Enforcement of New L.A. Minimum Wage Law Will Be Challenging

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There was plenty of cheering last month when Los Angeles leaders signed off on an ordinance that will kick the city’s minimum wage to $15 an hour by the year 2020.

With the enthusiasm also comes concern --  especially among immigrants, who are the majority of low-wage workers -- over just how the city aims to enforce the pay hike.

The months of public hearings that led to the final passage of the pay increase were rife with stories of alleged wage theft. A lot of them came from immigrants who described restaurateurs pocketing their tips, carwashes that routinely shorted their paychecks and retaliation against those who spoke out.

“Nobody wants to increase their labor costs unless someone actually holds them to account for that,” says Tia Koonse of the UCLA Labor Center, who co-authored a report on the impact of wage theft in L.A.

Of the estimated 700,000 workers who could eventually see their pay increase under the new minimum wage, about six in 10 are foreign born, according to Daniel Flaming, director of the Economic Roundtable, an L.A. policy research group.

Immigrant workers with limited English or unfamiliar with labor laws can be at risk for exploitation, advocates say, but the undocumented tend to be the most vulnerable.

“It’s actually unlawful to pay anybody less than minimum wage,” says Koonse. “And undocumented workers must be paid, and are eligible for every single wage-and-hour right that their documented counterparts are.”

Koonse says the current system of wage enforcement, which relies primarily on state oversight, is broken.

The Los Angeles City Attorney’s Office handles some wage and labor complaints, but just a fraction of them. Most -- more than 80 percent -- are fielded by a small team of investigators and attorneys with the California Labor Commissioner’s Division of Labor Standards Enforcement.

“L.A. is the wage-theft capital of the country,” says DLSE attorney Julia Figueira-McDonough.

Her office handles about 5,000 L.A. wage-theft complaints a year, especially in industries that employ high rates of immigrant workers, but often pay those workers below the current minimum wage.

“Los Angeles is just a much bigger city with a greater variety of low-wage industries: garment, janitorial, construction,” says Figueira-McDonough. “A lot of industries that rely on what should be minimum-wage labor but aren’t.”

When L.A.’s wage hike goes into effect next June, so, too, will a newly created city Division of Wage Enforcement. It will be modeled after San Francisco’s wage enforcement division, where there are a half-dozen full-time wage-theft investigators.

Los Angeles will start with five. Koonse says that’s not enough. But it’s not a bad start.

“We have like nine times more low-wage workers than San Francisco does, so clearly hiring five investigators is not going to achieve the scale that San Francisco is able to achieve,” says Koonse. “But it’s still better than what’s going on at the state.”

L.A. aims to build out its wage and labor enforcement staff to nearly 40 employees by the year 2020, when the city’s minimum wage reaches $15 an hour. Businesses that fail to comply could face thousands of dollars in fines and lose their operating permits.

But many employers worry the tough rules could be exploited by people filing frivolous wage-theft claims.

“You’re going to see attorneys and advocates who are going to use this enforcement structure that right now looks very ripe for abuse,” says Ruben Gonzalez of the Greater Los Angeles Chamber of Commerce.

“I guarantee you that businesses which labor wants to organize are all of a sudden going to have a whole slew of wage complaints that may be specious claims,” he says.

Anthony Vallecillo says his claims are the real deal.

He’s among a group of workers at a big warehousing firm near the Port of Los Angeles suing their employer over alleged wage theft. Vallecillo says several workers in the complaint are undocumented immigrants.

“Some of our undocumented workers, they’ve been working there for 10, 15 years, and they were afraid to become part of the group because of retaliation of them firing them,” says Vallecillo. “And they’re still scared to this day.”

If the city already had a wage enforcement office up and running, he says, maybe he and his co-workers wouldn't have had to sue.

But winning a judgment against an employer who fails to pay the legal wage doesn’t guarantee workers will get the money they are owed.

According to a report from the state labor commissioner, only about 15 percent of wage-theft victims who win their cases actually collect. Judgments can get tied up with appeals. A business could shut down and reopen under a different name.

“Today it could be Magic Carwash, but tomorrow it could be Magic Carwash Inc.,” says Flor Rodriguez from the nonprofit Clean Carwash Campaign.

Rodriguez says that is what happened to a group of Los Angeles carwash workers a few years ago. The campaign helped those workers, all of them immigrants, eventually win a judgment for several thousand dollars in lost wages from their former employer.

“We did build up a case with the Labor Department, but we have not received money from that,” says Rodriguez. “The workers that did this, the owner started giving them less hours and less hours. So the retaliation started happening really fast.”

Proposed legislation from state Senate President pro Tem Kevin de León (D-Los Angeles) could reverse that trend.

If signed into law, renegade employers would have to pay a bond to ensure payment of stolen wages or risk property liens and other penalties.

California has the seventh-largest economy in the world, and immigrants have a long history in building that prosperity. Today one out of every three working people in California is an immigrant — a share that has grown in recent decades. Our state is shaped by these workers and entrepreneurs — 6 million people who’ve found a job in the Golden State. In our series “Immigrant Shift,” KQED and The California Report explore the impact they have, the challenges they face and the policies that affect them.