By Jim DeBrosse, email@example.com
Cincinnati could become the first city in Ohio with a local ordinance against wage theft and payroll fraud if City Council approves a measure advanced Monday by its budget and finance committee.
The committee voted 6-0 with two abstentions and one member absent to approve a bill that would withdraw city tax breaks, contracts, grants or loans from any company found cheating its employees and would bar, at least temporarily, serious offenders from doing further business with the city.
“This doesn’t create any rules, but it gives the city two new tools” for penalizing companies that violate state and federal wage laws while also retrieving money taken from city taxpayers, said Vice Mayor David Mann, who introduced the bill.
Some 40 or so supporters of the Just Pay Cincy campaign showed up for the committee hearing wearing green armbands.
The campaign was launched last year by The Cincinnati Interfaith Workers Center, a non-profit advocacy group for workplace justice that gathered more than 3,000 signatures for a local anti-wage theft ordinance. The campaign has the backing of the Greater Cincinnati Foundation, the Catholic Archdiocese of Cincinnati, the Woman’s City Club of Cincinnati and local labor unions.
CIWC director Brennan Grayson was pleased with the outcome of the hearing even though the ordinance is more narrowly focused than some anti-wage theft laws passed in other cities, such as Seattle, Chicago and Miami. Those cities have laws aimed at penalizing wage theft at any local company, not just those that have financial dealings with the city.
Still, Grayson said, Cincinnati’s ordinance “is more aggressive in that it has potential penalties” against both contractors and subcontractors receiving benefits from the city. Any governmental agency, arbitration decision, court judgment, or industry regulatory body would identify wage theft violators.
The ordinance, which could go up for a vote from council as early as Wednesday’s meeting, appears already to have majority support.
Council Member Chris Seelbach said he would vote for the new law even though he had to leave the committee hearing early.
Council members Charlie Winburn and Amy Murray both abstained from the vote. Murray wanted clarification on coverage of undocumented workers in the ordinance while Winburn said he wanted to be sure the law didn’t create an “anti-business climate.”
“To say this is anti-business is to give business a much worse name than they deserve,” said Council Member Yvette Simpson, who voted in favor. “Any civilized individual knows that if somebody does work for you, you pay them.”
Council Member Christopher Smitherman, who also voted in favor, said, “The Greater Cincinnati Chamber of Commerce had reached out to me in support of this ordinance.”
Mann pointed out the ordinance would protect workers from a wide range of fraudulent pay practices, including paying employees in unreported cash, paying them less than minimum wage or for hours worked, or misclassifying them as independent contractors in order to avoid paying overtime and benefits.
Manual Perez, an organizer for CIWC, told the hearing that those who can least afford it are most often the victims of wage theft – low-income wage earners, immigrants and their families. Especially vulnerable, he said, are English-challenged workers because their employers “believe they don’t have the acumen and they won’t report it.”
National research shows that 2 out of 3 low-wage workers experience wage theft. Low-income workers – those earning less than $10 an hour — in Cincinnati lose over $52 million in wages each year to employer theft, according to recent estimates by CIWC.
That also means millions of dollars in earned income tax lost from city coffers, Mann said. “If there is a proven case of wage theft, we want those moneys back,” he said. “And if it’s egregious, we want to debar that company from further business with the city.”
Worker rights advocates say far more wage theft occurs than is reported — one, because many workers aren’t aware of their rights under the law and, two, many fear they will be blacklisted within their industry.
Despite federal and state laws against wage theft, worker advocates say short-staffed federal and state investigators do a poor job of enforcing them.
The city ordinance would supplement those efforts with a staff of five local investigators who would periodically check work sites and handle complaints from workers.
Between fiscal 1978 and 2012, the U.S. Dept. of Labor’s investigative staff fell 13 percent, from 1,232 to 1,067, while workers covered by minimum wage laws increased 63 percent, from 57 million to 93 million. The number of inspectors per 100,000 such workers declined by half, from 2.2 to 1.1.
Richard Repasky, a former investigator for the DOL’s Wage and Hour Division in Ohio, said labor violations are widespread but the state has too few DOL investigators to clamp down on the problem. “I think they’re pretty much just going through the motions. I don’t think they take labor laws seriously at all.”
Ohio currently has 30 to 32 full-time federal labor law investigators, according to Don Harrison, who heads the Ohio office of the DOL’s Wage and Hour Division. But Repasky, who retired in 2011, believes the state needs at least 50 full-time investigators, and ideally one in each county of the state, for a total 88, to reduce travel time to manageable proportions.
Ohio’s Bureau of Wage and Hour Administration, which enforces laws on overtime on public projects as well as minimum wage and pay to minors, has just six investigators and one supervisor to cover the entire state.
“Their staff is so small as to be almost irrelevant,” said Zach Schiller, research director of Policy Matters Ohio, a non-profit government watchdog.
There were more than 250,000 business establishments in Ohio with 4.6 million paid employees earning $195.6 billion in 2012, according to the U.S. Census Bureau. But in 2014, Ohio’s Bureau of Wage and Hour Administration handled 900 complaints and recovered just $676,000 in unpaid wages.
Schiller says that, unlike federal investigators who seek out violators, Ohio officials simply respond to complaints, which represent only a small portion of all violations since workers are afraid of reprisals. “It’s almost like a dead letter office,” he says. “The attitude (in Ohio’s state government) is that enforcement is anti-business.”
Smitherman called wage theft “a form of slavery” and said the ordinance is “not about political affiliation. Even conservative principles hold people accountable for what they say they’re going to do.
“I’m going to support this and send a very clear message to anyone who doesn’t pay their workers.”