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A stronger law against wage theft

Wage theft is growing dramatically (as recent Newstips have indicated) — some advocates describe it as an emerging business model in an economy increasingly dependent on contingent labor — but weaknesses in Illinois law allow many employers to get away with it.

On Monday, state legislators and labor and community groups will announce legislation to increase penalties for employers who steal wages and remove obstacles to enforcement of wage law in Illinois.

State Sen. William Delgado (D-2) and State Rep. Lisa Hernandez (D-24) will be joined by workers who have experienced and fought wage theft and their supporters in the Just Pay For All Campaign at a press conference (Monday, March 8, 1:30 p.m., outside the Thompson Center, 100 W. Randolph) to announce the introduction of SB 3568.

The bill would amend the Illinois Wage Payment and Collection Act to establish an administrative hearing procedure under the Illinois Department of Labor for wage theft claims below $3,000, and would allow employees to recover legal costs if they file successfully for unpaid wages in civil court.

Smaller wage claims often fall through the cracks of the existing system, said Chris Williams of the Working Hands Legal Clinic, which handles many such cases.   He said that of 10,000 wage claims filed with the Illinois Department of Labor last year, 75 percent were for amounts under $3,000, and half were under $1,500.

Currently the labor department can investigate wage theft claims and make determinations but has no enforcement power; that requires a separate, potentially costly court action by the attorney general’s office.  And private attorneys must rely on contingency fees, which don’t cover costs in smaller cases.

(Working Hands takes wage theft cases as part of its mission as a nonprofit legal clinic supporting workers centers which organize low-wage and contingent workers, Williams said.)

The bill would also bring the state’s wage payment law into line with other labor law which allows workers to sue individual owners, in addition to companies, in order to recover wages.  In part this removes barriers to enforcement established by the Illinois Supreme Court in a 2005 decision (Andrews v. Kowa Printing), which required employees to prove “knowing violations” by owners.

“This would be a big advantage when a company goes into bankruptcy,” said Williams, citing the Duraco case (recently reported here) in which “two brothers who are robbing the people who worked for the company are hiding behind [bankruptcy] reorganization.”  Working Hands recently filed suit on behalf of former Duraco workers, claiming hundreds of thousands of dollars of unpaid wages.

The bill would also increase penalties and fines, including criminal penalties for repeat offenders, and establish a Wage Theft Enforcement Fund paid for by fines and fees.  It would add a penalty of 2 percent a month when back wages are paid, to “eliminate forced interest-free loans” from workers to employers, Williams said.

The bill was initiated by the Working Hands Legal Clinic along with others in the Just Pay For All Campaign, including the Chicago Workers Collaborative, Immigrant Workers Project of South Chicago, and the Latino Union of Chicago.  Several labor and immigrant groups are endorsing the bill.

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Category: labor, wage theft


2 Responses

  1. George says:

    Most of the wage theft going on involves employers stealing their worker’s tips. The word “wage” can be interpretted as not including tips. Tips should be protected. Tip theft accounts for the majority of most wage theft. Let’s see if there is anything in these new laws to protect tips. My guess is, the laws really won’t do much to stop wage theft. Business owners are the main contributors to our elected officials political campaigns.

    Is there anything in this bill that addresses whether or not tips are included in “wage” theft? Will this new law stop employers from stealing their worker’s tips? That’s were most wage theft occurs. In fact, many workers make much more in tips than from hour wages. A worker who receives tips can be paid as little as $2.13 an hour. Are those proposing such laws only concerned about protecting the measly $2.13 an hour employers are supposed to pay tipped employees, or are they really going to go after wage theft and inclue tip theft which makes up the bulk of many worker’s incomes?

  2. Curtis says:

    It’s certainly a significant problem. But according to the landmark UIC study earlier this year, 25 percent of all low-income workers reported minimum wage violations; 0.6 percent reported that tips were stolen by employers — that translates into 4.6 percent of “at-risk” workers, primarily restaurant and hotel workers, who accounted for 20 percent of the workforce studied. There are many ways that low-wage workers are be underpaid.

    In Illinois there’s a tipped minimum wage, and as I understand it, employers are responsible for ensuring that the tipped minimum plus tips adds up to the full minimum wage over a biweekly period. That’s the law that car wash employees charged was being violated in our recent post:

    The provisions in the new law that expand legal options for low-wage workers to seek redress for wage violations are indeed available to tipped workers.

    And yes, the national workers center for restaurant workers, ROC, has gone after tip theft; see this story which mentions a case in New York

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