Philadelphia City Paper: The Crime that Pays - How Predatory Bosses Steal and Get Away With It

by Jake Blumgart, Philadelphia City Paper, August 9, 2012

Stealing hundreds or thousands or tens of thousands of dollars is, generally speaking, a risky proposition. Take it from a wallet, or a private house, or a bank — and get caught — and chances are good that criminal prosecution awaits.

There’s an exception to this rule though, a loophole that’s especially gaping in Philadelphia: Steal from your employees, do it openly and flagrantly, and your worst-case scenario is generally just a civil lawsuit. Best-case — and most likely — scenario: You get away scot-free.

Wage theft, the unglamorous name for a shockingly common crime, can be anything from failing to pay promised wages to denying overtime, paying below minimum wage or requiring work off the clock. Some particularly audacious bosses don’t pay their employees at all, but wage theft is usually a slow bleed. It especially targets the most vulnerable workers, including undocumented immigrants and unskilled or low-skilled workers who are desperate to hang onto any job in a tough market. The lack of either strong anti-wage-theft legislation or sufficient local or state resources dedicated to the issue has, some argue, made Philly a haven for predatory bosses looking to save on payroll.

Eduardo, an undocumented Mexican immigrant in South Philadelphia and a skilled carpenter, says he’s living proof. He’s been working here for seven years — but the recession, he says, was when things got bad. In 2010, he was nearly finished with a bathroom-remodeling job when his employer fired him and refused to pay the rest of his wages.

“I knew of other friends of mine, other immigrants, who had been threatened with the police or immigration when they tried to complain about pay,” says Eduardo, 29. (He asked that City Paper not use his real name due to his undocumented status.) “So I was a little bit afraid, and I didn’t know what to do. I let that go.”

Luckily, he soon found a good gig with another construction company, and even brought on an apprentice, another immigrant we’ll call Hugo. They worked as a team until, in late 2011, new owners took over the company. Their business model was awfully familiar. The construction company began to dramatically underpay both men, claiming a lack of cash flow. Some co-workers were fired, and never paid. The employer changed his phone number to avoid their calls. Finally, the owner stopped paying Eduardo, too, and stopped answering his phone calls.

Eduardo took his case to Community Legal Services (CLS), which is helping him prepare a case against his employer. But getting his former co-workers, including his protégée, Hugo, to join the case has been challenging, given their fears of retaliation.

Hugo doesn’t have much reason for optimism. “I didn’t complain at that time; I just kept working, and didn’t really know what to do about it,” he says. He has friends in other lines of work who’ve had the same experience. “It’s a widespread problem that happens to a lot of people.”

It’s a growing problem, if the number of lawsuits is any indication. An analysis by CNNMoney recently found that, nationwide, federal collective-action lawsuits alleging wage and hour violations have increased by 400 percent since 2000. (The accused range from perennial targets of outrage like Walmart to companies like IBM and Bank of America.) This increase doesn’t include lawsuits settled in lower courts, individual wage-theft suits or claims settled by other means. Of course, the vast majority of cases go unreported.

While there’s been no quantitative research on wage theft specific to Philly, we can extrapolate from a 2009 National Employment Law Project study of New York City, Los Angeles and Chicago: There, 68 percent of low-wage workers interviewed had experienced wage and hour violations in the previous week, amounting to about 15 percent of their pay.

Tom, 24, a college graduate who lives in North Philadelphia, says it happened to him, back when he used to work at a “pretty popular coffee shop in Northern Liberties,” where his boss never paid overtime, even when he worked for two weeks without a day off. (Tom requested his real name not be used because he feared harassment from his ex-employer.) The boss promised to pay extra hours in a separate check, but never did. The same went for the rest of the staff. When one worker quit, he never got paid for his last two weeks. No one reported the owner.

The lack of reporting is due to “a toxic brew of circumstances,” says Tim Judson, senior policy specialist at the Progressive States Network. “Fears of retaliation, weak laws … unresponsive enforcement agencies with too little capacity, people not knowing their rights.” In a recent report, he gave Pennsylvania an “F” grade for its wage-theft policies.

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