By BY JEANNE KUANG AND LIL KALISH | CalMatters
It took two shifts to wash the five-story central Los Angeles workplace constructing the place Edith Lopez labored as a janitor.
From morning to nightfall she vacuumed, wiped down kitchens and took out trash, and her employer, Pacific Industrial Co., paid her like an everyday worker. Then from 5 to 10 p.m. she did the identical however Pacific labeled her as an impartial contractor and paid for these hours with private checks that overlooked typical payroll deductions equivalent to earnings tax or Social Safety withholding, she stated.
Over her eight years working for Pacific Industrial the corporate typically paid her late and lower her hours, she stated, and she or he didn’t obtain any time-and-a-half time beyond regulation premiums. Lopez, a single mom who emigrated from Durango, Mexico, fell behind on lease and frightened about supporting her three daughters. A health care provider warned the 52-year-old that stress was inflicting her blood strain to spike.
In September, she received a break. She obtained $30,000 in restitution, the results of the profitable prison prosecution of her former boss, Moon Hyuk Hahn, by the Los Angeles District Lawyer’s Workplace in partnership with the state’s Labor Commissioner, the California Division of Insurance coverage and a janitorial business watchdog group known as the Upkeep Cooperation Belief Fund.
“It looks like retribution for the struggling that this firm has put me by,” Lopez stated. “This firm has precipitated me to lose out on time with my household and made my household undergo.”
Uncommon prison prices
Hahn, who owns Pacific Industrial, confronted greater than a dozen counts of grand theft of wages and different allegations. He pleaded responsible to a depend of insurance coverage fraud and wage theft and has agreed to pay $1.6 million in restitution.
He declined to remark to CalMatters however his lawyer, Keith Kim, stated the plea was a “safer route” than going to trial.
Most of California’s wage theft circumstances aren’t dealt with this fashion.
Wage theft has been a federal crime for many years however in California, the place felony circumstances are punishable by as much as three years in jail, prosecutors throughout the state not often filed prison prices based mostly solely on wage theft.
Some prosecutors say that's starting to vary.
Since 2015, the state’s Labor Commissioner’s Workplace has investigated 16 labor violation circumstances that resulted in prison prices, spokesperson Paola Laverde stated in an electronic mail; 11 of these circumstances concerned wage theft.
Few native prosecutors contacted throughout the state may inform CalMatters what number of wage theft circumstances they’ve introduced prices for since 2015.
In contrast, the Labor Commissioner’s workplace carried out investigations of worksites and issued 141 minimal wage violation citations and 102 time beyond regulation violation citations within the 2019-2020 fiscal yr. These wage theft citations had been dealt with administratively or in civil court docket.
Additionally staff who suppose their wages had been stolen often file claims with the Labor Commissioner’s workplace, slightly than reporting it to legislation enforcement. Final yr California workers filed 19,000 unpaid wage claims for a complete of $320 million, which are also often dealt with administratively.
Prosecutors’ consideration
As California continues to grapple with the scope of wage theft, prosecutors say prison prices may turn into extra frequent. A number of prosecutors’ places of work lately have introduced models that can deal with labor violations equivalent to wage theft.
“The aim right here is to extend our prosecutorial consideration to wage theft,” stated George Gascón, LA’s district lawyer who final yr agreed to take referrals and examine wage theft alongside the Labor Commissioner’s Workplace. “This (wage theft) is dangerous for all the group.”
The initiatives coincide with a rise in what some name “progressive prosecutors,” who search to refocus their places of work’ consideration on points that disproportionately have an effect on low-income and minority residents, equivalent to labor violations and human trafficking. Research present wage theft primarily impacts probably the most susceptible staff — those that make low wages, typically individuals of coloration or immigrants.
These efforts typically draw on legislation enforcement that already is concentrating on associated types of white-collar crime, equivalent to staff compensation fraud or tax evasion — the place victims are different companies or the federal government, slightly than staff.
“Wage theft impacts way more particular person people who find themselves residing on the margins and due to this fact is a higher impression on public security than most of the classes of crime that DAs historically focus their assets on,” stated Chesa Boudin, a former San Francisco district lawyer who created a unit investigating office crimes in 2020.
5 years in the past, the prison investigation unit within the Labor Commissioner’s workplace forwarded three circumstances to prosecutors. To date this yr, it has referred greater than a dozen, Laverde stated.
‘Extra scary’
Nationally there's a rise in prison prosecutions of labor abuses, in response to a report launched final yr by the left-leaning Financial Coverage Institute. The research famous that since 2017 prosecutors in 15 states have introduced new prison circumstances towards employers.
“My robust sense was that the employer group actually responded in another way to prison versus civil circumstances,” stated Terri Gerstein, the report’s writer and a former labor bureau chief in New York’s Lawyer Common’s workplace. “It felt completely different when there was a prison case. It was rather more scary.”
Some labor specialists query whether or not prison prosecution is an efficient software for recovering cash. In spite of everything, many staff who win civil wage judgments towards their bosses nonetheless find yourself accumulating nothing, and a few companies working within the so-called underground financial system don’t even have liquid property, staff’ attorneys say.
When a enterprise proprietor will get convicted, “in the event that they’re behind bars, they’re positively not paying their staff,” stated Tia Koonse, authorized and coverage analysis supervisor on the UCLA Labor Middle.
Others say the specter of jail time and the damaging press related to prison prices are stronger deterrents than different labor enforcement strategies.
