Underground Economy Industry Expertise

Wage Justice Center has developed expertise within a few targeted industries operating in the underground economy – usually subcontracted and almost always operating in cash. Here are selected success stories by industry:

CARWASH WORKERS

The Wage Justice Center initially helped five workers at Melrose Strip Auto Detailing & Car Wash – located along a posh section of the famous Melrose Strip – file a lawsuit for years of unpaid wages and other labor violations.

The workers were not paid minimum wage, much less overtime wages for overtime work. They were regularly denied rest and meal breaks. These are basic employment rights of every California worker. Many workers reported being paid a flat daily rate that amounted to well below our minimum wage.

On November 9, 2012, several other workers joined the case, bringing the total claimants to nine. Workers sought back-wages for themselves and all their co-workers, as well as an injunction that would prevent similar labor violations in the future.

A few short weeks later, these nine workers stood up to the carwash publicly by announcing their lawsuit at a press conference and helping identify management for the purpose of serving the complaint.

We were honored to stand beside these brave individuals who have taken a stand against exploitation in LA’s carwash industry.

GARMENT INDUSTRY
Monitoring of Seventeen Inc.

In addition to collecting thousands of dollars in unpaid wages for garment workers, the Wage Justice Center, under the leadership of Matt Sirolly, in 2010-2011, partnered with the Worker Rights Consortium to assist the WRC in its role as court-appointed monitor of the employment conditions at a Los Angeles garment factory, where our investigators discovered additional – and numerous – undetected labor violations through worker interviews, and obtained unpaid wages for employees. These violations were not remedied by the original lawsuit and they included reporting time-time pay violations and unpaid compensable standby time. The garment factor, Seventeen Inc., agreed to provide the workers the additional back pay that they were owed. This LA Times article outlines why a monitor was needed.

Fraudulent Transfer Lawsuit
The Wage Justice Center represented five garment workers in a joint lawsuit to collect approximately $100,000 in unpaid wages that the California Labor Commissioner had ordered to be paid.

These workers had received a piece rate that amounted to approximately $3.65 per hour, well below our state’s minimum wage at the time.

A mere 3 months after the wage theft judgments were entered into court, the married couple who owned the garment factory transferred over $1 million in assets (including their home and another business) to their college-age son. The owners transferred these assets in exchange for no money.

The Wage Justice Center took over the case a couple of years after the court ordered a judgment for wage theft. Our initial research found that the owners had no personal assets. We continued digging until we discovered this transfer of assets to their son. We filed a fraudulent transfer lawsuit.

After substantial discovery and a long mediation, we reached an agreement mandating that the employers pay the wages owed to the workers. Further, we made sure this agreement included providing a deed of trust to the workers to secure full payment.

JANITORIAL WORKERS

Janitorial Subcontractor Retaliates Against Janitor Who Cleans Police Department
”Olivia,” a janitorial worker for “Good Quality Janitorial,” spoke out in public about the prevalence of wage theft in the janitorial industry as part of a bigger workers’ rights campaign organized by Maintenance Cooperation Trust Fund (MCTF), a group that advocates for janitors and janitorial employers who play fair.

Olivia did not mention her company’s name nor the Southern California Police Department where she cleaned restrooms, emptied trash and vacuumed.

Yet when her boss found out about her talk, he fired her. After nearly seven years of working for him, Olivia was pushed out for simply declaring the truth.

Olivia had had enough. She had been systematically denied meal and rest breaks and she had not been paid for all hours worked. She filed claims for years of wage theft. The California Labor Commissioner issued a judgment for $20,000, but like most victims of wage theft, Olivia couldn’t get paid with the judgment alone. She turned to the Wage Justice Center.

Our investigation revealed that the janitorial company was evading its responsibility by simply changing the corporation’s name.

You can imagine Olivia’s frustration and disappointment every time she passed her local Police Department, knowing her former employer was doing the same work, at the same location, but claimed to be a different company simply because it was now “Good Stuff Janitorial” instead of “Good Quality Janitorial.”

Our investigation revealed evidence that’s unfortunately common in our work: The owner’s corporation was suspended because Good Stuff Janitorial owed $5,000 in back taxes to the State of California.

When Wage Justice Center and MCTF filed a lawsuit against Good Stuff Janitorial for taking the police station business account from Good Quality Janitorial, we also asked for an expedited proceeding, so Olivia didn’t have to wait for two years of litigation to prove the obvious.

Because the $5,000 in back taxes prevented the employer from responding, it would have been sensible to negotiate a payment plan with Olivia. But spite is rarely sensible: The same spite led him to pay $5,000 in back taxes just to be able to file an opposition to our expedited proceeding.

