Business & Economy

LA City council committee recommends launching a new office to patrol 'wage theft'

From left:  John Wickham and Roy Morales of the Los Angeles Chief Legislative Analyst's office and  Valerie Flores of the City Attorney’s office brief the L.A. City Council's Economic Development committee
From left: John Wickham and Roy Morales of the Los Angeles Chief Legislative Analyst's office and Valerie Flores of the City Attorney’s office brief the L.A. City Council's Economic Development committee
Brian Watt/KPCC
From left:  John Wickham and Roy Morales of the Los Angeles Chief Legislative Analyst's office and  Valerie Flores of the City Attorney’s office brief the L.A. City Council's Economic Development committee
Luis Jimenez told the L.A. City Council's economic development committee about working in a restaurant for three years.
Brian Watt/KPCC


The L.A. City Council's Economic Development Committee approved a set of recommendations Tuesday to create a new city "Office of Labor Standards," which would enforce local wage laws, including any future increases to the minimum wage.  

The office would be able to fine employers who engage in what's become known as "wage theft," or not paying workers what they were promised.

As Los Angeles city leaders continue to debate raising the city's minimum wage, many people have shown up to public hearings to say they support "raising it ... with enforcement." 

The enforcement part is important to activists who believe not only that the current minimum wage of $9 per hour isn't enough to live on, but also that there are many low-wage workers whose employers aren't paying them all that they're owed.

Council member Paul Koretz, one of the main proponents of the office, called Los Angeles "the wage theft capital of the country," citing one estimate that low-wage workers in the city lose $25 million per week to wage theft.

"The bad industries that tend to be the violators — day laborers, car wash, restaurants, garment industry, janitorial, construction — they're all here in L.A.," Koretz said at the committee meeting.

Staff from the city's Chief Legislative Analyst's office has been studying the feasibility of an Office of Labor Standards. It's recommending creating five positions in the Public Works department's Bureau of Contract Administration or in the Office of the City Attorney.

Initial estimates show it would cost $500,000 to establish. But Koretz and other council members believe effective enforcement could require more people and more money.  

"In the long run, or the short term, I don't think that four or five staff people are enough to do this job," Koretz said. 

Council member Nury Martinez repeatedly stressed that she wants the office to be more than an illusion. "This notion that we're going to create a department that is going to help people, we need to fund that," Martinez said.

Valerie Flores of the L.A. City Attorney's office told the committee that the office currently has a Consumer Protection Unit that devotes some time to wage cases.  She estimated the four lawyers in the unit spent approximately 20 percent of their time on wage cases last year. 

Former waiter Luis Jimenez told the committee about his three years working in a restaurant.  He wouldn't name the restaurant but said the owners used the tips pool to pay other staff, including managers and themselves.

"Our tip pool was essentially financing the entire restaurant," Jimenez told KPCC. "Once you started adding up all those dollars every night and you look at your tax return and say...'I could have made $12,000 more this year if it wasn't for these people taking money out of my pocket,' it starts to really affect you." 

Jimenez is now an activist with the Restaurant Opportunities Center in Los Angeles.  He has filed a complaint against his former employers but said other workers would be afraid. 

"You come in, you're desperate for work, and the owners know that," Jimenez told the committee."They take full advantage and the attitude is: 'if you don't like it, there's the door.'"

Ruben Gonzalez of the Los Angeles Area Chamber of Commerce said the vast majority of businesses are not committing wage theft.  "Therefore, we would be against any funding mechanism that charges all businesses across the board to go after bad actors," he told the committee. 

Before the new office becomes final, the city council's budget committee and the full council must also approve its creation.