Dan Walters

June 18, 2014

Temporary workers, paid sick days, back wages lead California labor priorities

Paid sick days. Tougher penalties for employers who withhold back wages. More liability for corporations that use subcontractors. The priority list of organized labor, a formidable force in the Legislature, begins with these three items.

Paid sick days. Tougher penalties for employers who withhold back wages. More liability for corporations that use subcontractors. The priority list of organized labor, a formidable force in the Legislature, begins with these three items.

In the recurring rhetoric of business vs. labor, the measures either protect workers or destroy work. The measures sit on the “job killer” list, published each year by the California Chamber of Commerce, that previews where business interests will play defense against the Democratic-controlled Legislature. All three have emerged from the Assembly and are advancing through the Senate.

“I think all three bills are broad mandates on all business in California that will significantly increase California employers’ costs, the threat of litigation and the health of our economy,” said Jennifer Barrera, a lobbyist for the California Chamber of Commerce.

To backers of organized labor and their Democratic allies, the bills are joined by a common thread of basic economic fairness. They say they are aimed at the most vulnerable – shift workers who can’t take a day off when they come down with the flu, or day laborers who have little recourse when they aren’t paid the money they’ve earned.

“Addressing the growing disparity between those at the top of the economic ladder and everyone else is really what drives our agenda,” said Steve Smith, a spokesman for the California Labor Federation. “And so when we sat down early in the year and sort of put together a legislative agenda, our thinking was all centered on that concept of, what can we do to give low-wage workers in particular a leg up in this economy?”

Sick days have become a coveted goal for unions and Democratic politicians from New York to California. Previous bills requiring California employers to provide time off to ill employees have succumbed to business opposition, arguments about aiding workers and protecting consumers from germ-ridden workers notwithstanding. Employers currently are not required to provide time off for sick employees.

But Assembly Bill 1522 emerged from the Assembly last month by a comfortable margin. It won 52 aye votes, including support from a handful of moderate Democrats generally seen as impediments to the most ambitious labor-supported policy items. In a compromise that has irked some supporters of paid sick leave, the bill would let employees earn up to three sick days a year – fewer than in past proposals.

“(Workers) have to make the choice between going to work, and possibly infecting others if they’re sick, or helping their children and losing pay,” said Assemblywoman Lorena Gonzalez, D-San Diego. “I think when businesses slow down and look at the proposal on its own,” she added, “they realize they overreacted.”

More novel than Gonzalez’s push for sick days is the concept behind a bill helping workers recover back wages: allow them to slap a lien on the property of employers. California already allows workers owed money to bring a claim before the labor commissioner. But data show that only a fraction of workers who win their claim receive money as a result.

“When you recognize that money actually owed never gets paid, that’s a substantial issue,” said Assemblyman Mark Stone, D-Scotts Valley, who is carrying Assembly Bill 2416. “And these are the lowest-paid workers throughout the state of California.”

A central obstacle to workers, advocates say, is that employers play a shell game to evade their responsibility. Some companies change names or simply vanish, leaving a worker nowhere to turn. In her 15 years of helping janitors seek lost wages as head of the Maintenance Cooperation Trust Fund, Lilia Garcia-Brower said she has secured judgments worth $60 million in back wages. Only $30 million has ended up in the pockets of workers.

“The reason we don’t collect is the contractors go belly up and there’s no legal entity to sue,” Garcia-Brower said.

But if Stone’s bill became law and an employer’s property was at stake, Garcia-Brower said, “then they would have had to seriously deal with the dispute.”

Currently, her organization is helping a Los Angeles janitor named Yair Suarez as he seeks to recover an estimated $15,000 in back wages. In a shift that Garcia-Brower said does not bode well, the name on his paychecks suddenly changed. One pay period he was working for Floor Care Systems; the next, he was an employee of The Floor Experts, Inc.

Floor Care Systems was suspended by the Franchise Tax Board in 2013 and its official founder has been charged with workers’ compensation fraud, failing to pay unemployment taxes and grand theft of labor. The Sacramento Bee was unable to contact the listed founder of The Floor Experts, Inc.

