The largest growth sector over the last ten years has not been in technology, transportation, or communications. Unfortunately, the largest growth sector we have seen in the U.S. has been in wage theft. In 2017, an Economic Policy Institute study reported that “in the 10 most populous U.S. states, 2.4 million workers lose $8 billion annually (an average of $3,300 per year for year-round workers) to minimum wage violations – nearly a quarter of their earned wages.”
The attacks on workers and the theft of their wages, benefits, and retirement are not only happening on minimum wage workers. All workers are a united target for theft. Workers are paid under the table, are having their health care and pensions underfunded, are being paid in cash, or not being paid anything for overtime. These are daily attacks on all kinds of workers in this country.
In many instances, workers don’t know about the fraud, such as in the cases of health care and pension theft, until it is too late. In the cases of cash payments and non-funding of overtime, workers fear for their jobs as the reason they don’t speak up. Most often they are working as independent contractors or on a day-by-day basis and they are usually being used to undercut Union workers.
On April 8, the Pennsylvania Attorney General, Josh Shapiro, announced the Largest Prevailing Wage Criminal Case On Record in U.S. History against Glenn O. Hawbaker, Inc. Hawbaker, who received over $1.7 billion in state contracts between 2003 and 2018, is accused of underfunding employee retirement plans by $15 million in the last five years and over charging employees by $12 an hour for their health insurance.
“My focus is on holding Hawbaker accountable for breaking the law, and getting workers their money back,” Shapiro said. “Employers across the commonwealth, you are on notice: if you steal from your employees, if you misclassify workers, if you violate labor laws, we are going to find out, we are going to hold you accountable, and we will do all we can so Pennsylvania workers receive the wages and benefits owed to them under the law.”
Unfortunately, these are not isolated instances. These cases are happening in every industry and every state in the country. In the past we have only seen prosecution of what have been termed white collar criminals that steal from pension funds; they receive a slap on the wrist and only serve limited jail time. It is time to stop the theft by corporate America in the ever-increasing search to line the owners’ pockets with more money at the cost of their employees. Working people have built this country and they deserve our respect and the investigative and prosecutive follow-through of the people and corporations that are stealing from them.
Almost daily we see headlines like these:
- March 18, 2021: Nashville restaurant workers awarded $628K in wage theft lawsuit settlements
- March 19, 2021: Amazon will pay contract delivery drivers $8.2 million to settle a wage-theft lawsuit
- April 13, 2021: San Jose flooring company owner charged with wage theft
- April 13, 2021: CLN Report Documents Rampant Wage Theft in DC Commercial Construction Industry
It must stop. These are not victimless crimes as they have been treated in the past. This is rampant abuse of a system that has taken this as just another step in the way America does business.
In many cases these crimes go unreported or not covered by the news media because they don’t have the intrigue of murders and burglaries. As a result, these cases are being initially investigated by worker defense groups and labor unions, which then have to convince state attorneys and attorney generals to further investigate and prosecute or help file civil litigation against the perpetrators.
States choose to prosecute and investigate these claims differently. Illinois, for instance, has a division within the Attorney General’s office that is specially tasked with investigating worker rights:
The Workplace Rights Bureau protects and advances the employment rights of all Illinois residents by investigating and litigating cases involving serious or persistent wage law violations or other significant employment practices. The Bureau also monitors labor and employment legislation and proposes legislation when there is a need to address gaps or strengthen existing law.
The charges described above filed in Pennsylvania are the largest criminal case filed in the country. However, most cases never end in jail time; instead, companies and employers are assessed large fines and are charged to repay the money to the workers. Almost none of that money is ever collected or repaid.
Workers’ rights advocates and Unions such as the Laborers International Union of North America (LiUNA) are taking new and innovative steps to hold these employers responsible. If lawsuits and complaints aren’t slowing this extensive theft, they are taking these cases directly to the Private Equity (PE) funds and the investors that are supplying these companies with operating capitol.
A March 16 Wall Street Journal story detailed how LiUNA has documented BluSky Restoration’s use of sub-contractors or temp agencies in an attempt to insulate themselves from unfair and unethical wage practices of workers on their projects. Many of these projects are remediation and cleanup after natural disasters and instances of civil unrest that in turn are receiving public funds.
