Cincinnati Approves Wage Theft Ordinance

Vice Mayor David Mann is pictured at a Jan. 15 Thriving Cincinnati event where he unveiled his proposed wage theft legislation. The legislation was approved by Cincinnati city council on Feb 3. Photo: Mike Brown, C4AD.

By Jim DeBrosse, jdebrosse.c4ad@gmail.com

Cincinnati became the first city in Ohio Wednesday to approve a local ordinance against wage theft and payroll fraud after City Council voted 7-2 in favor of a proposal introduced by Vice Mayor David Mann.

The new law will withdraw city tax breaks, contracts, grants, loans or favorable property transfers from any company found cheating its employees and would bar, at least temporarily, serious offenders from doing further business with the city.

The ordinance doesn’t create new rules but gives the city two new tools for penalizing companies that violate state and federal wage laws while also retrieving money taken from city taxpayers, Mann said. City officials would also be obligated under the law to report wage theft complaints to state and federal authorities.

“We’re not just going to slap you on the wrist and say you have to pay what you should have paid your workers,” Mann said, “but you’re going to pay a penalty on top of that.”

Republican Council Members Charlie Winburn and Amy Murray voted against the measure after council declined to add an amendment that would have excluded undocumented workers from protection.

Federal law prohibits the hiring of undocumented workers but, once hired, both documented and undocumented workers are protected by federal wage and hour laws.

“If you work a hard day’s work, you should get paid for it” whether you’re documented or not, said Council Member Chris Seelbach. “It’s not a Republican or a Democratic value, it’s an American value.”

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 at a budget hearing on Monday. “And if it’s egregious, we want to debar that company from further business with the city.”

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 less than hours worked, or misclassifying them as independent contractors in order to avoid paying overtime and benefits.

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.

Some 50 or so supporters of the Just Pay Cincy campaign showed up for the council meeting 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.

Representatives from more than a dozen religious, community, civil rights and labor organizations spoke in favor of the ordinance Wednesday, including the Catholic Archdiocese of Cincinnati, the Episcopal Diocese of Southern Ohio, Interfaith Worker Justice, Black Lives Matter and the Indiana-Kentucky-Ohio Regional Council of Carpenters.

“If you’re going to fight child poverty in Cincinnati, this is a good beginning because children’s welfare depends on their parents and guardians receiving fair pay for their work,” Sr. Mary Wendeln of Su Casa Hispanic Center told council.

Brian Taylor of Black Lives Matter said he wished he had joined the Just Pay Cincy movement earlier. “It’s only when those who carry out crimes are punished that we can begin to see justice take place – whether it’s wage theft, police brutality or the genocide in Flint, Mich.”

Dave Meier of the Indiana-Kentucky-Ohio Regional Council of Carpenters said wage theft not only cheats workers but also puts honest contractors at a disadvantage in competing for city contracts.

By misclassifying their employees as independent contractors, Meier said, dishonest contractors “gain a 25 percent to 30 cost advantage” by not having to pay into workers compensation, unemployment insurance and Social Security. They also save on payroll staffing costs, he said.

Yet “these same contractors continue to get city jobs,” said Dave Baker, a board member of CIWC. “I’ve personally seen wage theft at (projects involving) Cincinnati schools. I’ve seen it at (the University of Cincinnati.) I’ve seen it at FBI headquarters.”

CIWC director Brennan Grayson said he was pleased with the ordinance even though it is more narrowly focused than anti-wage theft laws passed in some 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 city ordinance will be enforced by a staff of five local investigators who would periodically check work sites and handle complaints from workers, a city compliance official told a city budget committee on Monday.

Grayson said the next step would be to encourage the city to prosecute misdemeanor cases against wage theft even among companies not doing business with the city. Under state law, he said, the city solicitor’s office would have that power.

Worker advocates say federal and state investigators have too few staff members to properly enforce wage and hour laws. Hannah Halbert of Policy Matters Ohio, a state watchdog group, told council that Ohio now has only five wage theft inspectors for the state’s 4.5 million private sector employees.

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.