To fight wage theft California gets strong assist from worker centers

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Annelisa Luong met with the Kome Japanese Seafood & Buffet employees in secret to talk about their sub-minimum wages and lack of overtime pay.

She convened clandestinely with cooks and dishwashers. Sometimes they met at a McDonald’s, other times at a transit stop and other times in workers’ homes.

“Here is an opportunity,” she recalled saying. “The state is investigating. You actually have the opportunity to speak up.”

Her efforts worked. Workers cooperated with the state’s investigation of Kome, a popular San Francisco Bay area restaurant, and in 2018 the labor commissioner issued $5.16 million in citations alleging wage theft by the employer. The restaurant ultimately closed, but its owners settled without admitting fault in August 2020, eventually paying $2.6 million to 133 workers.

The probe was the outcome of the state’s partnership with the Chinese Progressive Association, a San Francisco nonprofit that employs Luong and has organized working-class immigrant Chinese families for 50 years.

The investigation also is part of a broad strategy the state launched six years ago to work alongside 17 labor-friendly organizations, most of them worker centers — nonprofit community hubs that advocate for low-wage workers. The state calls its collaboration with the groups the California Strategic Enforcement Partnership. 

“We’re going after bigger companies, and we have multiple defendants.”

Lilia García-Brower, Labor Commissioner

Labor experts say the partnership is one of the state’s most proactive responses to wage theft. By convincing groups of workers to testify in an investigation, the partner groups help the state target prominent employers and seek large repayments for workers, despite legal fights that are long and drawn out, state officials said. 

“We’re going after bigger companies, and we have multiple defendants,” Labor Commissioner Lilia García-Brower said in an interview. “They have a lot to protect, right? And so they’re coming in with their A-game to defend themselves against these multimillion-dollar citations.”

Community connection

Wage theft — the failure of bosses to pay workers what they are owed —  frequently occurs in low-wage industries. The state partners with worker groups that operate in such industries as restaurants, janitorial services, construction and residential care.

These labor groups have referred investigations resulting in citations against 50 businesses, a state spokesperson said.

Among the major wage theft cases involving these partnerships was an $11.9 million labor commissioner citation against RDV Construction in Los Angeles, $8.5 million in citations against elder care facility Adat Shalom Board & Care, also in Los Angeles, and more than $4 million in citations against two janitorial companies employed in California by the Cheesecake Factory, as well as the chain itself. On Friday, a labor commissioner spokesperson said the agency had reached a tentative settlement in the Cheesecake Factory case, but did not immediately provide details.

Business groups are divided about the strategy. The California Chamber of Commerce said it allows the Labor Commissioner’s office to target bad actors.

Another group, the California Business and Industrial Alliance, said the partnership strategy blurs the line between regulator and state. 

Before Gov. Gavin Newsom appointed her labor commissioner in 2019, García-Brower was executive director of one of these labor organizations, Los Angeles-based Maintenance Cooperation Trust Fund, a nonprofit that advocates for janitorial workers. It is funded through union contracts and is assisting workers in the Cheesecake Factory case.

As with other wage theft cases, staffing shortages in the Labor Commissioner’s office and the pandemic are slowing the state’s strategy. The citations take months and even years to resolve. A state database of the partnership’s 50 cases shows the agency has collected 14% of the wages cited — though the number may be higher as some settlements are still being paid out.

Even so, García-Brower says, the partnerships are necessary to help the state enforce the law. 

“They have a connection to the community that the state won’t be able to build in time,” she said.

A Chinatown partnership

On a recent afternoon, Luong, a program manager at the Chinese Progressive Association, fielded questions from four Cantonese-speaking canvassers who had been surveying workers in San Francisco’s historic Chinatown.

Luong quickly found herself in a discussion about whether she could intervene on behalf of an employee who had found irregular deductions in his paycheck. Luong explained that because the worker was represented by a union, she would not intervene directly. The organization’s role likely would be to help the employee and the union work together, she said.

Worker centers such as the Chinese Progressive Association sometimes tip off the labor commissioner to employers to investigate. They also encourage workers to testify and maintain contact with them through what can be years-long appeals by employers.

Founded in 1972, the Chinese Progressive Association occupies the top three stories of a Chinatown office building anchored by a Chase Bank. Shaw San Liu, the organization’s executive director, said the association first saw an opportunity to bring large, organized investigations against employers in 2010, when then-Gov. Jerry Brown appointed Julie Su as labor commissioner.

At the time Su was an attorney known for handling workers’ rights cases at Asian Americans Advancing Justice, a civil rights organization. Now she is deputy secretary of labor in President Joe Biden’s administration.

Su shifted the focus of the state agency’s Bureau of Field Enforcement away from random workplace sweeps and administrative violations, toward citing companies directly for stolen wages and recovering back pay. 