In cases when PE funds cover the operating capitol, corporations look for a large return on their investment. They don’t delve into how the work is being done or if the workers are trained correctly; they are only interested in the return for their investors. Much like the hedge funds in recent past, these PE funds invest money from pension programs. Some of those very pension programs are for the workers from whom BluSky is stealing and undercutting jobs.
LiUNA is meeting with the boards of these PE funds to try and convince them that this is not a sustainable market plan. At some point, the laws will catch up with BluSky and they will be forced to potentially pay millions of dollars in backpay and wages for workers. They are also meeting with the pension funds that are giving their money to the PE funds to try and explain of the potential pitfalls of these models.
In one example in Iowa, BluSky Restoration blamed a subcontractor for breaking agreements with workers and not paying them thousands of dollars, not keeping time sheets, putting them up in unsafe housing, not providing them with PPE, and threatening retaliation for work stoppage over lack of pay.
This was all going on while BluSky employees monitored the workers daily on the job, made them wear BluSky shirts and finally, even though they blamed the subcontractor, paid them money they were owed after they signed a non-disclosure agreement. While BluSky claims this is a rare instance, Pablo Ramirez of Painting and Demolition Ramirez Company, the sub-contractor in question has now signed an affidavit stating how the company plays loose with these facts. Ramirez was also retained and used on multiple projects.
Mr. Ramirez has since signed a sworn affidavit about how BluSky Restoration works with subcontractors. He stated:
6) BluSky’s practice was to front me a portion of my payment at the beginning of a project, with a promise that they would pay me the rest at the end. When my workers and I completed a project, they would tell me my payment would come later, or find problems in my work as a reason not to pay. In some cases, such as the Des Moines project, I did not receive any pay.
7) When I would tell them I was owed money to cover wages and materials, they would offer me a “new” project, and provide a partial up-front payment once again, which I had to use to pay workers and the costs from the last project.
BluSky Restoration is also named in a Federal Class Action Lawsuit in Minnesota (Case No. 19-cv-01929) which also alleges wage theft. In this case, BluSky working with a temp agency, brought workers from Illinois to Minneapolis to clean up after the George Floyd protests. These workers were paid below the Minneapolis minimum wage. Those workers then moved on to Portland and then to Iowa, doing the same cleanup for BluSky. The number of workers owed money by BluSky could be in the thousands.
What are workers to do? They don’t have the money to hire lawyers and spend years in court fighting for back wages. These cases generally aren’t flashy or large enough for a state attorney or an attorney general to spend time and resources investigating. A number of states appear to be stepping up to the plate. The Attorney Generals in Illinois (Kwame Raoul), Minnesota (Keith Ellison), and Pennsylvania (Josh Shapiro) are a few making this a priority.
What the pandemic is starting to reveal to workers in this country is that they have more power than they ever imagined. They are fighting for hazard pay, paid sick time, and health benefits.
But even when workers win and a judge or jury awards them back pay or damages, that money is all-too-often never paid. Companies declare bankruptcy or just change names and move.
In California, workers have an unlikely ally in Los Angeles County Sheriff Alex Villanueva. In an opinion piece published in March 2021, Opinion: Wage theft thrives in secrecy, Villaneuva detailed how awards and penalties are going uncollected:
“Only 3 percent of back wages awarded in court judgements are ever collected. We’re talking about a multibillion-dollar crime in which predators get to keep 97 percent of their illegal haul …
In Los Angeles county, there are 8,000 existing court judgements that workers have won against their employers for owed wages that haven’t been paid, totaling a mind-numbing $115 million.”
When will these workers get the justice that they deserve? We are the wealthiest nation in the world and we treat the people who built this country and keep it running as if they are disposable pieces on a chess board. It is time that we put people ahead of profits and hold employers accountable for their actions.
For every case of wage theft that is taken to court, even more slip through the cracks. We need an investigative unit in every state to begin prosecuting these offenders as we would any other thief. Holding their feet to the fire will be the only way to start getting workers the respect and pay they deserve.