Wage theft whack-a-mole: California workers win judgments against bosses but still don’t get paid

Manuel Chavez, a former front-desk manager at the Stuart Hotel in Los Angeles’ MacArthur Park neighborhood, was elated when he won a wage claim victory of more than $200,000 against his old boss in 2017.

California’s Labor Commissioner ruled Chavez had worked thousands more hours than his employer paid him for over a three-year period — a clear case of wage theft, the state decided after administrative hearings.

“I felt good, very content, after so much work and so much suffering,” Chavez said about his case.

Rather than paying Chavez, his former employer countersued, taking the case to appeals courts multiple times and trying and failing to get it heard by the U.S. Supreme Court — twice. 

Chavez hasn’t been compensated. His experience may be unusual, but it underscores a plight common for thousands of California workers who win wage theft claims: Many bosses don’t pay, even after courts order them to.

Paper victories

Only 1 in 7 employers who were issued court judgments in wage claim cases in 2017 have paid their workers the full amount of the claims five years later, according to data from the Labor Commissioner.

That’s the state’s best estimate — a disclaimer on the agency’s website reads “Defendants often make payments to claimants directly without the knowledge of the Labor Commissioner’s Office.” In other words, the agency admits it doesn’t always know if those judgments are paid, although state law says the office “shall make every reasonable effort to ensure that judgments are satisfied.”

What’s more, California’s wage claim system is so backlogged it takes nearly four times longer than state law permits for the average case to reach a decision, according to a CalMatters’ analysis of state data. Most workers drop or settle their claims before a hearing. Judgments are issued if a worker persists and wins.

Labor Commissioner Lilia García-Brower, through a spokeswoman, refused to be interviewed about her office’s work on wage theft, which is the failure to pay employees what they’re legally owed.

505 days

Wage theft has been a significant focus of California policymakers for years given the state’s high income inequality.

When a worker files a wage claim with the California Department of Industrial Relations, the Labor Commissioner’s office holds a settlement conference with the employer. If the claim isn’t settled, a deputy commissioner holds a hearing. If he or she decides the employer owes the worker wages and the employer doesn’t pay or appeal the decision, that debt becomes a judgment filed in court.

The Labor Commissioner, who the governor appoints, does seek payment of wage judgments on behalf of some workers. In general, workers are directed to collect these debts on their own, like any other creditor might.

But the power disparities between workers and employers means California’s worker-versus-employer claim system is flawed, said UCLA labor researcher Tia Koonse.

“You cannot play Whack-a-Mole with wage theft,” Koonse said. “It is not an effective strategy to go after every actor on a complaint basis.”

When Chavez filed his claim in 2015, he was making $425 a week, and working every day at the Stuart Hotel, case records show. It took him 16 months to get his case heard by a Labor Commissioner’s hearing officer and another six months to get a winning decision.

The wait for the average California worker who files a wage theft claim has grown since then, according to Labor Commissioner data.

For workers who don’t drop or settle their cases, the state averaged 505 days to decide an individual worker’s wage claim, data from 2017 to 2021 show — a violation of the 135 days maximum set by law.

Battling backlogs

Erika Monterroza, a spokesperson for the Labor Commissioner, told CalMatters last month the office was addressing backlogs and had hired 288 people since January 2021. She did not say how many people had left the office during that period. Nearly a third of the Labor Commissioner’s 733 positions were vacant as of May.

Paola Laverde, another spokesperson for the Labor Commissioner, wrote in an email that the office processes claims “diligently.” 

“You cannot play Whack-a-Mole with wage theft. It is not an effective strategy to go after every actor on a complaint basis.”

tina koonse, UCLA labor researcher

During the pandemic, the commissioner’s office closed in-person operations and shifted to virtual hearings, labor advocates said. Workers’ attorneys said the office appears to be increasing the frequency of hearings this year.

Californians filed 19,000 individual wage claims against employers last year. 

Koonse and other advocates said an alternative approach to wage theft enforcement may be  better for workers than the individual claims route. They said the Labor Commissioner has since 2016 partnered with labor and worker groups to initiate company-wide wage investigations through the agency’s field enforcement division. Advocates say these result in large-scale, sometimes multimillion-dollar, citations, sending messages of deterrence to employers in targeted low-wage industries.

Accident or intent?

