Angeles Superior Court alleging false testimony. He is seeking $10 million and to overturn the decision. "It's damn lies," Patel told the LAist. "I've been doing business for a long time. I never cheat."
Jennifer Barrera, chief executive of the California Chamber of Commerce, told the LAist that it was rare for California's employers to intentionally steal wages. "We have the most complex labor and employment laws, I would argue, in the country," Barrera said. Little was done to educate employers on how to navigate that complexity, she claimed.
California's experience combatting wage theft then has been a lot of turmoil and headaches for employers without much in the way of restitution for workers. This is the model that Su will likely try to put in place at the federal level. Senate lawmakers should be wary.