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Among the DFL’s big legislative priorities, addressing wage theft is one of the few that have a good shot of becoming law. Why?

The Department of Labor and Industry estimates that 39,000 Minnesota workers aren’t fully paid what they’re owed each year, and labor and social justice advocates have waged a campaign to address the issue. 

State Sen. Eric Pratt and state Rep. Tim Mahoney
State Sen. Eric Pratt, center, and state Rep. Tim Mahoney, right, shown during last week's conference committee.
MinnPost photo by Peter Callaghan

The Minnesota House DFL had an ambitious agenda for 2019. Family and medical leave insurance, a public health insurance option, restoring voting rights for released felons, tax hikes for increased education spending, a pair of gun safety measures, anti-gouging laws for drug prices.

Nearly all are likely to fail when they get to a state Senate that is controlled by Republicans. All, that is, except for one DFL bill that has a pretty good chance of passing into law. That is likely due to a campaign by labor and social justice advocates that reached a key Republican senator. The issue is combating wage theft. And the senator is Eric Pratt of Prior Lake.

Wage theft is when employers don’t pay workers — or pay them less than promised. It’s often connected to labor trafficking and has a particular impact on recent immigrants who fear reporting their bosses out of fear of retaliation.

After hearing about the problem from organized labor, Pratt said he met with new Attorney General Keith Ellison to talk about the issue. He followed up with House Rep. Tim Mahoney, the St. Paul DFLer who chairs the House Jobs and Economic Development subcommittee.  “His comment, and it really stuck with me, was that nowhere in statute do we define wage theft as a crime,” Pratt said of Mahoney. “If someone has earned a wage, they should be paid. Where Chair Mahoney and I and the attorney general agree is on that very simple premise. Now, how we get there might be a little bit different.”

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The House and Senate wage-theft bills are similar in a lot of ways, said Pratt. “We define wage theft as a crime. We agree there should be higher penalties for repeat offenders so we have a misdemeanor and a gross misdemeanor. I think this will make it through conference committee is some way, some form and we’ll get it to the governor.”

Pratt’s optimism, and that of advocates, may have been dampened some last week when Pratt and Mahoney engaged in a contentious first meeting of the conference committee created to resolve differences between each chamber’s omnibus jobs and economic growth bills.

Pratt accused Mahoney of violating legislative rules by convening that meeting without Pratt’s cooperation. “You didn’t ask me if we were going to meet today,” Pratt said. “You told me we were going to meet today.”

Mahoney at one point said that if Pratt didn’t like the meeting, “there’s a door.” Later in the meeting, Pratt took him up on the suggestion and left.

That dispute, however, had little to do with the wage theft issue, and backers point out it is one area where the two chairmen agree in principle if not yet in the details.

Biggest difference is over intent

The state Department of Labor and Industry estimates that 39,000 Minnesota workers are not fully paid what they have earned each year.  

A news conference promoting the Mahoney bill earlier in the year, Cecelia Guzman described how she was owed $2,000 from a cleaning company. “We live paycheck by paycheck, and after two months the person still hadn’t paid me,” Guzman said through an interpreter. “Without having any money I had to look for money to pay for my bills and so I asked around for help.”

Guzman said she went to small claims court and received an order that the wages should be paid yet the employer still hadn’t paid her. “Until this day, there isn’t any law that obligates a person who steals wages to pay,” she said. “Out there there are a lot of workers going through this right now.”

At the news conference, another worker, restaurant line cook Kevin Osborne, described being made to work off the clock to set up and clean up before and after his shifts. Complaining attracts retaliation, he said. “We don’t call it retaliation, we call it getting our hours cut.”

Rep. Tim Mahoney
MinnPost photo by Peter Callaghan
Members of the advocacy organization Centro de Trabajadores Unidos en la Lucha (CTUL) and other backers of an anti-wage theft bill join with state Rep. Tim Mahoney at a February press conference.
In addition to the basics, the House and Senate bills also have similar language relating to third party reporting and retribution. Pratt said letting people and entities other than the wronged worker report violations is “absolutely” necessary. The state Department of Labor and Industry can bring actions on its own if it finds violations. So too could a labor union, human rights group or advocacy organizations, like Centro de Trabajadores Unidos en la Lucha.

