Local leaders examine ways to combat wage theft

Retail janitors at a recent strike outside the Macy's in downtown Minneapolis. Photo by Uchechukwu Iroegbu

Shortchanged: An in-depth look at wage theft 

Leticia Zuniga and Abraham Quevedo kept noticing hours missing from their paychecks week after week while on the job for a cleaning subcontractor hired for janitorial work at local Macy’s and Herberger’s stores.

At the time, they earned $7.25 an hour. They would report the problem to their supervisor who always assured them it would get fixed. But it never did.

Zuninga and Quevedo eventually decided to file a class action lawsuit in federal court along with several other local janitors against the subcontractor, Illinois-based Capital Building Services Group, for underpayment and other state and federal employment law violations.

Leticia Zuniga and Abraham Quevedo in Washington, D.C.

In many cases, workers earned $4 to $5 an hour for their cleaning work.

The non-union janitors won a settlement earlier this year with Capital for $425,000 in back wages and damages, which will impact about 600 workers, Quevedo said.

Zuniga and Quevedo, members of the Minneapolis-based workers advocacy group Centro de Trabajadores Unidos en Lucha (CTUL), recently traveled to Washington, D.C., to share their experiences with wage theft with federal lawmakers.

In addition to the legal battle, they have raised awareness about the issue by participating in strikes and marches across the Twin Cities.

“People should not remain silent. They should get legal help,” Quevedo said during a recent interview, speaking through a translator. “The more people that speak up the better so these companies change their policies.”

Zuniga said people need to realize that wage theft is a widespread problem in the Twin Cities that is not isolated to one bad actor. She said it’s a major burden for low-wage workers who already face challenges making ends meet.

“We lost our money and we also lost our time,” she said of the legal battle against Capital Building Services.

In the class action lawsuit, lawyers for the janitors noted that subcontractors are under significant pressure to cut costs.

“Increasingly, Minnesota businesses subcontract out to the lowest bidder labor traditionally performed by their own employees,” they wrote in the complaint. “The result is a classic race-to-the-bottom, where unscrupulous subcontractors compete for contracts by exploiting vulnerable workers to keep costs low. In this new ‘fissured workplace,’ some of the most egregious mistreatment of workers occurs right under the noses of some of Minnesota’s most esteemed businesses and retail establishments.”

Low-wage workers, often recent immigrants with limited English proficiency at the “margins of economic life,” are the most vulnerable to exploitation, the lawsuit noted.

Merle Payne, co-director of CTUL, said workers need to feel empowered to speak up when they’ve been victimized.

“So long as workers live under the constant fear of losing their livelihood if they complain about workplace issues, wage theft will never end,” he said. “Real change requires ensuring that workers have a voice in their workplaces.”

Federal bill would mandate paystubs

Sen. Al Franken and Congressman Keith Ellison are backing federal legislation requiring employers to provide workers with pay stubs as a way to combat wage theft.

It sounds like a simple measure, but many low-wage workers who have been shortchanged by their employers don’t get pay stubs, making it difficult for them to challenge their employers and go after the money owed to them.

Franken has sponsored the proposed Pay Stub Disclosure Act in the Senate and Ellison is a co-sponsor of the bill in the House of Representatives.

“Americans are spending more hours working than ever, but all too often, they aren’t compensated fairly — and as a result working families suffer,” Franken said. “While a majority of employers are playing by the rules, wage theft is a real problem that’s causing workers to not receive the money they have earned. … Our bill will combat this crooked tactic by giving each employee a pay stub, allowing them to make sure that employers aren’t shortchanging their hours, wages or overtime pay.”

A recent survey of a 173 low-wage workers in the Twin Cities found that nearly half had experienced wage theft by employers. CTUL and the Advocates for Human Rights surveyed workers in a variety of industries, including janitorial services, restaurants, retail, construction, manufacturing, hospitality and temp work. The average annual salary for workers was $14,737.

The problem was especially prevalent for janitors like Zuniga and Quevedo with two-thirds reporting they had experienced wage theft.

