San Diego Aims to Help Wage-Theft Victims Recover Money Owed

San Diego County is stepping up efforts to help residents recover wages they’re owed while fronting them up to $3,000 through a new Workplace Justice Fund.

Over the last decade, thousands of wage claims have remained unpaid even after state authorities ruled in favor of workers and ordered their employers to pay. Part of the challenge for many wage-theft victims is that they are essentially left on their own to try to collect that debt, a process that can be time-consuming and onerous.

To support dozens of workers with low-income who are waiting for unpaid wage judgments, the county’s Workplace Justice Fund has distributed roughly $100,000. San Diego’s debt collections agency then also takes on their cases and works to get them paid.

“This program is an example of a county really serving workers in a creative and innovative way, and showing that the county has their back,” said Terri Gerstein, a former wage-theft investigator who now directs the Wagner Labor Initiative at New York University. “Employers who are law-abiding should know that programs like this will enable them to have more fair competition.”

The pilot program is the first of its kind, according to both Gerstein and county officials.

On paper, California has some of the strongest employee protections in the nation. Yet, as of last summer, more than 6,500 cases with wage claim judgments since 2013 remained completely unpaid, according to the California Labor Commissioner’s Office. The amount in back wages, penalties and interest owed totaled $84.6 million. The agency did not provide KQED with more recent figures.

The labor commissioner, which is understaffed, works to help workers recover wages in a fraction of those cases. While the agency has a small judgment enforcement unit dedicated to the task, it often faces employers who intentionally hide assets or close down their business to avoid complying. Others may simply lack the money.

San Diego is part of a growing number of counties and cities in California leveraging their authority and resources to assist state authorities in combating wage theft, when an employer doesn’t pay workers what they are due.

‘They are heroes’

Jesus Arriaga, 38, said he filed a complaint with the labor commissioner after a construction company failed to compensate him about $1,700 for work installing bathroom tiles in 2019. The father of two said that as a result he struggled to cover the cost of food, rent and other basics for weeks.

Arriaga met with agency staffers and attended a hearing. The labor commissioner ruled in the fall of 2021 that Titan Tile Corp. owed him $10,500, for the original work plus waiting time penalties and interest. But until recently, Arriaga felt frustrated by the state wage claim process. Titan Tile didn’t pay him a penny.

“I was so disappointed in the laws,” Arriaga said. “I believed in them, in the labor commissioner. I thought they were going to help me, and all they did was waste my time.”

Dustin Gornik, the former chief executive officer at Titan Tile, told KQED he disputed the labor commissioner’s findings, but declined to comment further.

“It was all bogus anyway, what the guy was claiming,” said Gornik. “It was a complete farce.”

In 2017, only one in seven employers in wage claim judgments ultimately paid their workers the full amount owed, according to a CalMatters analysis of labor commissioner data. Those who don’t pay often face minimal or no consequences.

However, Arriaga’s case record led San Diego County officials to come to him with a proposition he said initially seemed “too good to be true.” He became one of the first participants in the Workplace Justice Fund, approved by the county board of supervisors last spring with a budget of $100,000.

San Diego issued Arriaga a check for $3,000 last December and transferred the case to the Office of Revenue and Recovery for collection efforts on his behalf. After years of waiting for redress, Arriaga said his faith in the law has been restored.

“They are heroes,” he said. “I never expected the county to give me money that they have no obligation to give me.”

The challenge of debt collection

If the county is successful in obtaining payment on Arriaga’s judgment, the first $3,000 would go back to the fund to help other workers, according to county officials. Any additional money recouped would be handed to Arriaga, minus a 35% fee to cover costs incurred by the recovery office.

Even with the county’s legal tools and resources, recovering what he is owed will be very difficult because — as often happens in wage-theft recovery — the company Arriaga used to work for closed down. Titan Tile’s contractor’s license, which is required to operate in California, expired in November 2021, just one day after the labor commissioner issued its decision.

Employment attorneys said Arriaga — or the county on his behalf — could only pursue assets from Titan Tile, not from any individual owners, because the company was the sole entity named as a defendant in the judgment.

“This is part of the challenge… I don’t think we’ll get apples-to-apples back,” said Branden Butler, who heads the county’s Office of Labor Standards & Enforcement, which launched the Workplace Justice Fund. “But we are hoping that this new model, where essentially we’re trying to take over the debt collection process on behalf of these workers, will yield results.”

Butler said the county has yet to collect any wage judgments on behalf of the 34 participating workers, but that process has just begun. The county may also make changes to this pilot program after they evaluate its impact, he said, both in terms of benefits to participants and debt collectability.

“We’re going to hold the line on accountability,” he said. “We’re going to do our best to try to help these workers recover.”