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|February 21, 2019|
Report finds wage theft running rampant, and California tops the list
WASHINGTON--More than 500 large U.S. companies have paid out $8.8 billion in wage-theft claims since 2000 and more than half are from California, a new report finds.
The companies, including mega brands Wells Fargo, Children’s Hospital Los Angeles, 24 Hour Fitness, Oracle and Smart & Final, have boosted their profits by forcing employees to work off the clock or by not paying their required overtime, according to “Grand Theft Paycheck: The Large Corporations Shortchanging Their Workers’ Wages.”
The study was published June 5 by the Corporate Research Project of Good Jobs First and the Jobs With Justice Education Fund.
The longstanding practice of denying workers fair wages is “pervasive” and “goes far beyond sweatshops, fast-food outlets and retailers,” according to Philip Mattera, lead author of the report.
“It’s built into the business model of a substantial portion of corporate America,” Mattera said. “Many of these companies will say that this was an innocent mistake. But it happens so much and with so many companies that it’s hard to believe these are all accidents and that they just ran afoul of bureaucratic procedures.”
From cashiers to financial advisers
The report analyzed 1,200 successful wage-violation lawsuits brought against large companies that have been resolved either by a verdict or settlement from 2000 through May 1 of 2018. Employers in those cases have collectively paid out billions on behalf of workers that range from cashiers and security guards to financial advisers and pharmaceutical sales representatives.
Those same 500-plus companies paid another $400 million in penalties to the U.S. Department of Labor’s Wage and Hour Division.
Mattera wasn’t surprised to learn that the lion’s share of wage-theft lawsuits came out of California. “It’s mainly because you have a stronger labor code that puts more restrictions on employers,” he said. “Some of it relates to issues concerning rest and meal breaks that don’t exist anywhere else in the country, so more employers tend to run afoul of the rules. Many of these cases that begin in state court get transferred to federal court and then they get combined with the federal Fair Labor Standards Act, which governs overtime and these kinds of issues.”
The most common issues
Unpaid overtime was the most common issue in the lawsuits, but job misclassifications and meal/rest breaks also played heavily into the mix. The issue of “donning doffing” also arose. Those cases involve disputes over whether workers should be paid for the time required to put on and take off protective gear.
Walmart is the biggest offender on the list with 36 wage-violation cases resulting in penalties totaling more than $1.4 billion since 2000. That was followed by FedEx (15 cases totaling nearly $502.2 million) and Bank of America (34 cases and nearly $381.5 million in penalties).
Wells Fargo ranked fourth nationwide. The San Francisco-based banking chain also tops the list of the most penalized California-based companies with 24 cases and penalties totaling $205.4 million. Oracle, a computer technology firm headquartered in Redwood Shores, ranked second among California-based businesses with 10 wage-violation cases and penalties of $92.3 million.
When contacted about the report and the company’s costly payouts, Wells Fargo issued a statement:
“Wells Fargo is committed to paying its team members for all of the time they work and being in compliance with all applicable employment laws,” the statement said. “Agreeing to settle class action lawsuits instead of continuing to litigate takes into account a number of factors, including the risks and costs of litigation, and doesn’t mean that we agree with the claims that were made.“
Others that rank high on the California list include:
· San Ramon-based 24 Hour Fitness — two cases and more then $55.4 million in penalties
· Oakland-based healthcare provider Kaiser Permanente — nine cases, $27.7 million in penalties
· Commerce-based supermarket chain Smart & Final — three cases, $27.4 million in penalties
· Children’s Hospital Los Angeles — one case, $27 million in penalties
· San Diego-based fast-food chain Jack in the Box Inc. — two cases, $17.3 million in penalties.
Kaiser responded by noting it was recently named No. 2 on Indeed’s 2018 Best Places to Work: Compensation and Benefits list.
Children’s Hospital Los Angeles maintains the disputes against it were “unfairly launched.” But in a statement issued Thursday, said years of expensive and time-consuming litigation had put a significant drain on the hospital and its resources.
“Reaching a mutual settlement allowed the hospital to utilize its limited resources and return its focus to fulfilling its critical mission of providing access to leading-edge care and critical medical intervention to the children,” the statement said.
A variety of other Southern California corporations landed lower on the list, including KPC Healthcare Inc. in Santa Ana (one case, $14.5 million), business services firm Alorica in Irvine (four cases, nearly $10 million), AHMC Healthcare in Alhambra (one case, $6 million), clothing retailer Guess Inc. in Los Angeles (two cases, $5.2 million), The Walt Disney Co. in Burbank (four cases, $5.1 million) and the Big 5 Sporting Goods chain in El Segundo (two cases, $2.6 million).
Most of the companies accused of wage theft are highly profitable. Among the dozen most penalized corporations, all but two had an annual income of more than $2 billion in the most recent fiscal year, the report said. Wells Fargo and a few others each logged more than $20 billion in profits.
Small companies also have been the subject of labor probes, including several in Southern California. In January the state labor commissioner assessed a chain of assisted living homes $7 million in back wages and penalties for paying 149 workers as little as $2.40 an hour. Ten eldercare facilities in Laguna Niguel, Mission Viejo and Laguna Hills were likewise slapped with a federal order to pay 72 of their workers more than $173,000 in back wages.
And in March the U.S. Department of Labor charged a car wash mogul and his managers with failing to pay minimum wage and overtime to some 700 workers at facilities in Orange, Los Angeles, San Bernardino and Ventura counties over a five-year period. (Source: The Mercury News)
Story Date: June 14, 2018