The Pay Stub Disclosure Act would require employers to provide pay stubs to workers covered by the Fair Labor Standards Act’s minimum wage or overtime rules with the number of regular and overtime hours worked and the employee’s pay rate. Workers would also have the right to copies of their own payroll records.

The legislation would also codify a 1946 Supreme Court ruling that presumes an employee’s own credible evidence and testimony about his or her pay is true when an employer fails to keep pay records.

Rep. Bobby Scott, a Democrat from Virginia who cosponsored the House bill with Ellison, said many workers are unaware that they are victims of wage theft.

“This injustice occurs because employers are under no state or federal requirement to produce a pay stub itemizing wages and deductions,” he said. “Given the prevalence of this problem, we must work to ensure that workers have the tools necessary to fight back against wage theft.”

Currently 42 states, including Minnesota, require employers to provide some sort of paystub to workers, but standards vary as does enforcement.

A study commissioned by the U.S. Department of Labor in 2014 focused on California and New York found more than 600,000 weekly minimum wage violations, which added up to $28.7 million in weekly lost income for California’s workers and $20.1 million in weekly lost income for New York workers.

Local efforts to fight wage theft

The City Council also recently voted to update its prevailing wage ordinance — one of its main tools to fight wage theft.

The update codifies the city practice of wage enforcement for city contracts worth at least $50,000, said the city’s Civil Rights Director Velma Korbel.

Wage violations for smaller city contracts are reviewed when complaints are filed with the city.

“Just last year through its prevailing wage monitoring, the Civil Rights Department recovered almost $200,000 of unpaid wages to workers on city projects,” Korbel told a Council committee April 13.

City Council Vice President Elizabeth Glidden (Ward 8), who co-authored the update to the prevailing wage ordinance with Council President Barb Johnson (Ward 4), said constituents are sharing stories with Council members about their experiences with wage theft and urging local officials to take more actions to fight the problem.

“The challenge is that good employers are following the law, but there are bad actors out there,” she said. “We have people being taken advantage of and we do not have the resources invested in making sure our good system of laws is being enforced to their fullest, and that we have more standard compliance across the line.”

Another recent case of wage theft to make the headlines involved the case of an electrical company that underpaid workers for electrical work on a state transportation project.

In March, Hennepin County District Judge Tamara Garcia found Laura Plzak guilty of 16 counts of failing to pay workers the prevailing wage. She was convicted of 13 counts of theft by swindle over $35,000 and three counts of theft by swindle over $5,000.

Her sentencing hearing has been set for May 13.

Plzak, president and CEO of Honda Electric, which she runs with her husband Jeffrey, had a contract with the Minnesota Department of Transportation for electrical work on a project at I-35W and I-694. Her husband pled guilt to similar charges in federal court last year and was sentenced to 22 months in prison.

She was found guilty of falsifying government documents to make it appear that she was going to pay workers on the project the prevailing wage. State officials started investigating her after a former Honda employee told investigators he was paid $17 an hour instead of the $58.50 an hour he was supposed to make under the prevailing wage law.

For low-wage workers, particularly new immigrants, fear can be a major factor to overcome in addressing wage theft.

CTUL has a Workplace Rights Defenders Program that provides workers with information about their rights and encourages them to feel empowered when confronting employers.

Workday Minnesota, a project of the Labor Education Service at the University of Minnesota, also recently published an investigation into the state’s wage theft problem on its website — workdayminnesota.org. It also outlined solutions to fight the problem, including more education about workplace rights, improved government enforcement and more organizing among workers.

Madeline Lohman, a senior researcher with the Advocates for Human Rights in Minneapolis, said workers can face a lot of barriers when they try to go after money owed to them.

“Workers face this gauntlet of navigating all of these different referrals and they may get lucky and get the right phone number to begin with or they may not, and all of that makes it less and less likely that they are going to get helped,” she said.

Zuniga of CTUL, who still works for Capital Building Services, said she wants more people to become aware of the problem and help fight it.

“There needs to be real consequences for companies who violate the law,” she said. “There needs to be actual punishments.”

Other stories in this special report 

Workers share stories of lost wages

On the wage theft beat

Wage theft watchdogs 

How to ensure fair pay on household projects