Illinois Wage Theft Bill Actually Made Things Worse

Most victims of wage theft in Illinois never see a dime because the system meant to help them isn’t working.

That’s not what labor advocates envisioned in 2010, when the state passed a bill meant to give employees a better chance of recouping stolen wages and to toughen penalties against the employers who stiff them.

The situation, however, has gone from bad to worse for the thousands of mostly low-wage workers who have filed roughly $50 million in wage claims with the state since the measure took full effect in 2014.

Workers who report wage theft now face longer wait times, higher dismissal rates and more red tape, according to a Chicago Reporter review of complaint records and enforcement procedures at the Illinois Department of Labor.

Fewer than 1 in 4 workers recouped wages within a year, the analysis found. The odds are so bad, many labor advocates say workers shouldn’t bother filing a claim.

“The worst that can happen to [employers] is that they can use the workers like a credit card, and pay them months after the claims were first filed,” said Jacob Lesniewski, an associate professor of social work at Dominican University, who has studied wage theft.

The Reporter’s review of wage enforcement records found:

• More claims are dismissed: 58 percent in 2014, up from 41 percent in 2010. The state doesn’t track why cases are dismissed, but most are scrapped early, before workers get a chance to have the merits of the cases weighed.
• Cases now take an average of nearly nine months to resolve, about two months longer than in 2010. If a case ends up going to a hearing, resolving it could take well over a year.
• Even when workers win their cases, they might not be paid. Only about 1 in 10 of nearly 500 cases forwarded to the Illinois Attorney General’s Office for collection resulted in payment, and collection can take years.
• The state has let dozens of deadbeat employers off the hook by allowing them to settle claims early in the enforcement process, avoiding formal violations or financial penalties.

Because of the ineffective enforcement, workers and labor advocates say they’ve lost confidence in the department. Perhaps as a result, wage claims have declined 40 percent since 2010.

Most wage complaints filed with the Illinois Department of Labor in 2014 ended up dismissed, according to a Reporter analysis.

One of the most celebrated aspects of the reforms elevated repeat offenses to felonies, a change that advocates hoped would be a deterrent. But the labor department does not refer cases for criminal prosecution. Nor does it systematically track repeat offenders. One result: Without such tracking, Chicago has never been able to enforce its ordinance that allows the city to revoke the business licenses of repeat offenders.

Department of Labor officials say their priority is to get wages back into workers’ pockets, not to punish businesses.

“The Illinois Department of Labor works collaboratively with employees and employers to try and reach a just outcome for all wage cases,” a spokesman said in a written statement. “Relevant staff reviews each and every claim individually and litigation can sometimes lengthen the duration of open cases. However, it is an important legal process that helps ensure fairness for both workers and businesses.”

But without effective state enforcement, low-wage workers have few options.

The labor department has become the de facto option for “people who either don’t have information to know they could get an attorney to take their case, or an attorney wouldn’t take their case because it’s too small,” said Chris Williams, a private labor attorney and one of the original champions of the 2010 legislation. “Unfortunately I think it’s kind of utilized in that way: It’s where [those] cases go.”

A Worker’s Quagmire

In Chicago, the highest concentration of wage complaints comes from workers living in low-income black, Latino and immigrant communities, according to the Reporter’s analysis. Complainants often work for smaller companies in the health care, transportation, construction, landscaping, manufacturing and service industries.

These 10 Chicago zip codes have the highest rates of wage complaints, are all overwhelmingly non-white, and have higher poverty rates than the city average of 22 percent. (Graphic: Matt Kiepher)

“All of the growth industries in the city rely on low-wage labor. These occupations breed wage theft,” said Lesniewski. “So much of what makes the city run are occupations where wage theft is endemic. This is just as damaging to the city as the crime problem.”

Juan Lopez’s story is typical. Last August, the 42-year-old Mexican immigrant planned to take his two-week paid vacation from the suburban Itasca-based manufacturing company where he worked, building beverage displays. He had his bags packed and train ticket to Los Angeles purchased for a visit to his brother, whom he hadn’t seen in more than two decades.

But on his last day before vacation, a 145-pound oak whiskey barrel he was building rolled off a display mount and crushed his body. There would be no vacation. Lopez, who used to take pride in his physical prowess and jog every night after work in Pilsen, can no longer work and can barely walk; injuries to his lower back, hips and knees shoot pain up his body with every step. The company denied his workers’ compensation claim, but an attorney is helping him fight the rejection.

When he went to pick up his last paycheck, Lopez asked his former boss about his vacation pay, a little over $1,000. His employer told him he wouldn’t get paid. Lopez was dejected but unsure of his rights. He didn’t know that the Illinois Wage Payment and Collection Act protects a worker’s right to be paid for earned vacation time.

But Lopez, depressed because he was plowing through his savings, knew “a thousand dollars would help me pay the bills for a long time.” He turned to Chicago Community & Worker’s Rights, a workers center.

Executive Director Martin Unzueta knew Lopez’s case was too small for a private attorney. So he contacted Lopez’s former employer and asked the company to pay up.

“We go to the Department of Labor as a last resort,” said Unzueta.

Direct negotiations got nowhere. So Unzueta helped Lopez prepare a wage claim in January, though warning him not to get his hopes up about getting his money quickly.

“He told me this could take a year or more,” recalled Lopez, speaking in Spanish. “I said that was OK. In a year I will still need $1,000. I don’t know when I will be able to work again.”

