Enforcing higher minimum wage may prove tough in 'epicenter' of wage theft

As Los Angeles begins moving toward a $15 an hour minimum wage, one area is going to prove difficult, officials said: enforcing it.

“Los Angeles is somewhat an epicenter of wage theft, for a variety of reasons," said Julia Figueira-McDonough, a Los Angeles-based attorney with the California Labor Commissioner's office.

They include what she calls the "informal economy" - working under the table. She said lots of subcontracting in janitorial and garment industries, for instance, causes problems because it can be hard to figure out who the person actually worked for and companies that are caught cheating can just re-incorporate under a different name.

The Labor Commissioner's office is part of the state Department of Industrial Relations, which is charged with enforcing minimum wage laws at the state level - currently $9 an hour. According to an internal report, in 2012 the department assessed a record $3 million in unpaid minimum wages in 2012, and $13 million in unpaid overtime wages.

But the office isn't empowered to enforce Los Angeles' higher wage. That'll be up to the city.

When the L.A. ordinance was approved, city officials requested that City Attorney draft an ordinance to establish an Office of Labor Standards.  It's unclear how big it will be; a spokesman for the mayor's office familiar with the plan didn't respond to requests for comment.

"The collaboration between the two agencies will be very important in order to realize the full effect of the increased minimum wage," Figueira-McDonough said.

That's how it works in San Francisco, she said, where the local minimum wage is $12.25 an hour and will rise to $15 by July 2018. Still, there have been enforcement challenges there, too.

L.A.'s garment factories are especially prone to wage theft, according to her and advocates.

“I suspect that the vast majority of people in the garment industry are not making minimum wage," said Mariela Martinez, an organizer with the downtown Garment Worker Center. "I think that on average, folks are making something like five or six dollars an hour."

That's because they're paid by the piece. Martinez said employers are required to make up the difference between what employees earn per piece and the minimum wage, but often don't.

"Most garment workers don't know they are entitled to the minimum wage," Martinez said.

Those who do are often afraid to report it, fearing they'll get fired or deported if they're working in the U.S. illegally, she said.

"A lot of the workers who are being paid off the books, they really don’t exist in the formal process," Martinez said.

Other problematic local industries include restaurants and car washes, Figueira- McDonough said. Her department process about 5,000 wage claims out in Los Angeles each year. She thinks it's not anywhere close to the scope of the problem.

"It's definitely not the majority by any means of the violations that are occurring," she said. "It is a small minority."

A bill that recently cleared the state Senate could make it easier for employees who do file wage claims and win them to collect their money.

It would increase punishment for employers who refuse to pay; the bill proposes giving state officials more power to collect, including a provision that could cause non-compliant employers to receive liens, or be ordered to shut down.