That aligned well with the Chinese Progressive Association’s priorities, Liu said. A study by the association in 2010 found that half of Chinatown restaurant workers were not being paid San Francisco’s minimum wage, which the organization had campaigned to raise in 2003.

“No one’s interested in just doing something that is on paper only, right? That’s not the point,” Liu said. “And just enforcement is not enough, because how an agency actually conducts its enforcement has a lot to do with how successful it is.”

The association led a workplace campaign that prompted the Labor Commissioner’s office to investigate Yank Sing, a high-end dim sum restaurant. In 2014 Yank Sing reached a $4 million settlement that included paying back wages to 280 current and former workers. 

Yank Sing managers did not return a call to the restaurant seeking comment.

The victory cemented in Liu’s mind the power of partnering with the state. 

“None of us had ever seen a case of that size of settlement for immigrant restaurant workers at a single restaurant,” she said.

Liu said she considers these key ingredients as necessary for a successful wage theft campaign: workers willing to take risks and act collectively, community support and a proactive government agency.

Luong and other organizers convene weekly meetings at the Chinese Progressive Association to check in and trouble shoot with community canvassers, who are interviewing workers in the immigrant community.  They’re developing a snapshot of working conditions and looking for ways to assist workers in future cases

Strategic enforcement

The state’s strategic enforcement partnership, begun in 2016 as a pilot project, is between the labor commissioner’s Bureau of Field Enforcement, 10 worker centers, five legal aid organizations and two labor-management trust funds, which are entities funded by contributions from companies that have unionized workforces.

Since then, the James Irvine Foundation has contributed $12 million to the 17 groups and the National Employment Law Project, a pro-labor group based in Washington, D.C. that coordinates the groups’ wage theft investigations. (The Irvine Foundation also is a funder of CalMatters but does not influence its editorial decisions.)

The partnership groups aren’t paid by the labor commissioner, nor are they bound by formal contracts. Instead they strike case-by-case agreements to share information, such as interviews with witnesses.

The worker centers help low-wage workers not represented by a union and often lobby alongside unions for pro-labor state policies. 

In many respects, California’s partnership with worker centers reflects changing labor trends in America.

Union membership in general has waned. The undocumented immigrant workforce has grown. And the practice of outsourcing lower-paying jobs to contractors and subcontractors has proliferated, said Janice Fine, a labor studies and employment relations professor at Rutgers University.

California business leaders are split on the labor commissioner’s strategy. 

Jennifer Barrera, chief executive of the California Chamber of Commerce, said the state’s targeted approach makes sense, because the state shouldn’t be going after all employers. Many wage theft claims are “good faith” disputes over state labor law or errors by smaller employers unaware of technicalities, Barrera said.

“The targeted model is the appropriate way for the labor commissioner to utilize their resources,” said Barrera, who represented employers as an attorney before joining the business group. “They should be focused, again, on those employers who are just disregarding the law, versus employers who are actively trying to get it right.”

But Tom Manzo, founder of the California Business and Industrial Alliance, said the partnership was “a terrible idea,” because it crosses lines between regulator and advocate, given the worker centers have an explicitly pro-labor agenda. 

“They’re doing everything they can to find any kind of violation,” Manzo said.

The alliance is a major critic of the state’s private attorneys general act, which allows workers to file civil suits on behalf of the Labor Commissioner’s office, including those alleging wage theft.

Major cases

California’s Bureau of Field Enforcement cites an average of nearly 900 businesses a year for labor law reasons, including wage theft. Some of its largest employer citations come from its partnerships with worker groups, a review of the citation data shows. 

The state’s investigation of RDV Construction Inc. in December 2018 resulted in an $11.9 million citation, California’s largest employer wage theft citation so far. 

The state’s field enforcement bureau began investigating RDV in 2017 after the Los Angeles-based Carpenter/Contractors Cooperation Committee tipped off the state. 

The committee is a watchdog group funded by construction companies that monitors projects for worksite violations, said David Kersh, its executive director. RDV’s workers had asked the committee for help with bounced paychecks, Kersh said, and that eventually led to interviews with state inspectors. 

“We became facilitators to help the Labor Commissioner’s office put together their case because we were the nexus, the link to the workers,” Kersh said.

RDV was known for working on high-profile Los Angeles projects such as The Mansfield at Miracle Mile, a luxury lofts building in the Mid-Wilshire neighborhood.

The state cited RDV, its owner, Rafael Rivas, and two project managers for allegedly failing to pay overtime premiums, not allowing breaks or failing to pay on time, affecting about 1,100 workers. Later, the state cited RVR General Construction — another company owned by Rivas that officials described as a successor to RDV— $4 million for similar allegations affecting about 350 workers.

Both businesses’ appeals were dismissed in May, after RVR filed for Chapter 11 bankruptcy, and the companies’ owners stopped showing up to hearings, according to citation appeal documents.

The companies’ former attorney, who defended them against the citation, declined to comment, and Rivas could not be reached for comment. 