Within weeks, a labor department employee called Lopez to ask him to fill out another wage claim form. Lopez speaks and writes limited English, and said he was told language help was available at the department’s downtown Chicago office and that he would hear back on a date to come in. Lopez said he never heard back, but got a letter telling him his case would be closed if he didn’t provide more evidence within 10 days.

“To tell you the truth, I got frustrated … because we’d already sent them what they were asking for,” Lopez said. “I called the office once and nobody picked up. So I didn’t bother filling out the form again. They already had all the information.”

In March, the department dismissed his case, records from Lopez’s case show. (After Unzueta’s group contacted the labor department, Lopez was able to refile his paperwork to open a new case, which is now pending).The Reporter’s analysis shows that workers who say they need a translator are far more likely to have their cases dismissed.

Like Lopez’s case, most claims to the labor department are dismissed early on. Department officials estimate that nearly half of dismissals occur because of incomplete claim forms.

Stricter notification requirements as well as recent labor department policies have made dismissals more likely, especially for low-wage and immigrant workers. For example, the department will dismiss a case when it can’t locate a worker — and low-income and immigrant workers tend to be more transient and are more likely to change phone numbers. Also, workers, instead of the labor department, are now required to send copies of their evidence to their employer — creating an added expense.

“Some workers don’t know the real name of their employer or how to find their address or phone number,” said Carmen Cabrera, an organizer with the Chicago Workers’ Collaborative, another workers center. “These people know how to work with their hands, and that’s it … It’s impossible for some of them to stay on top of their cases, especially if they’re looking for a new job.”

In a written statement, a labor department spokesman said, “The new forms have helped provide clarity for workers on their rights and responsibilities, improved the processing of claims internally, and contributed to the reduced number of cases filed per year.”

But Lopez got the sense that labor department staff was so overwhelmed, “it was like they were trying to frustrate me with the process so I would drop the case. So I would go away.”

Finding Solutions Elsewhere

Labor advocates and former labor department officials say lack of manpower is part of the problem, as wage claim specialists handle hundreds of cases per year. The ongoing state budget impasse has made it impossible to hire more staff.

“They don’t have much in the way of resources and so they’re backlogged. To get anything done takes forever. It’s like pulling teeth,” said State Rep. Barbara Flynn Currie, a Chicago Democrat who has studied the issue. “My impression is that they are just plain under-resourced and overworked.”

Department officials acknowledge that cases take far too long to resolve, and they have begun to make changes. More administrative law judges have been trained, and department officials said that move doubled the number of cases that went to hearings late last year.

Advocates have proposed other changes, including more aggressive collections against deadbeat employers, who take advantage of the lengthy process by dissolving their assets or declaring bankruptcy to avoid payment. Workers then may find it nearly impossible to recoup their wages, and employers who stiff workers get a message that the state won’t go after them.

“For very few employers have there been consequences, because of the slowness of the Department of Labor, because of the difficulty of proving the charge, because of the timetable,” said Flynn Currie, who introduced legislation last summer that would let the labor department file wage liens against an employer’s property at the time a worker files a claim. “People who need the money now don’t have the time and the resources to go through all of these motions, jump through all of these hoops and wait three years to get their money.”

The labor department opposes the bill and estimates that the law would cost about $1 million annually, mostly in salaries for new staff with expertise in lien procedures.

“For us it’s an administrative burden,” said Chris Wieneke, legislative liaison for the department, during an Illinois House committee hearing in February. “Our opposition is the million-dollar price tag to properly enforce this act.”

Another bill, introduced this spring by State Sen. Daniel Biss, an Evanston Democrat who’s running for governor, would increase fines for employers that refuse to pay judgments for wage theft and would ban repeat offenders from getting state contracts. The bill has passed the state legislature and now heads to the governor’s desk.

A recent study suggests that higher financial penalties do reduce wage theft. Daniel Galvin, an associate professor of political science at Northwestern University, analyzed self-reported income data from the Current Population Survey and found the states with stiff financial penalties for wage theft — particularly triple damages — have fewer minimum-wage violations.

“Each state’s embrace of treble damages signaled to employers that intentional wage violations would be extremely costly, especially in cases involving multiple plaintiffs,” Galvin noted in his paper, published last year in the academic journal Perspectives on Politics.

Unlike Illinois, a handful of states, including California, New York and Massachusetts, are more aggressive in criminal prosecution. The strategy has drawn more attention in recent years, particularly after high-profile cases brought by New York Attorney General Eric Schneiderman against home health agencies, car wash bosses and a pizza franchise owner.

“It’s so important for prosecutors to take these cases seriously and understand the criminality of this conduct,” said Terri Gerstein, former Labor Bureau chief at Schneiderman’s office. “It is, while nonviolent, certainly analogous to many other kinds of cases prosecutors routinely bring without batting an eyelash. And these crimes have a serious social impact on victims and communities.”

Illinois could follow New York’s example because the 2010 amendments elevated criminal penalties for repeat or willful offenders from a misdemeanor to a felony. But it doesn’t.

Advocates point out that it will take a variety of strategies to make a dent in the problem. Improving the complaint-based system, which the labor department relies on, would not be enough, given the scale of need and the persistent lack of resources.

“We have to think about [each of] these as small, incremental changes,” said Sophia Zaman, executive director of the Raise the Floor Alliance, an umbrella legal and policy advocacy group for the state’s eight workers centers. “How do we make the path to justice easier for workers?”

The Chicago Reporter is a nonprofit investigative news organization that focuses on race, poverty and income inequality.