“I am confident that the employer is going to be held accountable, but I am not confident that Yair is going to recover his money,” Garcia-Brower said. “He’s going to learn a hard lesson here, but it doesn’t solve his problem of being paid the stolen wages.”

If Stone’s bill passes, opponents argue, abuse will follow. Barrera did not dispute the statistics showing workers struggle to see successful claims translated into money. But she said that is a matter for the Labor Commission, not for private citizens who could launch costly and unjustified legal battles.

“An innocent third-party property owner, not even the employer, will have to go through a legal process to have a lien removed from their priority that never should have been there in a first place,” Barrera said.

Given well-documented delays in California’s civil courts, which have seen their operation undercut by scant resources and criminal cases taking precedence, Barrera said employers could endure months or even years of working to remove unwarranted liens on their property.

“And during that time,” she said, “your property is frozen.”

According to supporters of Stone’s bill, employees seeking back wages are often thwarted by the fact that they work for a subcontractor employed by a larger corporation. That gap can make it harder to trace the trail of responsibility.

That focus on subcontracted and temporary workers informs the third prong on labor’s priority list. Assembly Bill 1897 would hold businesses liable when they employ subcontractors that violate rules around wages, workplace safety or workers’ compensation. The California Labor Federation, California Teamsters and United Food & Commercial Workers Western States Council are co-sponsors.

Assemblyman Roger Hernández, D-West Covina, described the bill as a response to an overarching trend of companies turning to subcontractors in an effort to cut costs. He called the increasing reliance on subcontracted and short-term workers part of “systemic, widespread business models that are designed to keep the workers down.”

“We are taking on a business model that relies heavily on labor contractors to confuse workers and evade responsibility for labor laws,” Hernández said at a recent rally.

Despite that broader justification, AB 1897 overlaps with a specific labor fight. Joining Hernández at the rally were workers from subcontractors hired by Salinas-based Taylor Farms. The company uses a pair of firms, Slingshot and Abel Mendoza, that in turn employ hundreds of workers. Some of them allege they have been mistreated.

“Taylor Farms workers are treated differently than the agency workers,” Victor Borjas, who worked for Abel Mendoza for nine years before being fired months after injuring his foot, said through a translator. “They would treat them better, they would respect them more.”

Mendoza worked at a Taylor Farms facility in Tracy, where current employees are fighting to organize in an election that has seen the National Labor Relations Board impound ballots. Union advocates call the situation at Taylor Farms emblematic of a trend of employers favoring subcontracted workers, saying the trend is evident in sectors from agriculture to janitorial work to nursing.

“It’s a loophole where they can have you working somewhere, and you’re working next to an employee and you think you work for Taylor Farms but you don’t work for Taylor Farms. You work for someone else,” said James P. Hoffa, president of the International Brotherhood of Teamsters. “More and more companies are trying to misclassify people, basically set up temporary companies. This is a growing epidemic, and it’s going to take legislation to stop it.”

Businesses defend the use of subcontractors, saying it gives them more flexibility. Barrera offered the hypothetical example of an online company that deploys a shipping service to get its product to customers. Under Hernández’s bill, she said, that company could be on the hook for delivery drivers over which it exerts little control.

“If the delivery driver came back and was working his ninth hour of the day or was working through his lunch break, you could be liable even though you didn’t dictate his schedule, didn’t dictate his meal break,” Barrera said.

Taylor Farms CEO Bruce Taylor said his subcontractors take on staffing needs, like recruiting short-term seasonal workers, that fall out of the larger company’s area of expertise.

“They develop a pool of good people. For us, our focus is to make great salads,” Taylor said. “What the unions are trying to do is add additional potential liability to employers which strikes me as counterproductive,” he added. “I think what it would do is probably push employers away from this structure.”

In a way, Hernández and others argue, that’s the point.

“California’s middle class is eroding,” Hernández said, “because of this business model.”

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