Six workers and a union contractor told legislators how stealing employees' pay hurt them, their families and the state. They testified in favor of the Wage Theft Prevention Act at a Minnesota Senate committee hearing on Tuesday.
Lakeville Motor Express workers and Teamsters Local 120 members Roger Nelson and Sam Nunn told how the company closed abruptly three days before Thanksgiving, refusing to pay 95 workers their last two weeks of wages and canceling their health care. Nelson related, “Now I owe more than $100,00 in medical bills for my wife’s illness. My wife and I wondered, where’s our next meal coming from? Are we going to lose everything?”
The bill, SF 1329, is co-sponsored by Representative Tim Mahoney, DFL-St. Paul, and Senator Bobby Joe Champion, DFL- Minneapolis, ranking minority member of the Jobs and Economic Growth Finance and Policy Committee that convened the hearing.
Champion explained a variety of ways that employers cheat their employees out of payment for their work and stated, “Every year, at least 39,000 workers in Minnesota have their wages stolen from them."
Department of Labor and Industry Commissioner Ken Peterson added that this may well be an underestimate. “This number represents the number of people whose cases have been handled by either the federal government, our department or the courts," he said. "We don’t know how many people don’t complain or haven’t taken any action, so 39,000 is the floor.”
Testimony by workers at the hearing and previous reporting by Workday Minnesota indicate that the total of those experiencing wage theft is many times more than the number of cases acted upon by the government. Intimidation is common and workers are afraid to report violations or doubt it will do any good. For example, Centro Campesino Director Ernesto Vallez estimated that 75 percent of dairy farm workers have wages stolen from them.
Centro de Trabajadores Unido en Lucha/Center for Workers United in Struggle (CTUL) member Lilia Lopez had to leave her dry cleaning job because her boss pressured her out after she complained about bounced paychecks. She was advised to hire an attorney to get back her unpaid wages, but she asked, “I make minimum wage, how am l going to pay for a lawyer?”
Peterson explained that the bill would protect employees who report violations. It would clearly define wage theft, specify how employees will be compensated and give workers accurate employer name and contact information. The legislation would also authorize subpoenas and increase penalties for wage theft.
“We do penalize people who burglarize, embezzlers and pickpockets," Peterson said. "There’s no reason why we shouldn’t do the same thing for people who steal workers’ wages.”
In response to a question about the proposed $500,000 for education outreach and increased staff, Peterson noted that the vast majority of Departent of Labor and Industry staff are legally mandated to focus on other areas. The number of wage enforcement employees has actually decreased from nine in 1990 to five today, despite a much larger state workforce and increased violation complaints.
The bill would also require employers to pay workers at least every 16 days instead of the current 31 days.
Former Crystal Care homecare worker and current SEIU Healthcare Minnesota member Robin Pikala testified, “I stayed with my clients, seniors and people with disabilities, for 46 days without getting paid until the company filed for bankruptcy, owing 600 employees $1.4 million." Under current law, she couldn’t file a complaint until 31 days passed since she received a paycheck (and an employer has an additional 10 days to respond to a DOLI demand for payment before a penalty is issued). “How many people can survive for 31 days without pay? I’m still owed $2,000, while Crystal Care was able to coast through bankruptcy.”
Wage theft is particularly common in the residential construction industry. Carpenters Union member Manuel Ortega testified, “I worked for a construction company that brought me here from Des Moines, Iowa. I worked every day for a month with no days off. They stopped paying me. They did not pay me overtime and to this day they still owe me wages.”
Elizabeth Neary told how her son Ben and four other young workers worked full time for a remodeling contractor from May through August. After persistent demands for payment, Ben received only $900 and none of the others were paid at all, a loss Neary estimated at $20,000. She said the contractor got away with breaking the law by refusing to respond to DOLI information requests and not opening his door when investigators knocked.
Shawn Larson, assistant vice president and co-owner of RTL Construction in Shakopee, explained how difficult it is to compete with such contractors.
“Construction is a tough enough business and when employment laws go unenforced, as they often are today, we’re forced to go head-to-head bidding against competitors that are skirting these rules," he said. "A contractor that is willing to cheat can shave a lot of money off costs that I have to pay. People who pay taxes in this state and play by the rules should’t be stuck holding the bag for companies who believe they’re above the law.”
Kathleen Harrell-Latham, vice president of the Minnesota Staffing and Recruitment Association; Brian Carr, government relations director and legal counsel of the Minnesota Retailers Association; and Cam Winton, director of labor management policy for the Minnesota Chamber of Commerce, testified against the bill.
Winton declared, “Wage theft is terrible and I sincerely appreciate the opportunity to hear the stories that we have heard today. Theft is theft and it should it should not occur.” Carr agreed, but all three opposed SF 1329 because of concerns that it would place an administrative burden on businesses.
Chair Jeremy Miller, R-Winona, declared that the committee would lay over the bill for further consideration, making it eligible to be brought up again later in this legislative session or in 2018.