Pratt’s Senate bill does require that workers point out mispayments before asking the state for help. “There’s no demand that the employee name themselves,” he said. “There’s no demand that you take formal action. You just have to ask for your wages, that you think you’re short. Or on behalf of someone else that you think they’ve shorted. And another place where Chair Mahoney and I are in agreement is we want to make sure there’s no retribution with these folks for filing a wage-theft claim. They’re just standing up for their rights and they should be able to do that.”

Mahoney said most workers will ask for wages and point out problems. “But you get some jerk who uses it as a business model? He’s going to do everything possible, so if you even look like an undocumented worker he’s going to threaten you with ICE.”

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The biggest disagreement is over intent. Pratt said he thinks that for a violation to be a crime, it has to be intentional. “A simple mistake could be classified as wage theft,” Pratt said. “Before we start charging people with crimes we want to make sure there was some level of intent involved in it. It’s one of the biggest differences we have between the two bills.”

Mahoney, however, said the criminal aspects are reserved for purposeful and repeat offenders. Citations for not paying workers, however, should be available to regulators without proving that the employer intended to do so. He compares it to the traffic cop who only has to demonstrate that the driver was exceeding the posted speed limits, not that they intended to speed. “I have structured this new law to be so focused on administrative stuff,” he said. “You don’t cross the felony line until you get to $35,000. Thirty five thousand dollars? That’s like robbing 10 banks.”

Commissioner Nancy Leppink
Commissioner Nancy Leppink
Mahoney’s bill also has numerous provisions requested by the state department of labor relating to investigations, subpoena powers and warrant for information from violators. It also changes the minimum pay period allowed for all workers from every 30 days to every two weeks.

During Friday’s conference committee, after Pratt had left, Nancy Leppink, the commissioner of labor and industries, said her department is responding to a changing labor environment for low-wage workers. As more companies outsource work such as janitorial, hospitality, home care and some construction work, the primary cost difference between bidders for that work is labor costs.

Wage theft, in some of these sectors, has become “systemic,” to the disadvantage of businesses that follow the law, she said. “This bill is in response to the need for stronger enforcement.”

Judges would have to approve subpoenas and warrants and those would be used in cases where employers have refused to provide information or even threatened state regulators. Unlike earlier in the department’s history when it was reviewing payroll records of employees, a lot of these workers are not employees and there may be no record of their employment.

“We have a lot of situations where workers are not even identified on the payroll, are being paid under the table, who are told to run and hide when the inspector shows up,” she said. “We need to make sure our investigative authority and what we’re allowed to investigate are consistent with the challenges that we will face in workplace.

“These are not nice-to-haves, these are have-to-haves,” Leppink said.

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Mahoney said in April he thinks the final bills needs to include the tools Leppink has asked for. “I think we can have a conversation [with the Senate] but I would rather not have a bill than have a bad bill or even a weak bill. Because then someone can say, ‘We did that last year so we don’t have to do it again.’ This is something we need to follow and work on and make sure they get rid of those people from this state.”

An issue for construction workers

One of those lobbying for the bill as part of the Coalition to Stop Wage Theft is Adam Duininck, the director of government affairs for the Regional Council of Carpenters. He said the union is concerned not just because some workers aren’t being paid for their hours but because union-affiliated contractors are at a competitive disadvantage.

“What we’re really trying to get at with this bill is some of the worst of the worst — either developers or contractors or subcontractors who are letting this happen in construction,” Duininck said. The Senate’s interest is important not just because it is willing to make theft a crime but because, like the House, it is putting more money into enforcement.

Adam Duininck
Adam Duininck
“To see him take seriously the need for more resources was a great sign,” Duininck said of Pratt. “We think if the department has more resources and if they are able to work more strategically, with other agencies, they can get ahead of these things, be more proactive.”

The Senate also adopted language from human rights advocates to train investigators how to spot organized labor trafficking. He cited a Hennepin County case where a trafficker not only paid the workers but transported then to and from job and housed them, withholding some pay to cover the cost of those services.

“It’s not a normal relationship. It’s indentured servitude, you’re working off a debt,” Duininck said. “That’s a lot of where the wage theft happens. It’s a pretty shameless practice. So to tie it in with labor trafficking was a good move by the Senate.

“I think there’s real stuff there,” he said of the Senate bill. “I hope that organizations like ours and CTUL and the advocates for human rights and others who are working on it have helped to open people’s eyes to how much more of this happens than people realize.

“I’m still pretty optimistic that something will happen on this issue but where it could fall apart is if there are bigger-picture issues in the talks about the whole omnibus bill. I still feel pretty good about it.”