Wage claim backlogs in general are a problem for businesses too, said Jennifer Barrera, chief executive of the California Chamber of Commerce.

“We would like to see claims handled in the most efficient way possible,” Barrera said. “The employer, as well, wants to have these claims resolved and dealt with.”

Aside from wage claims, workers also can file lawsuits against their bosses through California’s Private Attorneys General Act — which gives workers the same powers as the state to sue and recover penalties on behalf of coworkers — and they can file class action lawsuits and other kinds of suits using California’s regulations.

Barrera said only a fraction of a percentage of California’s employers intentionally steal wages from their employees; many wage claims result from employers misunderstanding California’s evolving labor laws.

“We have the most complex labor and employment laws, I would argue, in the country,” Barrera said. “We don’t really do a great job, once the laws are passed, educating employers.”

Those who misinterpret labor laws shouldn’t be considered guilty of wage theft, she said, although their workers should be repaid.

“The enforcement really should be focused on the bad actors who are intentionally stealing wages from employees,” she said.

A bit of satisfaction

Despite its hurdles, the individual wage claim system still provides victories for some workers — often in the form of settlements. 

Mayra Perez, a former San Francisco office janitor, initially hoped to win a wage theft claim she filed with the state in January 2020 against San Mateo-based Eat My Dust, Inc. Perez, an immigrant from El Salvador, claimed more than $38,000 in unpaid hours, untaken breaks, vacation owed, out-of-pocket expenses and other violations for two years and four months that ended May 30, 2019. 

In its written response to her claim, Eat My Dust contended Perez had refused to use the company’s time-tracking software and that the company had no records of her complaining about not getting breaks.

After the case dragged on for more than two years Perez settled for $20,000 on June 3, she said.

An attorney for the company, Jeanine DeBacker, said it was an “amicable resolution.”

Perez said she is satisfied with the money, because she believes she would have gotten less had she joined a class-action suit other workers brought against the company that recently was nearly settled.

Nevertheless, she said, she would have liked to have faced her former direct manager at her wage theft hearing, but the pandemic robbed her of that opportunity; her hearing was scheduled as a Zoom call.

“I did want to see him and see the expression he had,” she said.

Manager’s hours

Chavez had no such resolution after winning his case. The 60-year-old immigrant from Mexico had worked and lived at the Stuart Hotel since 2002, first working overnight and evening shifts, before becoming manager and working long days, he told CalMatters.

His duties included sweeping, cleaning rooms, collecting rent, making repairs and dealing with fights between tenants, he told the Labor Commissioner’s Office at his wage claim hearings.

In a recent interview, Chavez said there were always loiterers in the building and tenants coming and going.

“My son would tell me, ‘Don’t be stupid, Dad. You work too much, and they pay you too little, and you never rest,’” Chavez told CalMatters.

After Chavez filed his claim, hotel owner Balubhai Patel sued Chavez, accusing him of stealing from the business. Patel later dropped the suit. He said afterward, during a wage claim hearing, that Chavez did not work overtime and often spent time in his room.

The Labor Commissioner in 2017 ordered Patel and his company to pay Chavez $202,000: about $115,00 in wages for about 5,800 overtime hours, plus meal and rest breaks, and the rest in damages and penalties workers can claim under state law. The state also awarded Chavez $33,000 from Stuart Union, a company that managed the hotel for four months before Chavez left.

‘A cottage industry’

Neither Patel nor Stuart Union paid. Instead, a few months later, Patel and the new manager jointly sued Chavez and the Labor Commissioner in Los Angeles County Superior Court, alleging false testimony and civil rights violations. They sought $10 million as well as a reversal of the state’s decision.

In a recent phone interview, Patel said Chavez did not deserve the money because he didn’t work nearly the number of hours he claimed. The money would be a “donation,” Patel said.

“It’s damn lies,” Patel said. “I’ve been doing business a long time. I never cheat.”

Frank Weiser, a lawyer representing Patel, said his client is a leader among local Indian immigrant motel operators. He also called wage claims a “cottage industry” for workers.

“The laws are so skewed in favor of employees you do see some abuse,” Weiser said, though he acknowledged Chavez had won his case. 

“We lost, fair and square,” Weiser said. Payment is still being disputed in court.

Chavez’ situation demonstrates how some employers choose to fight or ignore Labor Commissioner decisions.

