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Chicago legislature cracks down on wage theft

The city of Chicago is adding a bit more muscle to its laws against wage theft.
A worker stocks a new Walmart Express store in Chicago July 26, 2011. Chicago low-wage workers such as this one can look forward to additional protections against wage theft under a new city ordinance.(Photo by John Gres/REUTERS)
A worker stocks a new Walmart Express store in Chicago July 26, 2011. Chicago low-wage workers such as this one can look forward to additional protections...

The city of Chicago is adding a bit more muscle to its laws against wage theft. On Wednesday, the Chicago City Council passed an ordinance which empower the city to strip companies of their business licenses if they cut corners on wages owed to employees. Supporters of the law hailed it as a crucial step forward for workers' rights in the city.

Liliana Baca, a member of Arise Chicago's worker center, said she had been a victim of systematic wage theft over the course of her five years working at a local grocery store. "So many people have had their wages stolen, and this ordinance will help them recover their wages and prevent wage theft from happening to other people," she said in a statement released by Arise Chicago, which supported the legislation.

Supporters also argued that the new ordinance would help businesses which abide the law. "What it does specifically is, for those who have business licenses, it creates a fair playing field for them," Latino Union of Chicago executive director Eric Rodriguez told msnbc. "It's a good thing for workers and businesses."

Tsedeye Gebreselassie, an attorney for the National Employment Law Center, described wage theft as a national "epidemic." "There are a variety of ways in which some employers are cheating their workers," she said, including not paying overtime, withholding tips, finding various excuses to dock wages, or simply refusing to pay the agreed upon amount.

In 2008, NELP conducted a survey of 4,387 low-wage workers across the country [PDF]. According to the report, "More than two-thirds (68%) of our sample experienced at least one pay-related violation in the previous work week." Over a quarter of the workers had been paid below the minimum wage over the course of that week. Wage theft violations were found to disproportionately affect women, people of color and undocumented immigrants.

Chicago's new ordinance follows another recent attempt to stiffen enforcement and penalties for wage theft, this time on the state level. In 2010, Gov. Pat Quinn, D-Ill., signed an anti-wage theft law which gave the Illinois Department of Labor additional powers and added jail time to the list of possible consequences for offenders.

Now, "we're taking away the opportunity for any egregious wage practitioner to do business in Chicago," said Rodriguez.

Rodriguez argued that the changing nature of the American economy meant that more workers would become vulnerable to wage theft unless something was done. "What we're seeing is a new phenomenon in how business is done," he said. "We have more temporary labor, more middlemen and facilitation. It makes it more difficult for people to see who is the actual employer." With the new law, he said, "what we're trying to do is catch up and lift the standards, update the standards and laws to what we have now and the realities on the ground."

But enforcement on the federal level, as well as in many states and localities, is far too weak to do much good for most low-wage workers, Gebreselassie of NELP argues. "There's just a real lack of public resources," she said. "The federal U.S. Department of Labor, I think, only has about 1,000 investigators that are tasked with investigating wage and hour violations across the country. There are maybe 130 million workers that our covered by our wage and hour laws, and it's just impossible for a staff that small [to investigate every potential instance of wage theft]."

There are, however, some encouraging signs. "Over the past five to ten years, there's been a real groundswell of activity in this field," said Gebreselassie, citing the Illinois legislation and another anti-wage theft ordinance passed by Florida's Miami-Dade county government in 2010.

"I think you'll see that there will be more legislation that gets passed," said Gebreselassie.

CORRECTION: An earlier version of the article included this paragraph:

Rodriguez said that the state law was a step in the right direction, but it wasn't enough without the recently passed ordinance. "Basically, the laws were not enough to have an employer pay the judgment that has been placed against them," he said. Even with more Labor Department investigations and harsher penalties, some businesses still found it cheaper to steal their employees' wages and risk the consequences.

In fact, Rodriguez was referring to the 2010  state law in the above quote, not the city ordinance. We regret the error.