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Many low-wage workers unable to collect on settlements

A study has found that thousands of California workers, primarily immigrants, have not been able to collect on claims for back pay and labor law penalties from their employers. These are workers who perform jobs like cleaning, picking crops, sewing garments, and other minimum and low-wage occupations.

The study by the National Employment Law Project and the UCLA Labor Center titled “Hollow Victories: The Crisis in Collecting Unpaid Wages for California’s Workers” looked at the period from 2008 to 2011. It found that only 17% of court-ordered claims for back pay and labor law penalties were collected.

In three-fifths of unpaid-wage judgments, the companies no longer existed. Either the businesses were dissolved, licenses were revoked, or the companies changed their names. In what the Los Angeles Times described as an “amorphous underground economy,” businesses pay in cash for goods, services, and labor. This costs the state and local governments approximately $7 billion a year in tax revenue.

According to the Maintenance Corporation Trust Fund, a nonprofit organization that helps victims of wage theft, for every one of California’s legally-registered janitorial companies, there are two or three underground companies that can underbid legitimate businesses for contracts. However, they do not abide by state wage and hour laws, do not pay taxes, and do not pay workers’ compensation insurance.

Advocates for low-income workers hoped that a bill introduced this session in the California legislature by Assemblywoman Bonnie Lowenthal from Long Beach can help employees get the wages due them. Known as the Fair Paycheck Act, a wage lien would be placed on an employer’s property to ensure that assets are available to pay settlements for unpaid wages. However, the bill was held up in committee due to opposition from the California Chamber of Commerce and business trade groups. They argued that it would hurt business and job growth, fearing that it would allow employees to place liens on employers’ property for wage claims, even if not proven. Lowenthal intends to revive her bill next year.

Workers are entitled to rights under the law that many are not even aware of. Employees who believe they have faced any type of discrimination, whether in hiring, wages, termination, or any other aspect of employment should contact an attorney who specializes in employment law.

Los Angeles Times, “Many low-wage workers who won judgments were never paid” Marc Lifsher, Jun. 27, 2013

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