The prospect of jail can also drive a enterprise proprietor to pay restitution, stated Joel McComb, a deputy district lawyer in San Mateo County.
Lately a Half Moon Bay hemp farmer paid $128,000 in restitution to 31 former workers who, authorities say, he had stopped paying in December 2020 and January 2021. Initially the farmer confronted 33 felony counts of theft of labor, however he pleaded no contest to 2 counts and was sentenced to a yr in jail, to serve concurrently with a two-year sentence in an unrelated case, McComb stated.
Dangers and advantages
Within the Pacific Industrial case in Los Angeles, Lopez and 16 different staff obtained a complete of $240,000 in restitution. The cash got here from $522,000 the California Division of Insurance coverage seized from the corporate in the course of the investigation. The state saved the remaining for again taxes.
Hahn nonetheless owes about $1 million, to be cut up among the many state and two insurance coverage firms authorities say he defrauded, a spokesperson for Gascón’s workplace stated.
In that investigation, Gascón stated, his workplace targeted on returning cash to victims and the money seizure created a “clear path” for compensation.
However a money payout isn’t all the time doable in wage theft circumstances, he stated, and prosecutors need to weigh the dangers and advantages of prison prices.
The specter of dropping a enterprise is a “substantial deterrent” to wage theft, he stated.
“However we’re additionally cognizant of the truth that there are lots of individuals working on this firm that depend upon this work for his or her livelihood,” he stated. “After which the analysis is, we wish to ensure that we're not making a state of affairs the place … you’re gonna have a complete bunch of unemployed individuals as nicely. So it’s actually putting a steadiness.”
The human toll
As a Santa Clara County District Lawyer’s investigator targeted on insurance coverage fraud, Michael Whittington stated he typically noticed employers paying workers off the books or shorting their wages.
However few staff had been prepared to come back ahead to testify as victims, he stated, so his workplace was charging wage theft “intermittently, once we may determine it.”
Within the wake of nationwide protests for racial fairness within the prison justice system, the Santa Clara County District Lawyer’s workplace introduced in 2020 it was forming a Employee Exploitation Activity Drive, bringing collectively state and federal labor companies to refer wage theft circumstances to the prosecutor’s workplace.
“We actually turned our focus to discovering what we known as the human toll of fraud investigations, and specializing in wage theft first,” stated Whittington, captain of the workplace’s Bureau of Investigation. He stated the partnership has helped encourage staff to come back ahead and cooperate with legislation enforcement; now he hears from staff who wish to report circumstances on to him.
The fitting factor
Alongside the duty drive launch, the DA’s workplace introduced prices towards Robert Foster, then a San Jose police officer, and his spouse, who they accused of working an off-the-books personal safety enterprise. Prosecutors stated the enterprise engaged in insurance coverage fraud, tax evasion and cash laundering and that Foster didn't pay staff time beyond regulation, under-reported employee accidents, and threatened workers.
He pleaded no contest in January and this March was sentenced to a few years in jail.
His lawyer, Ronald Richards, stated Foster has paid full restitution, together with cash owed to staff and $1.13 million to the state and to insurance coverage firms.
Richards stated his consumer received caught up in his bookkeeper’s enterprise selections and “wished to rectify the state of affairs and do the fitting factor.” The case hinged on whether or not the employees could possibly be labeled as contractors slightly than workers, he stated.
When to cost the crime
Richards opined that Foster ought to have had an opportunity to pay a penalty and settle the matter exterior of prison court docket.
“He wasn’t stealing any wages,” Richards stated. “Quite a lot of instances individuals pay after an audit. Why are you going to discourage individuals from paying? Should you cost them criminally they’re simply going to pay the prison lawyer.”
Equally, in San Diego County, District Lawyer Summer season Stephan final yr launched a Office Justice Unit devoted to investigating wage and hour violations and labor trafficking.
Earlier than, the workplace had charged wage theft when it was secondary to insurance coverage fraud or tax evasion circumstances.
To date, the unit has secured a responsible plea in a single wage theft case, a spokesperson stated.
A number of prosecutors stated there aren’t normal guidelines about when to file prison prices in wage theft circumstances; they resolve on a case-by-case foundation.
Felony circumstances include the next burden of proof than civil ones; prosecutors should show an employer is responsible past a “cheap doubt.” And to convict an employer of wage theft below California legislation, a prosecutor additionally should show that nonpayment was intentional, not merely an oversight.
Extra victims
Final yr California lawmakers gave legislation enforcement extra flexibility when charging wage theft as a felony.
Whereas the state’s felony grand theft statute already contains stolen wages of no less than $950 from a single employee in a one-year interval, the brand new statute permits prices if a number of staff lose no less than $2,350 in unpaid wages mixed.
The brand new legislation “permits us to mixture the losses of a number of workers of the identical firm,” stated Tanya Sierra, spokesperson for the San Diego County district lawyer. “This may enable us to prosecute circumstances the place an employer steals a bit of bit from many workers slightly than a big sum from only one worker.”
A number of DA places of work and the California District Attorneys Affiliation stated they know of no circumstances filed below the brand new legislation, which went into impact in January.
Boudin stated his workplace in San Francisco was conducting a number of investigations below the brand new statute previous to his recall by voters final spring.
A spokesperson for Gascón’s workplace in Los Angeles stated officers anticipate to file no less than one case below the brand new statute by the top of the yr.