The Labor Commissioner asks courts to enforce unpaid wage theft decisions, and the commissioner’s office maintains a public database reporting those judgments.

An analysis of five years of the agency’s public data (2017 through 2021) by CalMatters revealed that 9% of court judgments were recorded as satisfied, or paid in full. Another 16% of those judgments were paid in part or in installments.

Three-quarters of workers were recorded as receiving no payment.

Those employers who received judgments against them in 2017 — and therefore had five years to pay workers — paid in full 14% of the time, the data shows.

The commissioner’s office did not answer questions about the database nor CalMatters’ analysis.

State’s scorecard

State law allows the agency to recover money on behalf of workers but doesn’t require it to do so in every judgment. In 2021, a Labor Commissioner unit dedicated to enforcing court judgments collected $2.8 million in wage claims on behalf of 311 workers, spokeswoman Laverde wrote in an email. The same unit collected $6.2 million on behalf of the commissioner’s field enforcement division. 

By comparison, the state recorded more than 2,300 wage judgments totalling $50.5 million that year.

If a business does not pay a judgment against it, the Labor Commissioner can file liens on employers’ property and garnish money from the employer’s bank accounts on behalf of workers. The commissioner last year filed 1,328 levies, Laverde wrote.

The commissioner’s office staff informs workers of this option and they regularly offer assistance filing levies to workers who prevail in the wage claim adjudication process, Laverde wrote.

 The agency also can order a business to stop operating if it doesn’t pay workers. But many businesses would not have the cash or assets to pay workers if they weren’t operating, said Jan Collatz, a staff attorney at the Los Angeles-based Wage Justice Center, which assists workers and the Labor Commissioner in collecting wage claims. 

“There’s this assumption that once you get a judgment, you’ve won. Ultimately, a judgment is just a piece of paper.”

Jan Collatz, staff attorney at the Wage Justice Center

Criminal cases also can complicate collections.

Eugene Lee, a Los Angeles attorney who represented Chavez, also won wage theft claims for 13 workers at a Los Angeles soccer merchandise store in 2018. Court dockets do not reflect any payments. Neither A-1 Soccer Warehouse, nor its owner, Enyinnaya Ojogho, have paid the workers despite court judgments against both, Lee said.

The California attorney general’s office has accused Ojogho of stiffing the state $1.6 million in a pending felony tax evasion case. Ojogho has pleaded not guilty. His defense attorney Robert Schwartz declined to comment the wage judgements or on whether his client is in a financial position to pay them. 

Fear of law

The legal system is set up to decide commercial disputes, Collatz said, but it is stacked against low-income people who often can’t afford to pay attorneys or court filing fees.

“There’s this assumption that once you get a judgment, you’ve won,” Collatz said. “Ultimately, a judgment is just a piece of paper.”

Assemblyman Ash Kalra, a San Jose Democrat who chairs his house’s labor committee, called the low payment of judgments unacceptable.

“The outcome of that is that employers don’t fear the law,” he said.

Kalra said he supports adding funding to the Labor Commissioner’s Office to increase staff. But in the face of the office’s current backlogs, he said workers may need to rely on local and county governments to enforce judgments.

Santa Clara County, for instance, threatened to revoke the food permits of restaurants that haven’t paid judgments. County officials said all eight of the restaurants that were cited have paid or are on a payment plan.

A life on hold

In the Stuart Hotel case, the years of countersuits and appeals have so far been “a long war of attrition”, said Lee, Chavez’ attorney. Chavez has prevailed in the trial and appellate courts, including getting the civil rights claims dismissed by the superior court. But Patel appealed all the way to the California Supreme Court, which declined to hear that case, and then he appealed to the U.S. Supreme Court, which also declined.

After another round of appeals, the Supreme Court declined to hear another part of Patel’s case this April.

Back in 2017, when Chavez first won his case, he told his son he might buy him a car or take him to Mexico to meet relatives.

These days he hardly mentions the money, Chavez said.

Recently he celebrated his 60th birthday. He lives with his son in Downey and earns a $15-an-hour minimum wage at a temp agency. The appeals have put his entire life on hold, he said.

“I just start thinking about it and I get sad,” Chavez said, “and then tell myself ‘Oh, hopefully one day. Hopefully one day.’”

CalMatters’ Lil Kalish and CBS News’ Julie Watts contributed reporting to this story.