Courtesy of MIRS News Service
Seventeen percent of low-income workers experience some form of “wage theft” at the hands of their employers — from managers who pay less than minimum wage or steal tips to asking employees to work without pay temporarily but never make good on the back wages — according to Senate Minority Leader Jim Ananich (D-Flint).
An Economic Policy Institute report concluded Michigan workers are losing $429 million each year to wage theft, he said.
“Every day all across the state and the nation, there are a handful of bad actors in the business community that take advantage of their employees,” House Minority Leader Sam Singh (D-East Lansing) told MIRS on Monday for its weekly podcast.
“It comes in a variety of ways. It could be people are misclassified as independent contractors when they are actually employees. It could be a restaurant worker who is not making minimum wage when you calculate all their hours and their tips. Other times you hear stories of companies keeping tips.”
Singh and Ananich announced Monday in a telephone press conference their plan to introduce a three-bill package that will crack down on wage theft by increasing enforcement and penalties for wage theft. The package will also add protections for whistleblowers. The press conference was followed up by statements of support from the AFL-CIO, Progress Michigan and the Michigan Democratic Party, among others, in which the name of Attorney General Bill Schuette was invoked.
Singh explained that wage theft is a misdemeanor carrying a penalty of a year in jail or a $1,000 fine. That would stay the same for first offenses. Second offenses, however, will be a felony carrying a two-year sentence with a $10,000 fine, Singh said. The bills would also double the staff in the Department of Licensing and Regulatory Affairs responsible for pursuing wage theft. Retaliating against a whistleblower who exposes wage theft would become a felony punishable by up to two years in prison or a $10,000 fine for each violation.
“Ensuring bigger paychecks also means doing everything we can to protect hard-working people from being ripped off. That sounds like a pretty simple concept but unfortunately the crime known as wage theft cheats workers out of pay every single day,” Ananich said.
“. . . Businesses that play by the rules are also at a competitive disadvantage trying to compete with those who cheat. The reality is that Michigan law is failing those businesses and hard working men and women.
“I honestly don’t know who would be opposed to making sure that if you work hard, sacrifice, take care of your family, play by the rules, pour your sweat and heart into doing a good job, that you get paid what you earn.”
But Tony Stamas of the Small Business Association of Michigan did have a different take on the bill.
“I think it is implausible that this percentage of employers are engaging in this practice. We see small businesses that are working with their employees. Right now, they are working to bring in talent in a tight labor market, and in many cases it is a family setting,” Stamas said.
“Certainly, if there are bad actors, they should be treated as such, but making a complex system for a lot of small businesses that don’t have a human resources (HR) department and making it more complex, we don’t think is the solution.”
He further contended that if the government is finding that many errors, then it should look to clarifying and simplifying the law, rather than taking a punitive approach.
“The Michigan Restaurant Association (MRA) supports the legal and proper payment of wages and always educates its members accordingly,” MRA President Justin Winslow said. “This ‘report,’ however, comes across much more as a political stunt than substantive claim given that the institute of record was created by and is funded entirely through Big Labor to justify its self-serving claims.”
Graham Kovich, of the Restaurant Opportunities Center Michigan, a nonprofit that aims to improve wages and working conditions for food service employees, said during the press conference that when gratuities or service fees are tacked on to customers’ bills, those sometimes don’t reach the workers.
“When you order delivery or takeout and there is a service fee on there, the person who prepared your food or who delivered it probably still isn’t getting the full amount. A big chunk of that is probably still going to the company,” Kovich said.
He said he worked for a national restaurant chain in 2012 that asked employees to sign agreements to use arbitration to resolve disputes rather than participate in a class-action suit. Delving deeper, he learned the company was being sued across the country for charging gratuities for banquet services but not passing the gratuity on to employees. Rather, the money was being use to subsidize workers’ base wages.
Restaurant workers can be paid $3.38 per hour under the law now, as long as tips bring them up to at least the minimum wage of $8.90.
“Even workers who work in high-tipped restaurants” can be subjected to wage theft, Kovich said. “I met a worker who said he could make $300 to $400 per shift but managers were saying, ‘If you want to keep these shifts where you are making this much money, then you have to give us $100 per shift.’ So just working weekends alone if you are paying out $200 per weekend over the course of a year, you are losing $10,000 in tips.”
Dr. Eric Simon said he worked for a pharmaceutical company in Ann Arbor from October 2010 to 2012 that eventually asked him to work without pay, saying an investor would soon come in to clear up back pay. Four months later, employees asked the CEO to lay them off so they could begin collecting unemployment. It took a year and half, Simon said, for the company to pay employees about 50 percent of what they were owed.
Lauren Rosen, of Hazel Park, said she has been terminated twice for raising the issue of wage theft. At a restaurant in Detroit, she was immediately let go when she pointed out to management that tips from banquet events were inconsistent and lower for workers of color. Later, at another job, she raised concerns in what was supposed to be a confidential survey about time being manually adjusted off of time cards and was terminated a few days later. As she walked out, she passed the corkboard where she had been featured as employee of the month.