The Equity Factor

Berkeley Makes History With Wage Theft Ordinance

City targets construction firms that don’t pay workers with first-of-its-kind measure.

(Photo by Joe Parks)

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Last year, at the start of spring, 21 construction workers were hired by a local contractor to hang drywall for a 79-unit apartment complex in downtown Berkeley, California. The workers spent five months on the project, but when they finally wrapped it up, they still hadn’t received a dime from their employer.

They filed complaints with their local trade unions, which were able to pass the message up to the Labor Enforcement Task Force and Joint Enforcement Strike Force, two coalitions of state and municipal agencies that have appraised $4.2 million worth of unpaid wages in California since 2012. Their investigation led California Labor Commissioner Julie Su to place a lien on the contractor for $60,000, the total amount the workers were owed, three months after they left the job site.

For Todd Stenhouse, a spokesperson for the wage advocacy nonprofit Smart Cities Prevail, the state’s response marks a turn for the best in what might have been a tragic finish for those workers. But successes like this represent a drop in the bucket when it comes to the hunt for unscrupulous contractors.

“While there’s a process in place at the state level, the unfortunate reality is that only a fraction of [wage theft] incidences result in claims, and of those that result in claims and judgments, only a fraction are actually paid,” says Stenhouse. Just 30 percent of the $4.2 million accounted for by California’s task forces has been collected and paid out to workers.

The issue is too widespread, and the resources too narrow, for California to reconcile every pay dispute, and his organization alleges that wage theft costs the state’s taxpayers $8.5 billion a year because employers aren’t putting in for social security and other payroll taxes. That’s why this July, Berkeley joined a growing chorus of U.S. cities that are expanding enforcement from the state to the local level with a wage theft ordinance geared toward protecting construction workers — a labor pool that’s victim to the second-highest rate of wage violations behind restaurant workers in California.

The new measure bars contractors from getting occupancy permits for buildings if they can’t lay out how they paid their employees, which the city will monitor through a series of audits. For every 30 days that a contractor performs work that’s worth more than $100,000 or 1 percent of a local project’s total cost, it has to file an update to the city outlining pay and benefit arrangements it set up with its employees. Within 10 days after the project is finished, the contractor then has to jot down a list of all the subcontractors that worked on the project, along with their Contractors State License Board license numbers, and how much work they performed for how much pay.

Wage theft researchers like Haeyoung Yoon at the National Employment Law Project say there’s nothing like Berkeley’s move anywhere else in the United States because of the focus on the construction industry. Smart Cities Prevail, an organization with close ties to trade unions (Scott Littlehale, the organization’s policy director, also represents a carpenters’ union), says one in six construction workers in California experiences wage theft each year.

Yoon says now that the kick-off celebration is over, the ordinance is about to face its biggest challenge: seeing if it actually works.

“This ordinance looks great on paper,” she says, “but it’s just the beginning.” Cities like San Jose, California; Newark and New Brunswick, New Jersey; and Chelsea, Massachusetts are just a few urban areas that have passed laws that attempt to exclude contractors with a history of wage law violations from city support. Their success, however, has faltered because “there isn’t a very strong, consistent enforcement to make sure there is compliance.”

Victor Navarro, a researcher at the UCLA Labor Center, agrees, highlighting Los Angeles’ newly minted Office of Wage Standards and its plan to contract non-government worker advocates to inform worker communities and their employers about wage earners’ rights.

He says the key to making sure measures like this resonate is to match them with city-backed crews that connect with workers and contractors in the field. “You have to have something that tells companies you are going to enforce this — a message that there’s an agency out there inspecting,” he says. “You’ll have the law on the books, but [without ground enforcement] you’re not going to have the same impact.”

Experts interviewed for this piece suggest that cities with newly adopted wage theft ordinances develop a comprehensive arsenal of tools and collaborations to take the potential funding pressures of hiring an entire enforcement arm off the city’s back. That could mean everything from partially compensating attorneys who agree to take on wage dispute cases for workers who can’t afford the cost of a lawyer, to deputizing worker center employees with the authority to enter and inspect construction sites.

Laurie Capitelli, the council member who authored the measure, says these types of collaborations aren’t off the table. “[The city] hasn’t talked about that, but it’s certainly something that could evolve over the next few months,” he says. He adds that the city’s next step is to get word out about the ordinance so that contractors aren’t caught off guard by the new requirements.

If Berkeley’s measure existed a year ago, the apartment complex those 21 workers drywalled, called the Varsity, would have never started taking rental applications. It was greenlit by the city in 2014 as part of a long-term housing rollout that will see the downtown area add more than 1,400 rentals by 2018.

Now there’s a lower likelihood that workers on these types of projects will face similar setbacks, and the measure emboldens California’s position as a national leader on progressive wage laws, according to Yoon and research by the UCLA Labor Center. Cities across the country can monitor the success or failure of local ordinances there to determine their own strategies for tackling wage theft and lightening the caseload for state and federal agencies.

“Is there a need for more statewide enforcement? Absolutely. Are there things that local governments can do? Absolutely,” says Stenhouse. The ordinance alone might not be enough to rid Berkeley of wage theft issues in the construction industry for good, but “what is certainly not a solution is doing nothing, and not utilizing the very real tools and agencies these cities have at their discretion.”

The Equity Factor is made possible with the support of the Surdna Foundation.

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Johnny Magdaleno is a journalist, writer and photographer. His writing and photographs have been published by The Guardian, Al Jazeera, NPR, Newsweek, VICE News, the Huffington Post, the Christian Science Monitor and others. He was the 2016-2017 equitable cities fellow at Next City. 

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Tags: jobsincome inequalityberkeley

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