February 28, 2017, 05:00 AM
By Rick Bonilla
Many flaws ultimately doomed President Trump’s labor secretary nominee Andrew Puzder, but among the most serious were allegations that his own companies had failed to comply with the very same wage laws that the Labor Department is responsible for enforcing. In Puzder’s case, the issue was that his fast food companies had failed to pay workers for all the hours they had worked, including overtime.
This is called wage theft and it’s much more common and widespread than you probably think.
It also impacts far more than just workers. When businesses steal workers’ wages, they gain a competitive advantage over honest businesses that play by the rules. And, when wages are stolen, so are required payroll and income taxes that are used to fund all types of public services – services on which every taxpayer relies.
In California, wage theft costs taxpayers about $8.5 billion every year, according to the Franchise Tax Board. About 10 percent of that comes from the construction industry, where I’ve worked for much of my career.
While there are state and federal agencies tasked with enforcing labor laws – the reality is that just a fraction of the employers who cheat their workers are ever brought to justice. Many workers who are victimized never file claims. Amongst those who do and receive judgments, only about 20 percent are ever paid. Such dismal enforcement statistics really only encourage more lawbreaking.
In a construction context, it works like this. A builder or general contractor hires subcontractors to do much of the work on a project. If one of the subcontractors cheats his workers, the lead contractor or builder can legally deny having any responsibility. President Trump has done this on his own projects.
Subcontractors can then disappear, shut down, shift assets to a relative, or reform under a different name to avoid payment. And then the cycle repeats.