UPDATE: San Jose council strengthens wage theft policy

San Jose wanted to loosen wage theft requirements to allow more contractors to work for the city, but councilmembers pushed back.

City staff recommended scaling back the city’s wage theft policy for public contacts, but the City Council voted unanimously to strengthen it at a Tuesday meeting. Councilmember Dev Davis was absent.

Wage theft occurs when an employer fails to pay workers minimum wage or overtime, takes away their tips or does not allow workers to take meal and rest breaks. If the employer is found in violation they are required to pay the employee for lost wages.

Before the vote, city law automatically disqualified contractors who bid for jobs in San Jose if they had two or more wage theft violations in the past five years, or at least one unpaid wage theft judgment—excluding public works contracts.

Under the updated policy, public works contracts will be included. In addition, contractors with a history of wage theft could be exempt from disqualifications if they create a process for workers to make complaints or allow for a collective bargaining agreement. The policy now expands city searches for violations from only examining violations filed with the California Labor Commissioner’s office to include Civil Wage and Penalty Assessments and Bureau of Field Enforcement citations.

Vice Mayor Rosemary Kamei and Councilmembers David Cohen and Domingo Candelas led the push to strengthen the policy.

“We’re making good progress here on making the city a little more flexible by applying our wage theft ordinance to more contracts,” Cohen said. “But also making sure that we’re holding people accountable.”

Union members and labor leaders echoed the sentiment, noting wage theft policies help support workers, their families and contractors that follow the law.

“The city’s policy ensures that all contractors compete on a level playing field, and prevents low road contractors from using wage theft to gain an economic advantage in an otherwise competitive bidding process,” said Frank Austin, business agent for UA Local 393. “And (prevents them) from stealing well earned wages from our families within our communities.”

Staff wanted to loosen the wage theft ordinance because the requirements are causing a shortage of contractors for a multitude of city services. Their proposed policy, which did not pass, would have disqualified contractors that have at least three violations in the past three years. City staff also wanted to have no wage theft disqualifications for banking, janitorial and security service contractors.

Matt Loesch, acting public works director, said he asked councilmembers to amend the requirements to help the city fill those hard-to-come-by contractor jobs and create a policy that is enforceable. He said the city has already made compromises by working with banks even though they have wage theft violations because it is nearly impossible to find a large bank with a clean record. That’s why he wanted banks to be exempt from the wage theft policy.

It’s the same for janitorial and security service workers who have high rates of unpaid violations, 67% and 69% respectively, according to data from the U.S. Department of Labor. In order to avoid automatic disqualification, the city suggests contractors with a history of wage theft work to demonstrate how they will comply with labor requirements including wages, hours and working conditions. That also includes providing employees with a wage theft grievance process.

Loesch said the policy revision should help keep bad actors out of city contracts. He also said his staff is eager to implement the changes because they can now search for violations through the state’s new public portal instead of relying on contractors to self-report.

Investigations into wage theft violations by San José Spotlight, as well as lawsuits from various labor groups, have found numerous allegations of wage theft and unsafe working conditions. Union leaders and legal experts said contractors routinely violate labor laws in San Jose because the city doesn’t have strong enough protections for workers or penalties for those breaking the laws.

Unions and wage theft lawyers argue if the policy is relaxed in any way, workers’ wages will continue to be compromised. Tomas E. Margain, an attorney who represented workers subjected to slave-like conditions during the construction of the Silvery Towers, said the city should expand disqualification to not only judgments, but also complaints filed.

“Most cases settle, so limiting this to judgments would potentially allow a contractor who is a repeat offender to be on a job without anyone knowing this history,” Margain said. “Having broader disclosure requirements allows municipalities and (compliance departments) to better monitor projects as they can see if a contractor or subcontractor has a pattern of wage claims.”

Contact Jana Kadah at [email protected] or @Jana_Kadah on Twitter.