Minnesota unions, businesses unite against wage theft

ST. PAUL, Minn. – Workers and communities suffer – and businesses face unfair competition – when companies cheat their employees through wage theft, Minnesota advocates told lawmakers at a mid-February hearing at the state capitol in St. Paul. They called on the legislature to pass measures to strengthen enforcement against this widespread problem.

“If you work for a living, you should get paid!” said Rep. Tim Mahoney, DFL-St. Paul, one of the authors of the anti-wage theft legislation. Several legislators, Lieutenant Governor Tina Smith and state Department of Labor and Industry Commissioner Ken Peterson listened as workers described how their paychecks have been stolen by unscrupulous employers.

One of the most egregious current examples is Lakeville Motor Express, a trucking firm that allegedly changed its name and location to avoid paying thousands of dollars to its workers. Their union, Teamsters Local 120, is leading an effort to recoup what was lost.

“We are union strong and we are here to fight for our rights!” said Samuel Nunn, one of the 95 affected workers.

The Minnesota Department of Labor and Industry has filed suit against Lakeville Motor Express for more than a half million dollars in unpaid wages. But the department lacks the resources to investigate half of the complaints it receives, Commissioner Peterson said.

If the workers succeed, Minnesota would be in the forefront of attacking a national problem, one that costs workers billions of dollars and states millions in lost revenue.

A study several years ago for the National Employment Law Project (NELP) calculated wage theft cost workers in just New York, Los Angeles and Chicago alone $56 million. And those lost wages also hurt states, NELP said: New York state lost $427 million yearly in unpaid taxes due to employer wage theft.

An investigation by Workday Minnesota found wage theft in Minnesota is larger and more widespread than most people realize – and the problem is growing. The state’s Department of Labor estimates that 39,000 Minnesota workers suffer from wage theft each year, resulting in $11.9 million in wages owed, and that’s only what goes reported.

Wage theft occurs when:

• Employers refuse to pay their employees for work performed
• Employers violate minimum wage, prevailing wage, and overtime protections
• Employers make unlawful paycheck deductions
• Employers coerce employees to work off the clock
• Employers misclassify employees as an independent contractors to avoid paying workers’ compensation and unemployment insurance.

Businesses that follow the law face unfair competition from those that are cheating, said Shawn Larson of RTL Construction in Shakopee. “They skirt laws in order to improve their bottom line,” Larson said. “It’s obviously bad for workers but it’s also bad for businesses and it’s bad for the state of Minnesota.”

The Wage Theft Initiative proposes policy changes to give the Minnesota Department of Labor and Industry more enforcement tools and an increased budget to hire four additional wage and hour investigators to do proactive outreach across the state. It would empower workers with more information and impose stiffer penalties for violators.

Rep. Mahoney says the changes would help protect workers from future wage theft while aiding the investigation of over 20,000 complaints filed each year.

“I had to live out of my car and then a friend’s house for several weeks because of the wage theft and the problems it created for me,” said Gloria Rojo, a janitor who experienced wage theft while cleaning car dealerships and other buildings for a subcontractor of ROC Commercial Cleaning. Since then, she has become a leader in CTUL, a Minneapolis-based worker center that is challenging wage theft.

“Now, I’m fighting to win improved enforcement standards around this crisis. This law would create the necessary consequences for companies like ROC and their subcontractors and allow us to get paid for our dignified work like we deserve.”

According to Take Action Minnesota, “[Minnesota] Governor Mark Dayton is getting behind [the Wage Theft Initiative] after meeting with community and labor groups.”

And at a recent labor rally, Lt. Gov. Tina Smith said that the state needs to hold accountable businesses that steal from workers.

Barb Kucera is the editor of www.workdayminnesota.org