Thanks to a forgotten 55 year-old statute, the California state Controller and the state Labor Commissioner are identifying wage theft, prosecuting offending employers, and returning lost wages to the workers who earned them. Under the California Unclaimed Property Law, lost wages become payable to the state after one year, where they can be claimed by the employees who earned them. This law gives the state the authority to directly fight wage theft.
Since entering office in 2007, California State Controller John Chiang has used the law to target Fresno Protein Processors, Elk Grove Ford, All American Pet Company, and Spirit Airport Services. Chiang’s plan, commonly known as “Operation Pay Up,” has shown no signs of slowing down. Back wages collected through this program has ranged from $50,000 to $850,000, representing the lost earnings of hundreds of low-wage workers. Businesses that refuse to pay lost wages to the State Controller’s office within 10 days can be fined up to $50,000 with high interest fees.
“We’re using a 55-year-old statute to compel immediate payment from unscrupulous businesses that have fleeced their employees of earned wages for years,” Chiang said at a news conference in Fresno. “These exploited workers often face retaliation from their employers when attempting recovery of wages and, too often, still wind up with nothing after a difficult and lengthy legal process to prove their claim.”
Between 2008-2011, Chiang estimates that $390 million in wages were stolen or unlawfully withheld from employees in California. According to a 2013 study published by the National Employment Law Project and the UCLA Labor Center, only 43 percent of lost wages are ever recovered.
The Los Angeles Times reports that wage theft is especially rampant in California due to its “underground” economy. One in six construction workers are misclassified as independent contractors and paid solely in cash. The Economic Roundtable also estimates that one in four Los Angeles workers are paid under the table, depriving local governments of $7 billion a year in tax revenue. In addition of depriving the state of funding, informal employees lack the guarantee of a fair wage. Low wage workers are thus exploited for their labor without receiving proper compensations.
“A just day’s pay for a hard day’s work should be a reality in every workplace,” said Julie Su, California Labor Commissioner.
In a state with one of the highest costs of living in the nation, the importance of receiving a fair wage for every hour worked cannot be understated. Regardless of what labor is performed, all workers are entitled to compensation.