Another community group, the Pilipino Workers Center, helped some Filipino workers in Los Angeles bring a major wage case to the state, resulting in the labor commissioner’s largest citation in the residential care industry.

In late 2017, the Labor Commissioner’s office cited Adat Shalom Board & Care, a chain of six residential care homes in the San Fernando Valley, for $7 million, saying it paid 148 caregivers well below the minimum wage. 

During Adat Shalom’s appeal of the citation, 13 caregivers testified in a 2019 hearing that they were paid flat monthly rates to live at the facility and be on-call 24 hours a day, six days a week. Two caregivers would share a room and were usually responsible for five or six elderly residents who had Alzheimer’s or dementia. 

Duties included feeding and dressing residents, taking them to the bathroom, supervising daytime activities, cleaning the facilities, changing diapers and placing the residents in bed — and then tending to them if they woke in the middle of the night. 

The workers said they had to ask Adat Shalom’s owner for permission to leave the facilities, according to hearing transcripts.

Adat Shalom owner Angelica Reingold testified that caregivers were not required to work all day. Her attorneys also disputed the state’s audit of wages, commissioning a statistician who said investigators used the testimony of a few workers and erroneously applied it to all employees. 

A labor commissioner’s hearing officer upheld most of the citation in October 2021, more than two years later, and added interest. Ordering the employer to pay a total of $8.5 million, the officer wrote that the caregivers were “pervasively and systematically underpaid” and called the situation “shocking.”

Reingold could not be reached for comment. Her attorney declined to comment.

Ripple effects

Despite citations in all the cases being upheld, neither RDV, RVR, nor Adat Shalom have paid their workers. 

In the construction cases, the state did collect $112,000 through a lien on a property the companies built, according to the labor commissioner’s spokesperson. 

The state earlier this year filed judgments in court against Adat Shalom and Reingold for that debt. The state also has filed a civil case in which the state accuses Reingold and members of her family of fraudulently transferring real estate assets to avoid paying the citation. That suit remains pending in Los Angeles County Superior Court. 

In large wage theft cases, employers regularly appeal citations, setting off lengthy administrative hearing processes. Appeals can delay payments to workers by three to five years.

“If they’re just in it to get their wages back, this is probably not the strategy for you. This is somewhat of a medium-to-long-term outcome.”

Amaya Jennifer Lin, campaign manager at the National Employment Law Project

That’s why worker centers try to be strategic, said Amaya Jennifer Lin, a California-based campaign manager at the National Employment Law Project who coordinates the strategic partnership. She said worker advocates take their victories where they can find them and celebrate non-monetary industry advancements, such as improvements in staffing levels at residential care facilities.

The cases aren’t all about money, Lin said, but rather industry-wide “ripple effects.”

“If they’re just in it to get their wages back, this is probably not the strategy for you,” Lin said. “This is somewhat of a medium-to-long-term outcome.”

Liu at the Chinese Progressive Association said winning stolen wages for workers has been gratifying, but she also measures results in the form of changed workplace conditions. Those changes might mean a restaurant is adopting a vacation policy, creating a fair system for promoting workers or instituting a grievance procedure.

“The money you get from the settlement, that’s not going to last forever,” Liu said. “But a job where you can feel like you have a little bit more dignity, and … you can get home in time to see your kids because you’re no longer being forced to work overtime without overtime pay — that lasts.”

That’s why John Wang, a 57-year-old Taiwanese immigrant, feels satisfied with the  settlement the Labor Commissioner’s office reached last year with his former bosses at Z & Y Restaurant, a Chinatown establishment on the Michelin Bib Gourmand list where he waited tables for more than three years.

Wang and his coworkers approached the Chinese Progressive Association and the Asian Law Caucus, a legal aid organization in the state partnership, in 2018 with complaints of unpaid overtime, no breaks and management confiscating tips. 

The restaurant settled the resulting state citation, as well as a separate lawsuit over retaliation complaints, denying liability, but the owners agreed to pay $1.6 million to 22 servers and cooks. They also agreed to institute policies on fair scheduling and distribution of tips, according to the association. 

The restaurant’s attorney, Seth Weisburst, wrote in an email that “while the settlement of this dispute was a difficult business decision to make, Z & Y Restaurant felt that it was in the best interest of all parties to do so.” 

Wang gets about $2,300 a month from the settlement, which supplements his income working part-time at a different Chinatown restaurant. 

“Nobody is going to retire” off the payments, he said. “To make (the owner) responsible for her actions is what really counts. By putting all these new requirements …  we were hoping that whoever started after us can benefit.”

Now Wang tells fellow workers in Chinatown to approach the association with labor complaints. 

“I just basically try to let people know that you can stand up for yourself,” he said.

Staff reporter Lil Kalish contributed to this report.

This article is part of the California Divide project, examining income inequality and economic survival in California.