The Wage Justice Center (WJC) was founded in 2007 by recent USC Gould School of Law graduates, Matthew Sirolly and Melvin Yee, to fight for greater economic equality and justice in California’s working communities through both litigation and organizing strategies.
At least $26.2 million is stolen from Los Angeles workers every week. While the California Labor
Commissioner issues thousands of judgments each year, approximately 83% of these judgments went uncollected in 2011. Businesses in the underground economy employ unprincipled and sophisticated strategies to evade their responsibility to pay workers for work performed. Tactics include declaring bankruptcy, closing up shop and opening their new business under a new name, and hiding assets.
Matthew and Melvin knew that commercial collections cases – brought by suppliers or funders against these same businesses – do result in compensation for the aggrieved party. They saw the potential to apply commercial collections laws to employee wage theft claims. Now, the Wage Justice Center has used commercial collections law to recover over $6 million in wage theft claims, giving low-income workers the same power to collect their wages that these commercial entities have.
When demand letters and bank levies do not produce compliance, we employ more sophisticated collections tactics:
- We’ve proved fraudulent transfer of assets in restaurant and factory wage theft cases when the owner attempts to sell the business to a family member for well below the market value or simply transfers the business into the name of a family member.
- We’ve proved that businesses – garment factories, restaurants, home care facilities –simply changed their business name, while continuing to operate the same business usually in the same location, to evade responsibility for paying wage theft judgments.
- We proved that bankruptcy does not absolve a business owner from paying a day laborer for back wages when the owner never intended to pay the worker.
- We’ve used the Mechanic’s Lien for day laborers to put a temporary hold (a lien) on the property of an employer who owes back wages. Although some restrictions about how and when Mechanic’s Liens can be used exist, it’s an under-utilized tool in wage theft collections. We’ve helped over 250 day laborers secure back wages totaling over $183,000 in the past 4 years using Mechanic’s Liens.
Marco Julian’s story is a typical example of wage theft in the underground economy:
Marco Julian and his son Marco Antonio worked in the kitchen of a restaurant in Rosemead. After working overtime but not being paid for overtime worked, they filed wage theft claims with the California Labor Commissioner.
In April 2012, the Labor Commissioner issued a judgment against the restaurant for over $150,000 for unpaid wages and penalties owed to Marco Julian and Marco Antonio.
Incredibly, within weeks, the owner sold the restaurant to her nephew for a mere $15,000! This common ploy by many businesses facing wage theft judgments often precludes collection.
However, our investigation led to two critical discoveries: 1) the owner was still acting as an owner by signing business checks being listed as owner on government documents 2) she pretended to be a cook but could only produce paychecks that were issued after our subpoena.
The Wage Justice Center filed a civil suit that included causes of action for fraud, fraudulent transfer, alter ego, and improper distribution of corporate assets to shareholders and directors.
In November 2016, about a year after WJC filed our lawsuit, the owner settled and Marco Julian and Marco Antonio are walking away with all wages and some penalties.
Ultimately, the Wage Justice Center seeks to reform the law through strategic litigation and policy advocacy to recognize a privileged claim by workers to collect unpaid wages against the businesses’ (and the business owners’) funds and assets that were accumulated, in large part, by these workers’ sweat.
WJC has provided legal representation to over 4,000 low-income workers facing wage theft and recovered over $6 million in lost wages.
By developing new strategies to enforce wage rights and educate workers, advocates and the public, the Wage Justice Center empowers long-abused workers to assert their basic rights and collects unpaid wages from employers who have previously escaped consequences for illegally underpaying – or simply not paying – their employees.
Organizations mentioned/involved: Wage Justice Center