California Employers Who Owe Unpaid Wages Rarely Pay Up

Workers Cheated Out of Wages Unable to Hold Employers Accountable; Company Machinations Make it Tough to Collect

 

hollowvictoriesLOS ANGELES— Over 83 percent of workers in California are unable to hold employers accountable and recover their unpaid wages after receiving a legal judgment in their favor, according to a groundbreaking study by the National Employment Law Project and the UCLA Labor Center.  The study, Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workersexposes the challenges that workers face in collecting wages owed from their employers—even after state authorities rule in the workers’ favor and order employers to pay.  The report was released Thursday morning at a live press event featuring workers who have tried to claim their unpaid wages, representatives from State Assembly Member Bonnie Lowenthal’s office and labor leaders.

The first of its kind, the study finds that the majority 60 percent of businesses found liable for unpaid wages ultimately suspend, forfeit, cancel or dissolve their businesses, making it more difficult for employees to collect the wages they are owed.

“A worker’s inability to hold unscrupulous employers accountable and collect their earned wages undermines economic stability for workers and their families and contributes to an unfair playing field for responsible businesses,” said Christine Owens, executive director of the National Employment Project (NELP).  “Our economy will not function unless an honest day’s work is rewarded with an honest day’s pay.”

The study is based on a comprehensive review of records from 2008 to 2011, released by the California Division of Labor Standards Enforcement (DLSE).

The report’s findings include:

·       Between 2008 and 2011, employers withheld approximately $390 million in wages owed to workers.

·       During that time, California workers were able to recover only $165 million, or only 42 percent, of the wages owed to them. This figure includes amounts agreed to after a state proceeding.

·       Of workers who prevailed in their wage claims before the DLSE, only 17 percent were ultimately able to recover any payment at all between 2008 and 2011.

·       In 60 percent of wage-theft cases where workers received a judgment from the DLSE, employers had suspended, forfeited, cancelled, or dissolved business statuses.

“Workers in California face an uphill battle when trying to collect the wages they earned,” said Eunice Cho, an attorney with NELP and a co-author of the report. “California lacks effective tools that would enable workers and public officials to hold employers accountable and recover wages, especially from employers that engage in unscrupulous business practices to avoid payment.”

Other states have implemented more effective policies for collecting unpaid wages, including wage liens. The report examines Wisconsin as a comparative case study, and found higher rates of success for workers:

  • In Wisconsin, 80 percent of suits where wage liens were used to recover unpaid wages resulted in some payment of unpaid wages to the worker.
  • Workers in Wisconsin recovered more than 1.5 times the amount of California workers’ withheld wages.

“California should learn from the experience of other states, which have introduced policies that are proven to help workers collect their unpaid wages,” said Tia Koonse, attorney with the UCLA Labor Center and a co-author of the report. “California should adopt policies like liens, to provide greater security for both workers and employers.  That helps the whole economy.”

“Waiting for so long to try and collect my unpaid wages has been hard on me and my family. Even though I won my case, my employer hasn’t felt any pressure to pay my wages. There should be better ways to make sure that employers are held responsible for paying their workers,” said Anita Herrera, a janitorial worker assisted by the Maintenance Cooperation Trust Fund.

“Workers who suffer from wage theft are often the most vulnerable to exploitation and abuse,” said Anthony Mischel, an attorney with NELP and a co-author of the report. “The tragedy of this situation is that workers who have been cheated gain a measure of victory—but this victory is ultimately a hollow one.”

Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workers is available for download here. The report’s authors are Eunice Cho and Anthony Mischel of the National Employment Law Project and Tia Koonse of the UCLA Labor Center.

The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more information about NELP, visit www.nelp.org.

The UCLA Labor Center is a vital resource for research, education, and policy development to help create jobs that are good for workers and their communities, to improve the quality of existing jobs in the low-wage economy, and to strengthen the process of immigrant integration, especially among students and youth. For more information, visit www.labor.ucla.edu.

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3 Responses

  1. […] Talking Union Over 83 percent of workers in California are unable to hold employers accountable and recover their unpaid wages after receiving a legal judgment in their favor, according to a groundbreaking study by the National Employment Law Project and the UCLA Labor Center.  The study,Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workers, exposes the challenges that workers face in collecting wages owed from their employers—even after state authorities rule in the workers’ favor and order employers to pay.  The report was released Thursday morning at a live press event featuring workers who have tried to claim their unpaid wages, representatives from State Assembly Member Bonnie Lowenthal’s office and labor leaders. | The first of its kind, the study finds that the majority 60 percent of businesses found liable for unpaid wages ultimately suspend, forfeit, cancel or dissolve their businesses, making it more difficult for employees to collect the wages they are owed. Read the source story here. […]

  2. On 7/31/2013, in San Francisco, there will be a continuing legal education course taught on this subject by the Labor and Employment Law Section of the State Bar of California. This course is also available separately as a live webcast and can be re-played for up to 3 months after purchase. Non-attorney labor relations professionals are also welcome to attend. Unfortunately, the course is focused on class-action litigation and the relatively larger and more complicated bankruptcies made available to individuals and companies under Chapter 11 of the Bankruptcy Code. See:

    http://laborlaw.calbar.ca.gov/Education/AdvancedWageHourConference.aspx

    “Wage Claims Against Insolvent Defendants: Litigating and Settling Actions Worth More than the Defendants”

    “This panel will profile an issue affecting the practice of every plaintiffs’ and defense-side wage and hour class action litigator during these economic times – how to cope with the threat of insolvency. The discussion will include Chapter 11 bankruptcy basics . . . . [etc., etc.]”

    Too bad they don’t offer a course more oriented towards the individual wage claimant, or a small group of wage claimants, and regarding other types of bankruptcies and insolvencies, both formal (e.g., Chapter 7) and informal (e.g., fly-by-night).

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