Yet, his opposition filing was futile: our Public Records Act Request to the City disclosed that the right to clean the Police Station went from Good Quality Janitorial to Good Stuff Janitorial without a new bid. This tied together both companies.

The employer paid Olivia an additional $28,000, covering nearly four years of interest.

Olivia’s activism on behalf of all workers continued. She traveled by bus to Sacramento to advocate for prior versions of the now-passed SB 588.

DAY LABORERS

Credible Threat of Foreclosure Restores Stolen Wages
Ricardo worked at a few properties for a subcontractor. He toiled for hours on cabinetry in a TV & sound room at one home and improving kitchen fixtures at another.

Although Ricardo was shorted hours on all jobs for this subcontractor, he was treated well and paid on time, so he continued working.

Ricardo is married with 3 daughters, and although his wife works, their combined $28,000 annual salary is stretched thin across rent, food and clothing. He couldn’t afford to rock the boat by demanding to be paid for all his hours and to take all his meal & rest breaks.

However, after he finished the job, his final check bounced. Assuming the bounced check was a clerical error, Ricardo contacted the subcontractor, explained what happened and politely requested a new check. However, the subcontractor refused to pay Ricardo and soon stopped returning his calls.

This sparked Ricardo’s sense of injustice; he had already tolerated not being paid enough for the job even with this paycheck. To be dismissed over more wages was enough. Ricardo contacted Wage Justice and we evaluated his entire work on both properties. We determined his work on two of the many properties met all the criteria for a Mechanic’s Lien, and we recorded Liens on these two properties for the back hours, denied meal and rest breaks and the final bounced paycheck.

Shortly after we recorded the Liens, the General Contractor on the Venice property contacted our legal team and took responsibility. He is licensed and he employed the subcontractor who hired Ricardo. He shared that he had been contacted by the angry homeowner about the Lien and he’d addressed it with the subcontractor, who had admitted to not paying Ricardo. The General Contractor was respectful of Ricardo’s work and – unlike many licensed and unlicensed contractors – he did not dispute that Ricardo completed the work, he did not disparage the quality of Ricardo’s work and he did not question the immigration status of the worker. Because of this General Contractor’s adherence and respect for the law, ​Ricardo quickly recovered his wages from that job.

Unfortunately, the Hancock Park homeowner initially refused to pay, forcing us to file a new and separate foreclosure lawsuit 90 days after the original Lien was recorded. His attorney impressed upon him that, in fact, he would be forced to sell his home over approximately $2,000. After weeks of fruitful negotiations with the homeowner and their attorney, we recovered Ricardo’s back wages.

PORT TRUCK DRIVERS

Wage Justice Center and Asian Americans Advancing Justice – Los Angeles (Advancing Justice-LA) litigated for four long years on a class action wage theft lawsuit brought on behalf of over 400 Latino and Korean immigrants against a port trucking company comprised of related corporate entities. Port truck drivers are the backbone of a $450 billion industry in Southern California. We secured a $5 million settlement.

The company, QTS, Inc., and its related entities, including LACA Express and Win Win Logistics, misclassified their drivers as independent contractors in order to deny them their rightful compensation and then hid behind purported bankruptcy protections to avoid liability for wage theft and other exploitative business practices. By classifying the drivers as independent contractors but controlling them like employees, companies are able to evade taxes as well as shift all the costs of operating their businesses to the drivers, including the cost of trucks, gas, maintenance and repair, and insurance, leaving drivers with poverty wages. These high weekly deductions operate like debt bondage, forcing the drivers to work dangerously long hours to eke out a living.

During four years of litigation, QTS, Inc. filed for chapter 11 bankruptcy, nominally to “reorganize” its debts, but in reality to frustrate the ongoing litigation and evade any responsibility for its debts. “The defendants in this case filed for bankruptcy to try to avoid paying our drivers their hard-earned wages,” said Jay Shin, Directing Attorney at Wage Justice Center. “But we were not ready to concede the millions of dollars stolen from our drivers. We doggedly followed them into bankruptcy court and used innovative legal theories to hold the companies liable.”

In a novel move, the drivers transferred their state court litigation into bankruptcy court by suing the non-bankrupt entities as creditors of the voluntarily abandoned and bankrupt entity. They asked the bankruptcy court to consolidate the assets and debts of all the entangled business enterprises. The parties reached the current settlement after 18 months of litigation in bankruptcy court entailing the subpoena of the defendants’ major customers, review of tens of thousands of pages of documents and deposition of the officers of the business entities.

The settlement pays out over five years. Wage Justice Center is prepared for any variation of corporate shell litigation that unscrupulous employers try to play to eschew their responsibility for compliance with basic employment laws: pay workers for work performed.